For nearly two decades, pundits have been predicting the demise of higher education in the United States. Our colleges and universities will soon find themselves competing for students with universities from around the world. With the advent of massive open online courses ("MOOCS") over the past two years, predictions that higher education will be the next industry to undergo "disruption" have become more frequent and fervent. Currently a university's reputation relies heavily on the "four Rs" in which the most elite schools thrive—rankings, research, real estate, and rah! (i.e. sports). But for the majority of students who are not attending these elite institutions, the "four Rs" offer poor value for the expense of a college education.
Craig sees the future of higher education in online degrees that unbundle course offerings to offer a true bottom line return for the majority of students in terms of graduation, employment, and wages. College Disrupted details the changes that American higher education will undergo, including the transformation from packaged courses and degrees to truly unbundled course offerings, along with those that it will not. Written by a professional at the only investment firm focused on the higher education market, College Disrupted takes a creative view of the forces roiling higher education and the likely outcome, including light-hearted, real-life anecdotes that illustrate the author's points.
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About the Author
Ryan Craig is the Founding Managing Director of University Ventures, a private equity fund focused on establishing next-generation postsecondary education companies through partnerships with traditional colleges and universities. He was the Founding Director of Bridgepoint Education, has served as advisor to the Department of Education and as Vice President of Strategic Development for Fathom, the Columbia University online education venture that was the first online consortium of world-class educational and cultural institutions.
Read an Excerpt
The Great Unbundling of Higher Education
By Ryan Craig
Palgrave MacmillanCopyright © 2015 Ryan Craig
All rights reserved.
Bundle of Joy?
It wasn't until I was 14 that I gave a thought to US universities. Growing up in Toronto, Canada, in the 1980s, the practice at my high school was not to think about university until the final year—the amusingly named Grade 13—when you'd receive a one-page form with the names of all 15 universities in the Province of Ontario and were asked to rank your top three choices. No standardized tests, prep courses or college counselors. No campus visits or interviews required. You'd simply record your preferences and the schools would either accept or reject you on the basis of your transcript, appended to the form.
But then I heard about a nerd in Grade 13 who, without telling anyone, applied and was accepted at Princeton. Everyone was abuzz about this nerd. If we thought about university at all, it was about the relative merits of London, Ontario (Western University) versus Kingston, Ontario (Queen's University). There was no question about going to University of Toronto. That was for losers who wanted to live at home. Going to Princeton was like going to outer space.
Still, I remember thinking that if you were going to take the trouble to go to space (or "the States," as we called it), of course you'd only do it for an Ivy. What else was there in the States? And if there were other universities, surely they'd want to be like Princeton. Little did I know this notion was at war with what really makes American higher education great.
My first job made an even bigger impression. One Sunday morning that spring I awoke at a friend's apartment following a "sleepover" (a night of playing videogames, looking at Penthouse and drinking alcohol) feeling shiftless. I had spent the prior evening sober, helping less sober friends on and off subway cars without falling onto the tracks or attracting official notice.
That morning I completed job applications at two establishments: Baskin-Robbins and Oliver's Restaurant. B-R called me for an interview that afternoon. Later that week I started my first shift as a trainee. We were permitted to bring home a quart after every shift. Bringing home those quarts filled me with pride and my freezer with ice cream. My ice cream adventure lasted less than a month; Oliver's called, interviewed me and hired me as a busboy. No longer would I work for the minimum wage. Now I would earn minimum wage plus tips.
Busing tables at Oliver's was the formative experience of my adolescence. I learned two important things there. First, no matter what food got dumped into the large bins we called "bus pans," the "bus juice" at the bottom invariably had the same dark gray coloring and the same sickly sweet smell. Second, and derivative of the first, I needed to go to a good university.
Most waiters at Oliver's had attended Canadian universities. While we made work as fun as possible, it was a large and busy restaurant: 8-hour shifts could extend to 10 or 11 hours depending on the traffic. Twenty-five years later, I still have nightmares of an empty section being seated in unison: 15 tables clamoring for drinks, bread and rolls and wanting to order. After the shift, we'd pull tables together in an empty section and commiserate. The waiters and waitresses would smoke and down a few bottles of Labatt Blue beer and tell stories. Then they'd take off their filthy, food-coated black sneakers (black so they'd look like dress shoes), store them in their lockers and take the subway home.
Ambition has many mothers; mine was fear. I saw my future waiting tables. Though a great job during high school—providing ample pocket money so I could try to impress girls with elaborate presents (a mountain bike) and expensive dinners followed by tickets to Les Misérables—the idea of waiting tables without end in sight motivated me in a way I hadn't been motivated before. So I worked hard, did well in school and at the end of the decade, in the fall of 1989, my father drove me to the University of Toronto where I took the SATs—a prelude to a Christmas break in front of the typewriter working on applications—ultimately successful—to Brown and Yale.
