A few years back, my college roommate Dave saw on Facebook that our other roommate, Alex, was staying at the Royal Sonesta New Orleans. Naturally, he called the front desk and asked to be connected to Alex's room.
Dave: Mr. Sion, this is Gary from the front desk, how is your stay, sir?
Alex: Just fine, thanks.
Dave: I'm calling to apologize for the fire event last night. I hope it didn't disrupt your sleep... Can you do me the great favor of looking at your smoke detector? Can you tell me if you see a light blinking?
Alex: Hold on... No, there's no light.
Dave: Not a problem, sir. Here’s what we’re going to do. First, we need to open the smoke detector. Do you happen to have a small Phillips head screwdriver with you?
Dave: That's not a problem, sir. Let’s do it this way. Can you find your TV remote control and confirm there are two batteries in there?
Dave: We're going to need you to take one of the batteries from the TV remote and insert it in the smoke detector.
Alex: [Long pause]... Dave?
In the ensuing years, various and sundry late night analyses over drinks have hit upon the reference to last night’s “fire event” as the key to this successful prank call. After years of Dave’s antics (beginning back in college when he regularly called Larry King’s syndicated radio show for the purpose of working “naked, nude” into seemingly innocuous comments), we’re all perpetually standing watch. But the mention of a fire event (what? where?) was disorienting and confusing, opening Alex to what came next.
This season of fire events here in the West has been equally disorienting and confusing. Last week’s ASU+GSV conference in San Diego was no exception – not only due to intense social (albeit masked) immersion after what seemed like 100 years of solitude, but also what was said. I moderated a session on online degree programs and representatives from three traditional universities (including one R1 institution) recited the gospel of unbundling, chapter and verse. Everyone agreed technology makes it much easier to unbundle expensive bachelor’s and master’s degree programs – courses, admissions, facilities, housing, credentialing, food service, athletics, and career services – into skills-based credentials. When I asked how online degree providers could forestall unbundling, the answer was resoundingly, shockingly: don’t try.
Sure, every university would love to sell more skills-based programs. But the logic of unbundling is the logic of OR, not AND. The point is faster + cheaper pathways to economic opportunity, not selling a $12K continuing education program to an indebted new grad. My head spun so fast, as soon as the panel ended I had to slap on a mask to keep it from flying away (among other health reasons).
The panel also included the CEO of Coursera and the Chief Academic Officer of Western Governors University (WGU). I’d expect as much from them. WGU is the first (and only) competency-based institution of scale and has established itself as higher education’s everyday low pricing leader. As $7,290 annual tuition has attracted over 130,000 students, WGU has less to fear from unbundling than any other accredited institution. Likewise, Coursera (alongside 2U, the leading online education platform) is agnostic about whether postsecondary education is consumed in the form of expensive, multi-year degree programs or faster + cheaper certifications, certificates, credentials, and courses. While 2U acquired GetSmarter and edX, Coursera built its own $200M+ certificates business. CEO Jeff Maggioncalda spoke about Coursera’s fast-growing enterprise business and plans to leverage thousands of enterprise-specific courses to better connect consumer offerings with skills, employment, and employers.
But a $5B company can’t move a $500B+ industry on its own. Nowhere is this clearer than in the recent superb Chronicle of Higher Education piece by New America’s Kevin Carey – a frontal assault on frivolous master’s programs like Penn’s $72K Master’s in self-help (AKA Positive Psychology) and Columbia’s $181K Film MFA. In The Great Master’s Degree Swindle, Carey takes aim at universities that exploit students’ passion for the arts: “taking on loads of debt to train for a profession that is commonly modified by the word ‘starving’ is a terrible idea… I’m sure colleges will say that arts training is time- and labor-intensive, and I’m sure they’re right. But that doesn’t excuse them from moral responsibility for their position in a system that puts 100 percent of the financial risk on young people who may not be that financially oriented to begin with.”
There’s been no unbundling of Columbia’s Film MFA. It’s possible to count on two hands the number of colleges and universities that have unbundled. In last week’s The Job, Paul Fain cited the iMBA from University of Illinois which unbundles the MBA into seven affordable parts and allows students to try before they buy – only $79 for the first segment. Not surprisingly, the iMBA is a Coursera jam (although as demonstrated by last week’s blue light special, Coursera continues to troll for traditional degree programs). And University of Pittsburgh has presciently backed Outlier – a provider of high production value level 100 courses that cost even less than WGU ($400 each) – by awarding transferable credits. But these exceptions prove the rule. When you have a hammer, everything looks like a nail. Higher education's nail is expensive multi-year degree programs. And students continue to get hammered.
