Fit In, Stand Out or Do Nothing

A wave of disruption is coming to traditional higher education, investor Ryan Craig warns in his latest book, A New U: Faster + Cheaper Alternatives to College, with “college MVPs” (“minimum viable products”) like coding boot camps, apprenticeships and even staffing firms menacing incumbent universities.

Craig is an enthusiastic, trenchant but not unconflicted chronicler of this trend. (His firm, University Ventures, invests in many of the would-be alternatives to higher education.) Craig understands the profound impact of a withered American university system -- that fewer young people in multidisciplinary degree programs means not only a less educated citizenry, but also the loss of a powerful coming-of-age experience. In this sense, Craig’s book is not so much a panegyric to new college models as it is “an elegy, or maybe even a eulogy, at least for nonselective colleges.”

We share Craig’s enthusiasm -- and concern. We are especially worried about what this trend might mean for Americans who have never been particularly well served by our higher education system -- the poor, low-income working adults and those from less educated families. We run the risk of further entrenching a system where the less advantaged get training to be the “model work force of tomorrow,” while the advantaged get a four-year residential experience that grooms them to be the “leaders of tomorrow.” In fact, this disruption could lead to an even smaller slice of Americans getting the full “college” experience, effectively growing the gap between the knowledge economy elite and everybody else.

We don’t believe this is a foregone conclusion: how any potential disruption plays out, of course, depends on how incumbent institutions react. The changes that Craig’s book chronicles -- the emergence of new pathways, innovations in education financing models and shifts in student demographics -- also create opportunities for incumbent institutions. And should universities embrace these opportunities, Craig’s report of the death of traditional college may prove exaggerated.

Craig himself, in the book’s afterword, offers three strategies colleges might adopt to survive would-be disrupters: try to become more selective, offer faster and cheaper pathways to degrees, or themselves offer boot camps and college MVPs.

Building off these ideas, we offer our own three-part framework: facing a new set of would-be disrupters, colleges can fit in, stand out or do nothing.

Fitting in would involve traditional colleges incorporating the most promising elements of last-mile training programs. We have four ideas:

• Reducing financial risk for students. Perhaps the most straightforward way of reducing financial risk for students is by reducing tuition. This isn't a popular option with colleges, but a handful of colleges have done it in recent years.
• Sharing financial risk with students. Risk-sharing mechanisms like money-back job guarantees and income-share agreements are increasingly common in the world of last-mile training providers. For instance, Holberton School, a two-year training program for aspiring software engineers, offers two payment options -- $85,000 in up-front tuition, or 17 percent of salary for the first three years postgraduation. With a long gap between education and employment (nominally four years, but often longer), and limited focus on career placement, most existing four-year schools aren’t a great fit for income-share agreements. But this is a choice, not an inexorable reality. A B.A.-granting institution that offers a compressed degree program with clear on-ramps to good jobs could very well make an income-share agreement work.
• Shifting from career services to career-centric. Craig is fond of calling career services the “Las Vegas of the university” -- a glitzy facade with not much inside. The answer instead is to build entire educational programs that are career-centric. They would start with career design, combine foundational and theoretical work with training in job-specific skills and technologies, and require work on real-world projects.
• Building on-ramps and off-ramps. What would it look like for more colleges to view job placement not as ancillary to education, but as a core component? Institutions like the University of Waterloo and Northeastern University have operated successful co-op programs for years, and more might consider this model. Beyond co-ops, colleges might consider partnering with train-to-hire staffing agencies like Revature, or even more simply, engaging employers in designing real-world, project-based learning opportunities for students. Colleges can enhance the efficacy of on-ramps by also embracing off-ramps -- opportunities for students to move into great jobs even before they’ve attained their degree. That doesn’t mean abandoning students, but rather creating pathways for students to transition seamlessly from a full-time, residential program to a hybrid or virtual program upon landing a great job.

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Standing out: while traditional incumbents have much to learn from faster and cheaper programs, fitting in won’t work for every institution. A different approach is to stand out -- to double down on delivering a well-rounded higher education (something that last-mile training programs, by their very nature, can’t do). As Craig writes in A New U, colleges stand to lose market share to alternatives designed to prepare students for first jobs, but in turn, they could see an increase in the demand for programs designed for young, working professionals who need additional skills development to move up. Incumbents might take advantage of this in three ways:

• Prepare students with the full complement of “new collar” skills. Incumbent institutions might play a role in defining and delivering a “new liberal arts” education -- training not only in language or in the humanities, but across a broader range of skills. Colleges could focus on producing more graduates who can write clear prose, collect and analyze data, understand historical context, and effectively use technology. Minerva Schools at KGI is one institution trying to do just that. It requires rigorous course work in logic, statistics, computer science, communications and beyond -- with the goal of preparing students “for success in any career you pursue -- even one that does not yet exist.”
• Shift from “career services” to “life design.” In a world of constant change and upheaval, it has perhaps never been harder for young people to find their career legs. Last-mile training programs aren’t well positioned to solve this problem because they’re so focused on preparing students for one particular job. (The right time to figure out that you don’t want to work in medical sales is not while you’re enrolled in Medical Sales College.) Given this, traditional universities can play an essential role in helping students explore career paths. Take Stanford University’s Design Your Life course as an example. Within a few years of Stanford introducing this course -- which uses design thinking to help students design their vocation -- it had become the most popular class at the university, enrolling nearly 20 percent of all seniors.
• Consider new audiences. Another way of differentiating from last-mile training programs and college alternatives is by better serving the students that these disrupters can’t support. Take, for instance, early- or midcareer adults working in entry-level jobs who seek advancement. These adults may have already been through community college, a last-mile training program or an apprenticeship, but they might still require additional training to unlock new career opportunities.

To effectively serve this student group, however, institutions need to rethink some of the basic tenets of their model -- from content to price point to delivery format. Universities nimble enough to address this market, such as Western Governors University, Trinity Washington University and Arizona State University, are just a few that are finding tremendous opportunity.

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Do nothing: despite his enthusiasm for college alternatives, Craig is also realistic about the staying power of selective universities. And while less selective institutions are far less insulated from new entrants like boot camps and tech apprenticeships, they too should note that -- as unsustainable as the status quo is -- the particular wave of disruption that Craig portends is not a fait accompli.

As recently as last summer, a spate of boot camp closures (Dev boot camp and Iron Yard, most prominently) had industry experts warning of a “provider glut.” Even the exemplar programs Craig highlights in A New U haven’t been immune to the churn of creative destruction. In May, MissionU was acquired for a small sum by WeWork, which then shuttered the program. Besomebody (another Craig spotlight) lives yet but offers only one educational pathway, training students for $3,000 to become a “nutrition technician” -- a $16-per-hour job available only in Cincinnati. This past July, coding boot camp Hack Reactor was sold to Galvanize in a further example of industry consolidation.

In highlighting MissionU and Besomebody, we’re not arguing for inaction; the faster and cheaper alternatives Craig introduces in his book aren’t going away. Rather, we raise these examples as a reminder that traditional institutions -- with decades (if not centuries) under their belt, access to federal financial aid and none of the growth expectations of venture capital -- can operate from a position of strength.

Incumbent colleges and universities should look to the arrival of new entrants like boot camps, apprenticeship programs and competency marketplaces not only as a threat, but as an opportunity. And they should work with these new players to build better educational pathways for students -- for the long haul.

If incumbent institutions are successful in doing so, they’ll help ensure that Craig can shelve his “college eulogy” for another day.