Visiting Brown, somehow I ended up on the campus radio station. At Yale, it was pitchers of beer at Branford College's Naples Night, which galvanized me to lead other pre-frosh on a blind-leading-the-blind tour of Calhoun College's newly renovated basement. Brown was fantastic and the pizza was equally good. But at Yale, as they say, ELI: Everything Looked Impressive. I was hooked.
My first week at Yale that fall was the first time I heard a gunshot. It was 3 a.m. I was in bed (not my own). And I thought: Welcome to America. The danger of the place—my sophomore year, a student was shot and killed right in the middle of campus—caused students to turn inward, resulting in an unfathomable level of energy on campus. Fear of death begetting life, or at least a college version thereof. An unfortunate by-product of this fear was ignorance of other colleges and universities in town. Yalies might bump into students from Quinnipiac or Southern Connecticut State at Toad's Place, the campus concert venue. But we knew nothing about them or their institutions.
That all changed for me senior year with my economics senior essay. I realized my current set of job opportunities and relationship (girlfriend from New York who would become wife from New York) would likely keep me from returning home to Canada any time soon. I thought about killing two birds with one stone: complete the senior essay and eradicate any misgivings surrounding my decision to abandon the True North Strong and Free. And so with the support of my economics advisor, Professor Joel Waldfogel (then known nationally as the Grinch for his attempt to calculate the deadweight loss of Christmas), I set out to use econometric modeling to compare the Canadian and US higher education systems.
Assembling the Canadian data set was simple. There were 60 universities nationwide and data was available for all of them. Assembling the US data was much more time-consuming and eye-opening. I spent days in Sterling Memorial Library poring through university guides and U.S. News rankings. The scope and diversity of the system stunned me. I had no idea that the amount US colleges and universities spent annually per student varied by as much as $30,000 depending on the institution—over five times the level of variance in Canada. A world, once hidden, was now revealed. In conflating American higher education with the Ivy League, I was suffering from acute myopia.
Twenty years on, I realize I was not the first or the last to be blinded by the Ivy League. America's colleges and universities are often referred to as "the wonder of the world" or a "crown jewel." Such statements, typically made by wealthy and powerful people who attended schools like Yale and are quoted in places like the New York Times, are a product of the threshold challenge facing any serious discussion of the state and future of American higher education: myopia.
Here's a fun exercise. Try naming 50 colleges or universities that meet the following criteria:
Their name doesn't include the name of a state
They don't have Division I football or basketball teams
If you can't do this, you may have myopia. And welcome to the club. It often seems that the set of people most engaged in discussing the future of higher education and the set of people who attended top 50 schools are one and the same. Of course, the top 50 are no more representative of the whole than the top 1 percent of earners is of the American workforce.
A serious discussion of higher education requires a broader view and, accordingly, would benefit from broader participation. Let's start with the basics. The 6,000 Title IV-eligible colleges and universities in the United States employ over 3 million people and produce nearly $500 billion in revenue each year from over 20 million students, an increase of more than 30 percent from 15 years ago. This enrollment growth is mainly the product of two things: the baby boom echo and the fact that the notion that college is the most direct path to a career and comfortable life is now as American as motherhood and apple pie. Which is why 70 percent of US high school graduates now partake in higher education—the highest level of matriculation in the world.
But taking a broader view also means looking beyond inputs to outcomes. The most obvious outcome is graduation rates. While graduation rates at the top 50 schools approach 90 percent, overall graduation rates hover around 55 percent for four-year institutions and 29 percent for two-year colleges. Some state universities graduate fewer than 25 percent of their students within six years of enrollment. According to the National Student Clearinghouse Research Center, more than 31 million students left higher education in the past 20 years without earning any credential. About one-third dropped out within the first term; 80 percent of the remainder dropped out within the first two years. Higher education institutions blame the poor performance of our K-to-12 system which graduates students from high school who are not capable of college-level work. And 60 percent of entering community college students are relegated to remedial courses before being admitted to a degree program. But higher education is failing in its remediation efforts; over 70 percent of students in remedial math courses do not pass these courses. This means about 4 in 10 incoming community college students—almost 2 in 10 of all undergraduates and mostly minority students—never have a fair shot. Our system of higher education may have the highest level of matriculation, but it also has the lowest level of completion.
Other surprises for higher education myopics who try on a pair of corrective lenses for the first time: 70 percent of the 20 million students in the American higher education system are enrolled in public colleges or universities. The vast majority are enrolled at non-research-intensive state institutions—the beating heart of American higher education. Only 29 percent are what myopics picture when they think of college students (18-to-22-year-olds attending a four-year college or university on a full-time basis); 43 percent of students are over the age of 25. Most of the rest are younger students who attend community colleges (45 percent of all undergraduates). So if Animal House is your paradigm for American higher education, the most typical student is John Belushi's Bluto: older, probably not attending full-time and not completing anytime soon.