After a year of remote learning, with tens of millions of students learning via a medium that makes it simple to unbundle, why haven’t more colleges and universities jumped at the opportunity? There are four primary reasons – some obvious, some less so.
With nearly 70% of prospective students saying the cost of degree programs has altered their plans for the 2021-22 academic year, you’d think more institutions would follow the example of the iMBA (or at least WGU). But the dark side of the bundle is strong. In microeconomic terms, bundling captures surplus for producers. And surplus is what supports the infrastructure of higher education (i.e., salaries and benefits for faculty and administrators – the latter increasingly outnumbering the former). Decision makers understand one simple equation: tuition revenue = budget = jobs. So unbundling is playing with fire.
2. Student Acquisition
Although they don’t talk about it, all colleges and universities track what they spend in marketing and enrollment to produce an application, an enrollment, and a start (three different metrics due to yield and show rates). It turns out these costs don’t vary significantly – certainly not proportionally – between expensive multi-year degree programs and faster + cheaper programs. So the logic of unbundling is also the logic of figuring out how to spread a little program across a lot of marketing and enrollment – like ring-weary Bilbo Baggins’ feeling “all thin, sort of stretched.. like butter that has been scraped over too much bread.” Bilbo needs a “very long holiday” in The Lord of the Rings, and it’ll be an equally long holiday for unbundled programs until universities master more efficient student acquisition models, or until lifetime value increases as students begin stacking skills-based units.
3. Employment Expectations
The long con of traditional higher education is convincing students that degree programs don’t have to (and probably shouldn’t) lead directly to jobs. But if colleges and universities unbundle, the long con will be long gone. Shorter programs come with employment expectations. And given the parlous state of career services, colleges and universities simply aren’t ready for this.
While Columbia’s Film MFA was taking shrapnel from Kevin Carey, USC’s Film MFA was getting it on Facebook. Here are a few recent posts from USC Film graduates:
The vast majority of people I went to school with there are out of the industry… I'd bet that 90% of us would have gotten a better return on our tuition money doing almost anything else.
The majority of my friends with film degrees are not working in the industry, and the majority of my friends writing do not have film degrees. I'm sure the education itself is great, but it doesn't seem like a good financial investment. (For most people).
After graduation, a friend and I wrote a pilot together “for fun,” and it turned out really well… The professor who was helping us asked the Dean of the Film School to help us get representation. She told us to talk to the Student Industry Relations office — whose ostensible raison d’etre is to help students to make relations with the industry (ha ha ha). We talked to the head of the student industry relations office about how we had 2 legit production companies who wanted to option our script and how we really needed guidance from reps. He could EASILY have connected us to someone. And he literally said “you’re not ready yet” and refused to help us.) And that’s the kind of s--t that makes me hate USC. Because supposedly that is EXACTLY why you’re paying them $300,000.
Which leads to a fourth reason unbundling into shorter credentials with employment expectations is so hard…
4. Employment Unwillingness
Faculty and administrators charged with connecting students to jobs may have a misguided belief that students need to struggle and pay their dues. But George Bernard Shaw’s insight that “those who can, do; those who can’t, teach” could be a factor as well. Would the head of the USC Film School’s student industry relations office be in that job if he or she was a high flyer in the entertainment industry? More than a few employment-connected roles at colleges and universities are occupied by those who couldn’t do. At best, some who are supposed to connect students to jobs are incapable or disconnected. At worst, they’re jealous.
Meanwhile, the need for unbundling is beyond urgent. It's a five-alarm fire. In California, the median price of a home is up nearly 40% since the start of the pandemic to $818K. Is higher education doing 40% better on connecting students to economic opportunities? Doesn’t seem like it; the average annual cost of college is now $35,720 – triple the level of 20 years ago. Since no one has a plan to close America's housing gap, unbundling postsecondary education may be one of the only ways to stop a revolution.
The challenge now facing American colleges and universities is that liberals and progressives recognize predatory degree programs aren’t limited to for-profit institutions. A new bankruptcy reform bill proposes to claw back some Title IV aid from colleges if students are unable to pay their loans. While the current version only applies to schools with very poor outcomes, and while the amounts in question represent a fraction of unpaid loans, the strange bipartisan bedfellows behind the Fresh Start Through Bankruptcy Act (Senators Durbin and Cornyn) should give every college pause. It’s no longer clear there’s a political coalition to support the status quo.
Where does this leave us? Likely at end of days for unlimited federal borrowing for any master’s program an accredited institution wants to offer. And perhaps on the cusp of broad-based outcomes regulation that will be a forcing function for unbundling – a “fire event” for thousands of colleges and universities.