Alternative Credentials on the Rise

Interest is growing in short-term, online credentials amid the pandemic. Will they become viable alternative pathways to well-paying jobs?

August 27, 2020
 
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Shorter-term, online alternatives to the college degree are having a moment.

A growing body of evidence has found strong consumer interest in recent months in skills-based, online credentials that are clearly tied to careers, particularly among adult learners from diverse and lower-income backgrounds, whom four-year colleges often have struggled to attract and graduate.

The reasons alternative credentials are piquing the interest of more Americans are not new, nor surprising. For years the demographics of higher education have been shifting away from traditional-age, full-paying college students while online education has become more sophisticated and accepted.

But a wide range of experts say the unprecedented societal turbulence caused by a pandemic, the worst recession in a century and a national reckoning over racism have accelerated and added urgency to the development of alternative pathways to career and life success.

That has amplified interest in recent months among employers, students, workers and policy makers in online certificates, industry certifications, apprenticeships, microcredentials, boot camps and even lower-cost online master’s degrees.

For example, 2U, the education technology and online program management company, has seen across-the-board growth in its online offerings, said David Sutphen, the company’s chief strategy and engagement officer. That includes its boot camp and short courses, as well as degree programs offered with college and university partners.

The focus for potential students right now is on career relevance, academic quality and flexible programing, he said. On the short-course side, Sutphen said, the primary draws are courses on disruptive technology (blockchain and financial tech), functional job skills (digital marketing), and soft skills around leadership.

“A combination of these kinds of skills are the things that people are looking for,” he said.

Accelerated Growth

Moody’s, the credit ratings firm, on Wednesday said online and nondegree programs are growing at a rapid pace.

“The move toward online and hybrid education (a combination of online and on-campus) will accelerate with the pandemic forcing many previously reluctant universities to launch or expand digital capabilities,” said Moody’s. “The coronavirus will also accelerate growth of nontraditional programs such as undergraduate nondegree/certificate programs, where career-advancement courses can be completed discretely and bundled into a degree.”

While short-term credentials accounted for only 10 percent of total enrollment in 2018, Moody’s projected they will remain a fast-growing market segment even after the pandemic subsides.

Moody’s also said corporate partnerships with higher education on the curriculum design for short-term credentials are projected to expand, as colleges increasingly focus on their “value proposition and making their graduates attractive to potential employers.”

The information technology industry continues to lead the way. For example, Google in July announced it soon will roll out three new online “career certificate” programs, adding to its popular IT support specialist online certificate, which is offered on Coursera’s platform. Coursera also has been booming amid the pandemic.

Google will fund 100,000 need-based scholarships for the certificates, and said it will consider them the "equivalent of a four-year degree" for related roles.  

“College degrees are out of reach for many Americans, and you shouldn’t need a college diploma to have economic security,” Kent Walker, Google’s senior vice president of global affairs, said in a statement. “We need new, accessible job-training solutions -- from enhanced vocational programs to online education -- to help America recover and rebuild.”

Google isn’t alone in this push. IBM, Facebook, Salesforce and Microsoft are creating their own short-term, skills-based credentials. Several tech companies also are dropping degree requirements for some jobs, as is the federal government, while the White House, employers and some higher education groups have collaborated on an Ad Council campaign to tout alternatives to the college degree.

Experts point to health care and education as other fields ripe for the expansion of short-term, online credentials, although both sectors include plenty of licensing and other requirements.

“The cloistered four-year college experience was designed to be a luxury good. And that’s why it’s so expensive,” said Paul Freedman, president of the learning marketplace at Guild Education, a growing player in online and work-oriented postsecondary education. “The majority of people who participate in a college experience will do it differently, and they’re going to start with something that gets them a job first.”

However, the jury is out on labor-market results from short-term education and training, said Freedman.

“The ultimate question is whether the outcome is going to be same,” he said. “That’s where the data is still unclear.”

Few have more experience monitoring alternative credentials and consumer interest in online learning than Sean Gallagher, an executive professor of education policy at Northeastern University.

“This looks to be a catalytic moment,” said Gallagher, who is the founder and executive director of Northeastern’s Center for the Future of Higher Education and Talent Strategy. “Like what’s happened with the rapid digitization of so many other areas of our daily lives, we’ve probably gained in a few months a level of interest and participation in online education that would have steadily played out over years.”

Likewise, he says rapid developments with the recession and COVID-19 lockdowns have driven people to look for “what can I do today?” with their education and skills training, and they have moved away from the longer-term investment and multiyear decision making that go into pursuing a college degree.

“Why commit to a long-term investment when your situation and options may change in a month?” Gallagher said via email.

Preference for Nondegree Options

One of the most consistent findings in a nationally representative poll conducted by the Strada Education Network’s Center for Consumer Insights over the last five months has been a preference for nondegree and skills training options.