Another surprise and an important contributor to low completion rates: one-third of students transfer at least once before graduating and 25 percent transfer more than once. So if you prefer to view the world through the lens of politics, give some thought to Sarah Palin, who attended five institutions before finally graduating, initially making an ill-informed decision to matriculate at University of Hawaii-Hilo because she wanted to enjoy the Hawaiian sunshine. (She had failed to do her due diligence: Hilo is on the rainy, volcanic side of the Big Island with fewer than 40 days of clear skies per year. She promptly transferred after her first semester.)
With this broader picture in mind, if America's colleges and universities truly are "the wonder of the world," it's not due to the achievements of the top 50 but rather a result of the system's diversity. It serves first generation immigrants with a GED, and—at the same time, typically but not necessarily at different institutions—it serves fifth-generation legacies (students whose parents or other family members attended the college). While higher education in almost every other country is public and fairly homogeneous across institutions, private institutions (from Harvard to St. Olaf College) play a major role in the US system, and public colleges and universities also embrace a high degree of heterogeneity. Clark Kerr's master plan for the University of California is the archetype for American public higher education, with the UC schools charged with enrolling the top eighth of high school graduates, the California State University system enrolling the remainder of the top third, and community colleges providing access to everyone else. As Arthur Levine remarked in his preface to Higher Learning in America, 1980–2000: "The importance of the California Master Plan was that it stopped the stampede toward a single, homogeneous model of higher education. Excellence, in many purposes was chosen over mediocrity ..."
American higher education is designed to produce excellence at top institutions while addressing accessibility at others. The result is the most diverse system of higher education in the world.
It would be nice if we could celebrate the diversity of higher education in America and call it a day. Through it, the system achieves both excellence and accessibility. But the myopia that obscures this diversity has also produced college rankings.
The U.S. News rankings and the other 14 rankings currently active in the United States are primarily derived from easy-to-measure inputs: student selectivity; faculty resources (class size, student to faculty ratio); spending per student; library holdings; and research productivity (an input into student learning). It may be tautologically risky to say it, but here goes: the top 50 do really well in these rankings. (So well, in fact, they tend to always finish in the top 50. And so consistently that U.S. News might as well rank colleges each year based on institutional age.) Why? Because the rankings are designed to measure what elite colleges do well: lavish money and resources on really bright, motivated students.
Trying to move up in the rankings is a Sisyphean task. A 2013 study published in the journal Research in Higher Education concluded that any sustained upward movement in rankings is nearly impossible. The paper, written by researchers from University of Rochester, asked what it would take for Rochester, a university consistently ranked in the mid-30s, to move into the top 20. The answer: Increase average faculty salary by $10,000 and spend $12,000 more per student. This would cost $112 million per year. And then Rochester would have to increase its graduation rate by 2 percent and improve in other metrics like alumni giving and acceptance rate.
Nonetheless, driven by boards of elite trustees, university and college presidents navigate their institutions by the stars of these rankings. "No one in the United States tries to figure out what a great university is," says Andreas Schleicher, head of the education arm of the Organisation of Economic Co-operation and Development (OECD). "They just look at the Ivy League."
To be fair, rankings are only one of the four Rs that now dominate the higher education landscape. The four Rs are:
All are easy to measure and communicate to alumni and other development constituencies. And all have precious little to do with student outcomes. All also happen to be dominated by the top 50.
The result is isomorphism, the phenomenon by which American universities have acquired similar characteristics. R.R. Reno describes isomorphism in a piece he wrote for First Things:
There aren't enough Nobel Prize winners to go around, so lesser universities chase the also-rans and young phenoms in the hope of gaining ground in the reputation race, offering them lighter teaching loads. To dampen the ill-will that arises when regular faculty began to envy the student-free lives of the academic heroes, the wealthier universities have consistently moved toward across-the-board reductions in teaching loads, with not-so-wealthy schools imitating this trend as best they can. This, of course, requires shifting still more teaching to graduate students and other adjunct, non-tenured faculty.
The result is a uniform model of program delivery through which most American colleges and universities aim to become "The Harvard of the _____" (fill in the blank for the region). They attempt to offer the same range of programs and provide the same services as an institution with an endowment of nearly $30 billion. It's a recipe for the crises we'll explore in the next few chapters.
Take a look at college catalogues from ten institutions chosen at random. What differences do you see? All claim to offer the same basic programs and experience with little differentiation other than an "international focus," a "community service" experience, or a "values-based education."
Excerpted from College Disrupted by Ryan Craig. Copyright © 2015 Ryan Craig. Excerpted by permission of Palgrave Macmillan.
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Table of Contents
1: Bundle of Joy?,
2: Crisis of Affordability,
3: Crisis of Governance,
4: Crisis of Data,
5: Finding Wonderland,
6: The Great Unbundling,
7: Preparing for the Great Unbundling,
8: America's Next Great Export,
9: Managing Change,
10: A Tale of Two Cities?,
11: American Hustle,
12: Humbling Unbundling,
About the Author,