The End of College?

Posted byCory Althoff

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17 Comments on The End of College?

COVID-19 is turning the world upside down, so it is the perfect time to question deeply-held assumptions. One thing I’ve been thinking about is whether or not colleges will exist in the future. With student debt at an all-time high and alternatives like teaching yourself to program becoming increasingly viable options, students are questioning whether it makes sense to pay an institution that doesn’t guarantee you a job, tens (or hundreds) of thousands of dollars.

None the less, colleges are powerful institutions, and they won’t go out without a fight. So is the end of college coming? In this article, I look at whether or not colleges will still exist in the decades to come.

The Problem

First, let’s examine why so many people are frustrated with the higher education system. There are three reasons why students are upset. The first is the cost of tuition, the second is the return on investment, and the third is going to school is not always the most efficient way to learn a new skill.

Cost

The issue that receives the most attention is the astronomical cost of getting a degree. In 2019, the average price for tuition at a public university was $10,116, and the average tuition for a private school was $36,801. That means, on average, it costs $40,464 to get a degree from a public school and a staggering $147,204 to get one from a private school.

Still, the price is increasing every year. According to the College Board, from 1990 to 2020, average inflation-adjusted tuition at public four-year universities tripled. That means, on average, college tuition increased by 8% each year. Today, the cost is rising 4% a year.

That is a staggering price increase. To put that into perspective, over the last 90 years, the S&P 500 stock index averaged a 9.8 percent return. With the cost of higher education increasing almost as fast as the stock market, it isn’t surprising that today’s college graduates are taking on 40% more student loan debt on average than students from ten years ago and questioning whether it is worth the investment. 

Return on Investment

So what do students get for that hefty price tag? Have colleges added new features that justify someone in 2020 paying three times more for a degree than someone in 1990? No. For the most part, colleges have remained the same.

According to Nerd Wallet, the average job placement for colleges is 50%. That doesn’t account for the fact that According to the Department of Labor, up to 17 million college graduates work jobs that do not require a college education. On average, college graduates make around $50,000.

While these numbers aren’t terrible, there are alternatives that offer better results. Programming bootcamps, for example, have higher job placement rates and cost less. According to Course Report’s 2019 Coding Bootcamp Alumni Outcomes & Demographics Report, 83% of the coding boot camp graduates surveyed say they’ve been employed at a job requiring technical skills. The average programming bootcamp costs $13,584, which is around 1/3 the cost of attending a public university, and the average salary for coding bootcamp graduates is $66,964.

Of course, there are problems with this comparison. Many students that attend them already have a bachelor’s degree, and some already have work experience. I’m also not suggesting we should eliminate colleges and have everyone go to coding bootcamps instead. Not everyone wants to learn to program, and as of right now, the government does not provide financial aid to attend one. The comparison does, however, suggest there are problems with the return on investment from higher education, and there is room for university-system alternatives to offer a better product at a lower price.

Inefficient Learning

The final problem is college is not an efficient way to learn many skills. For example, programming. Students that get computer science degrees spend four years learning to program, whereas self-taught programmers (like myself) and bootcamp graduates are often learning to code and getting employed in a year or less.

It takes longer to learn to program at a university because schools force students to take general education classes that are unrelated to computer science, like history or chemistry. Of course, it is important to study subjects outside of your field, and no one is saying studying history is useless. However, when you are in school you are not only paying to be there, you are also giving up the income you could be making working, which makes it hard to justify spending so much money on a class that will not help your job prospects.

As large institutions, it is also hard for universities to keep up with technology trends. For example, schools have been slow to switch from teaching Java to new programmers to Python, which many experts consider to be the best first programming language to start with.

The College Monopoly

Colleges offer an inefficient product at a high price, so why are they thriving? Colleges are popular and increasing costs without providing more value because they have a monopoly on the higher-education market.

Universities use public perception and status to hold on to their monopoly, but there is reason to believe that will not work much longer.

Fake Education?

