Tuition at colleges is rising at a rate higher than inflation and wage growth, which has left many students questioning the long-term returns associated with a college degree. At the same time, colleges are faced with a number of new pressures: decreasing state funding, and a push among students for colleges to prepare them for a job. There has also been a growing mismatch between employer needs and the skills of their employees, which has left over seven million jobs open as of January 2019.
Over the last few years, colleges have started to experiment more with their models. From schools like Arizona State University offering more online courses and partnering with Starbucks to help their employees pursue a college degree, to Western Governors University which provides an affordable, career-focused college education, these changes are becoming more apparent. Colleges are using different models to finance and deliver their educational programs. At the same time, the private education industry is booming, with companies like Holberton School and Coursera changing the way we think about higher education.
Before we explore these trends in more depth, we must first analyze the main factors which have caused these trends. Although there are many factors at play, perhaps the three main problems higher education institutions are dealing with are: reduced government spending on higher education; the lack of qualified candidates in the labor market; and questions over the value of a college degree. These factors have led to a significant amount of innovation, as colleges try to retain their position as the place to go to advance your career prospects, access higher salaries, and move up into the middle class.
New innovation in higher education
The first factor which has resulted in innovation in higher education is an increased pressure on colleges to prepare students for the evolving workforce. Students have started to question whether or not a college degree still confers enough value to make it worth the investment. This has become especially prominent as tuition reaches an all-time high, and the average student loan balance is approaching $30,000. In addition, over 40 percent of students who enroll full-time at four-year schools will not graduate within six years, which means that many people are left with a large student loan balance, without the earning power of a degree.
The price of an undergraduate degree is 13 times higher than it was 40 years ago, and the prices of school-related costs like student housing and textbooks have continued to increase. Students, therefore, are asking whether it is worth taking out tens of thousands of dollars in debt, if graduation is not guaranteed and the price of a degree is becoming more expensive. While college is still worth it for most people, majors in the humanities often offer lower earnings prospects than STEM degrees which can call into question the value of a degree. Overall, the value of a college degree depends on a student’s career path, but it is no longer the relatively secure ticket to significantly higher earnings it was in the 1970s.
In addition, there has also been a lack of qualified candidates in the labor market, which colleges are attempting to address. In the past, attaining a college degree was enough to prepare you for the rest of your working life. However, the growth of the digital economy and rising automation has displaced many workers, and rendered many of the skills they have learned in the past obsolete. Thus, colleges are looking to update their offerings to ensure they are covering the specific needs of the labor market.
One example of this lies in the computer science industry. In computing, real-world experience and practicing on projects has been more effective than a traditional academic curriculum. There are over 500,000 open jobs in computer science in every industry and state, according to Code.org. At the same time, many computer science majors do not have a curriculum which would prepare someone for an intensive job in this field. This has led to the rise of vocational coding bootcamps, which aim to train people in the practical skills they need to pursue a career in coding in a fraction of the time it would take to earn a college degree. Colleges are taking note, and looking to update their offerings to stay in touch with changes in the labor market.
Federal and state funding for colleges has also been decreasing over the last few years. For example, after the recession, states reduced funding to colleges significantly. In 2018, the government was spending 16 percent less per student than they were ten years prior. This has resulted in a number of budget cuts in universities, and some colleges have even terminated programs so they can continue to balance their budgets. The more popular response to decreased funding has been recruiting more students from out-of-state, who will pay higher tuition rates, and imposing general increases in the cost of tuition.
Trends in higher education
The aforementioned changes have resulted in a number of new trends in traditional higher education. These trends point the way forward to a more affordable higher education that is focused more on developing practical skills and preparing people for a job.
Preparing students for a job
Colleges are starting to feel more pressured to prepare students for a job after they graduate. This is becoming more important as the economy changes, and as the workforce is looking to hire more people with technical skills. In a September policy review, the Association of Public and Land Grant Universities said large research schools are looking to move a focus on workforce development and preparing students for a job.
