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What’s next for higher ed?

The higher ed system will be forced to rebuild itself on a new set of pillars: accessibility, outcomes, and high ROI.

By Abhi Ramesh
co-founder, Horizons School of Technology March 23rd, 2018

Education as an industry has undeniably missed the change cycle. Today’s higher education system is based on foundations that were built centuries ago for a country fundamentally different from the one we live in today. Historically, higher education existed to train the clergymen in subjects that many today consider to be “intellectual nice-to-haves.” Over time, the shift in U.S. population demographics resulted in a need for specialized, almost vocational training programs; however, universities were not able to make that shift.

University tuition has become more expensive, the curricula less useful, and high-paying jobs less accessible for today’s college graduates.

In our lifetimes, we will see three major shifts in the U.S. higher education system:

1. The demise of many ineffective, traditional, four-year universities programs.
2. Increased accountability among traditional higher education survivors.
3. The rise of mainstream alternative education platforms (in person and online).

Public funding for higher education in the United States is gradually decreasing. Overall state funding for public colleges in the 2017 school year was nearly $9 billion below its 2008 level (after adjusting for inflation). As states sponsor less and less, these institutions are forced to find other ways to survive. More often than not, this means increasing tuition. However, increased tuition, thus far at least, has come without a higher quality of education and more successful career outcome metrics. Schools that cannot create positive return-on-investment (ROI) career outcomes for students will close.

Additional changes on the horizon

Those that do survive will be forced to adapt. The remaining universities will be judged on their ability to create meaningful outcomes for their students. Curricula will become career-focused and students will have the power of choice and information on their side. Pretty soon, a university whose outcomes profiles do not match its costs will be viewed as a scam!

With the restructuring of the traditional higher education system, we will also see the continued growth of alternative education providers, many of whom are already taking the 21st century by storm. We expect this trend to not only continue but grow in magnitude. Platforms like Udemy, Udacity, and Coursera have made massive open online courses increasingly popular; traditional universities are partnering with these companies to offer certificate-granting programs. Perhaps the most notable trend in alternative education is the emergence of coding schools and bootcamps, and other physical, vocational education providers.

The higher education system will be forced to rebuild itself on a new set of pillars: accessibility, outcomes, and high ROI.

Attending a “good” private college for four years today costs at least $140,000. The vast majority of students need to take out student loans, assuming they even get into these “good” colleges. Many students, because of their backgrounds, never take the SAT/ACT or receive proper college-counseling guidance.

The future will have to be different. The one-size-fits-all approach of a standard four-year, tuition-based education will be challenged. Apprenticeship models will become more common as corporate entities begin paying for some portion of student education costs. The Common Application will disappear; studies have shown SAT scores, high school GPAs, and college essays to be very poorly correlated with career success. The college application will be customized, based on what the college offers. Do you want to attend Stanford’s computer science program? Show Stanford that you can code and care deeply about technology. The path to college will allow for anyone to get in.

Tomorrow’s universities will not be rewarded financially unless they place their students into jobs. Thus, their goals and the goals of their students will be perfectly aligned. Upfront tuition will be the first relic to go.

A set of alternative educators are already testing out income-share agreements as alternatives to traditional loans, whereby students attend college for free but agree to pay back a percentage of their income for a fixed number of years. There is no upfront tuition. There are no student loans. Instead, the educational institution takes on the financial burden (and risk) of a student’s education.

High ROI
ROI will determine which programs exist in the long run. If the average four-year private university costs around $140,000 and the average liberal-arts graduate earns ~$35,000 per year (pre-tax), it may take that student a decade or more to make up for the cost of his/her education. Negative ROI programs will be replaced by outcome-focused, high-ROI counterparts. If a college education is not a worthy investment, students and parents will choose an alternate path.

Change, though badly needed, is often slow to permeate through the various layers of the education bureaucracy. The time, however, is ripe and we will see dramatic shifts in the way the public views higher education over the next decade.

About the Author:

Abhi Ramesh is a co-founder of the Horizons School of Technology, a modern technology university designed to help students launch careers in software engineering. Prior to Horizons, he co-founded Altair Prep, an adaptive learning platform for K-12 standardized testing. He is a self-taught programmer.

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