Colleges are businesses. They are in the business of selling you a degree, and they’ve convinced American society if you don’t get a degree from them, your education doesn’t count. They deride alternatives to their monopoly, like the University of Phoneix, as “for-profit” or “online-only” institutions that don’t offer a “real” education. But there is no difference between the University of Arizona and the University of Phoenix, just like there is no difference between a self-published book and one that is “traditionally-published,” regardless of how hard traditional publishers try to discredit self-publishers.

There is no such thing as a fake education, and external factors are working to erode this competitive advantage universities have wielded for so long. For example, many universities now embrace online learning. With COVID-19 forcing everyone to switch to remote learning, I suspect that trend will accelerate universities embracing it. That could end up being a disaster for these institutions because it exposes that colleges might not provide enough value for the cost.

For example, students taking college classes online may compare their experience to what it’s like to take a Udemy course online. One has a professor, and that’s nice. But a Udemy course costs fourteen dollars, and the average cost of a college course is five hundred and ninety-four dollars. Does a professor make an online class forty-two times better? Are students learning 42 times more efficiently from a single professor teaching twenty or more students? Of course not. Plus, for that price, someone learning at home could hire a private tutor, which is more helpful than a professor helping twenty students.

As more universities move online, it will be harder for them to make the argument that other online “for-profit” schools are inferior, which will degrade the power of the most powerful tool they have for maintaining their monopoly.

Possible Scenarios

Of course, no one can predict the future, and anything could happen. However, two situations are most likely: colleges will adapt and thrive, or some will live, but thousands will die.

They Adapt and Thrive

Colleges are businesses, and, when companies refuse to adapt, they die. History is littered with examples. In 2004, Blockbuster was worth five billion dollars. By 2010, it was bankrupt. No one was sad to see Blockbuster go, because they didn’t adapt.

It is not too late for colleges to adapt to the changing times, and maybe they will. They could move completely online and slash the cost of tuition. Universities could also offer coding style bootcamps, which some colleges like UCLA are already doing.

Schools could also steal from the coding bootcamp playbook and offer job guarantees: if you earn your degree and you don’t get hired within a specific time frame, they will reimburse you for your tuition.

These are just some of the most obvious solutions colleges could try; there are many other strategies they could experiment with.

If these changes work, universities may not only survive but thrive in the coming decades.

Some Live Most Die

The other likely outcome is universities survive, but there are far fewer of them. Today, there are 5,300 colleges in the United States. Maybe in the future, that number drops into the hundreds, and eventually, only the most prestigious colleges survive.

As more potential students question the value of a college degree and more viable alternatives emerge, fewer students will decide to go to college. That will put enormous pressure on the thousands of schools in existence today, and many will go bankrupt.

The more startups disrupt the education space; the more likely the number of colleges in the United States will decrease. Some of the startups in the education space to keep an eye on are Codecademy, Lambda School, and App Academy. Of course, not all disruption will happen from the “Learn to Code” space.

Monopolies are powerful, but they never last forever. Even Standard Oil, the most powerful monopoly of all time, eventually fell. Colleges are not an exception. If they refuse to adapt, it is likely they will begin to disappear.

The Verdict

So will colleges exist in the future? Yes. I don’t see a scenario where colleges disappear even in the next one hundred years. Harvard, Yale, and Stanford are some of the most powerful brands in the world. Regardless of what happens in the future, students will want to go to Harvard.

That doesn’t mean thousands of colleges won’t cease to exist. Colleges are businesses, and they have a monopoly on “real degrees,” which allows them to get away with selling a subpar product for a high price. However, you cannot indefinitely increase the price of your product by four to eight percent each year without improving it. Especially when there are startups with million-dollar bankrolls determined to create better alternatives to your product and external factors like a societal switch to remote learning, killing off some of your built-in advantages.

As more alternatives turn up in the marketplace, potential students will start evaluating colleges for what they are: a business that provides a service. Not only that, but a business that offers a service to which there are multiple, less expensive competitors.

However, just because colleges are likely to lose the advantages that make them monopolies doesn’t mean they will cease to exist either, colleges could just as easily successfully implement changes like guaranteeing jobs and dropping tuition costs and thrive in the future.

But if colleges lose their two inherent advantages and refuse to adapt, they will die.

They have to make their product better and offer it at a lower cost, and their product needs to better hold up to scrutiny, or thousands of colleges will disappear.