Community colleges have retained this focus for many years, whereas universities have typically advocated for the importance of an academic education in preparing people for all the challenges they may encounter in the workforce. This may result in a number of changes in higher education. Colleges may start to provide better quality career counseling to students, making them aware of the new career options out there in their field. Colleges may also teach students about the growing importance of independent consulting or “gig” work in industries like design, marketing, and software development, and prepare people for this change in the workforce.
Online education is on the rise
Over the last few years, there has been a growth in popularity among high quality online education options. These options cater to people who are either unwilling, or unable to pay to attend a college, and people who are looking for more flexibility in their courses. For example, Coursera has invested more resources in their flexible degrees, such as their online master’s degree in computer science from the University of Pennsylvania, which act as an alternative to a traditional university education. This has not been a trend isolated in the private sector, however. Colleges like Arizona State University allow their students to take the first year of their degree online for a fraction of the cost.
This rise has also led to more interest in alternative credentials. While there are still many questions looming around the viability of these credentials and whether they will ever correctly certify an individual’s skills, the transition toward preparing students for a job has more companies thinking about this model of certifying skills. Alternative credentials such as MicroMasters programs by edX are paving the path toward more experiments in this space.
Income Share Agreements are supplementing loans
In the past, the primary option of financing an expensive college degree was to take out a student loan from the federal government, or a private lender if you had to. However, over the last few years, Income Share Agreements (ISAs) have started to gain traction. These agreements promise that you will pay for your education as a percentage of your post-graduation income, only if you earn over a certain amount. This acts as a form of insurance to students: if they graduate and become a waiter, their payments will decrease until they find a better job. If they end up in low-paid jobs for years after their graduation, the ISA will be forgiven.
Vemo Education is one company working with universities to help create new ISA programs. This year, colleges such as Brenau University and the University of Utah have announced ISA programs designed to offer an alternative to traditional student loans. The activity in ISAs is not confined to higher education. Skills academies such as Holberton School, a computer science coding school, are offering ISAs to their students. In the case of Holberton, students pay 17 percent of their post-graduation earnings for 42 months, only if they are earning over $40,000 per year.
Employers are getting involved
As previously mentioned, there is a large disparity among the needs of employers and the skills which workers have. The growth of technology in every industry has meant many people have had to transition into different jobs, or go back to school to acquire the skills they need to thrive in the modern workforce. However, it is not just schools which are helping to “upskill” workers. Employers have become more interested in providing retraining services to their workers, so that they can continue to be productive.
The promise for employers in this model is that a worker can acquire the specific skills they need to do a job within that company, and offering training may help boost employee retention and morale. For example, Amazon announced earlier this year that they are going to invest $700 million in retraining 100,000 members of its workforce into more technical roles. In addition, companies like Pluralsight, an online software developer training platform, are also partnering with employers to help them acquire new skills. To respond, higher education should be working on training people in more technical skills to prepare them for the future of the workforce.
Competency-Based Education (CBE) is growing
Competency-Based Education, where students are graded through their demonstrating they have acquired a certain set of skills, has started to become more common. Colleges are looking to use more CBE approaches to ensure students are progressing through their programs, and to keep people on-track to earn their degree. These approaches have also become part of broader trends toward preparing students for jobs, as CBE ensures students have indeed mastered the specific skills they are likely to encounter in the workforce.
Another part of CBE changes has been to allow students to take a test in a subject they already know without having to take the class. If a student has mastered a specific course in algebra, for example, they would be able to take the final test early and move onto the next course if they pass the test. This, in turn, can reduce the amount of time students spend learning skills they already know, and will also make their education more affordable. There are a number of schools experimenting with new CBE-based programs such as Southern New Hampshire University.
These are only a few of the many trends in higher education. As the workforce continues to evolve, there will be more opportunities to innovate in higher education. The problems of higher costs, lower government investments, and disparities in the skills workers have and the skills employers are looking for will continue to exist for many years, but these five trends should help mitigate these problems.
About us: Career Karma is a platform designed to help job seekers find, research, and connect with job training programs to advance their careers. Learn about the CK publication.