One in five Americans has said they plan to enroll in an education program in the next six months, according to Strada's Public Viewpoint survey on COVID-19’s impact on adults’ work and education.

Skills training tops the list of preferred education options (37 percent) among respondents if they were to enroll in a program in the next six months, followed by nondegree credentials (25 percent). Rounding out the list were the bachelor’s degree (16 percent), associate degree (12 percent) and graduate degree (10 percent).

With new data released yesterday, the Public Viewpoint poll asked what’s behind the preference for nondegree and skills-based training.

Americans who favor nondegree programs or skills training place more emphasis on value than do those who plan to choose a degree path. Relevance -- whether a credential is required or applicable to work, or a better fit for personal needs -- was the most commonly cited driver by both groups.

Another top finding by Strada’s survey so far is that the pandemic has exacerbated inequity in work and postsecondary education, as the crisis has disproportionately harmed Latino, Black and lower-income Americans.

For example, results released in June found that about one-quarter of Black and Latino respondents had been laid off, substantially higher shares than white and Asian Americans. Black and Latino respondents also were likely to report starting new jobs.

About the Strada Polling Data

Inside Higher Ed and Strada Education Network partner on Public Viewpoint. Strada provides funding to Inside Higher Ed to support its coverage of the polling data and related workforce issues. Inside Higher Ed maintains editorial independence and full discretion over its coverage.

Those who have lost jobs or pay are more likely to say they will pursue more education and training, said Andrew Hanson, director of research for Strada's Consumer Insights. One in five respondents plan to enroll in the next six months, compared to 40 percent of those whose livelihoods have suffered during the pandemic.

“Millions of Americans have had their work disrupted,” he said, which “has pushed them to consider a new option.”

‘Retraining for What?’

Despite growing skepticism about the value of a college degree, it remains the best ticket to a well-paying job and career. And data have shown that college degrees have been a cushion amid the pandemic and recession.

“College workers are not experiencing the same crisis that noncollege workers are,” said Mary Alice McCarthy, director of the Center on Education and Skills with the education policy program at New America.

While short-term training could help displaced workers re-enter the job market, that question largely remains open.

“Retraining for what?” McCarthy asked. “The real problem is the lack of jobs.”

Examples like Google’s certificates do have promising historical precedents, she said, pointing to automakers’ investment in education and job training after World War II. But employers need to invest in the credential infrastructure to ensure that they feature skills that can be built on, ideally to a future college degree.

The pandemic “has revealed how pervasive inequality is in our labor markets,” said McCarthy. “That’s the crisis we need to fix.”

The new data from Strada show consumers also care about stackability of credentials -- meaning that they would lead to additional education or training in the future. One in 10 respondents cited stackability as a driver of their education preferences.

Perhaps surprisingly, this is particularly true among respondents with a high school education or less, who say stackability is the second most important factor in deciding among degree and nondegree options.

For alternative credentials to truly take off, and to be of durable valuable to learners, they must be both stackable and portable, meaning they have value beyond an employer or industry that validates them, said Jane Oates, the president of WorkingNation and a former official at the U.S. Department of Labor during the Obama administration.

"It can't just be for one region or one employer," she said.

Agreeing with Oates on the portability issue was Louis Soares, chief learning and innovation officer for the American Council on Education. Being trained in one company’s offerings could leave workers hanging if that technology goes belly up, like when Betamax lost out to VHS videocassettes during the format war of the 1980s.

Additionally, Soares wondered what the minimum amount of embedded skills training will be for a short-term credential to have value in the job market. And the proof, he said, will be in regional labor market results.

But he said short-term credentials are showing initial promise amid severe disruptions to the economy.

“The job prospects for people are increasingly emerging in fields where there are a lot of demonstrable, measurable skills,” said Soares. “The labor market is presenting in more granular ways.”

Likewise, large employers appear to be remaining committed to subsidizing postsecondary education and training options -- or creating their own credentials -- despite the recession.

Experts had long speculated that employer interest in alternative credential pathways would wither when low employment rates went away, which they certainly have with the 16.3 million Americans out of work in July and a national unemployment rate of 10.2 percent, according to federal data, which likely understates the pain felt by many Americans.

Yet some big employers, including Amazon, are paying to retrain workers for jobs outside the company as it restructures. And Guild’s employer partners are doubling down on their debt-free, online education programs for workers, said Freedman, who cited Walmart’s move in June to expand the eligibility of its employee tuition benefits.

“It hasn’t gone the direction of past recessions,” he said.

As IBM, Microsoft and other tech giants create and endorse alternative credentials, it could begin to loosen higher education’s long-time “monopoly on signal” in hiring, said Freedman.

“These organizations have credibility. They’re putting their name on a product,” he said, which in turn helps smaller employers have faith in alternative credentials. “If Google’s brand is on it, that gives them credibility to hire the graduates.”

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