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The American Undergraduate Experience (circa 2016)

Posted in Higher Education on June 1, 2016 by

The American undergraduate experience is not what you see in newspapers and movies.

What does it look like today?

Before the Civil War, “college” typically meant private institutions emphasizing Classical languages and schools for future ministers, teachers, and military officers. In 1862, the First Morrill Act gave land to each state for a university to teach “agriculture and the mechanic arts… to promote the liberal and practical education of the industrial classes.” In 1890, a second Morrill Act established additional land-grant universities for African Americans in the segregated South.

Since World War II, we’ve seen a boom in public colleges, two-year community colleges, and for-profit colleges to meet demand that began with the G.I. Bill. More recently, demand has further increased with the shift from an industrial to an information economy. Enrollment has grown from 10% to 41% of 18–24 year olds and from 2 million to 17.5 million overall. Veterans, working mothers, and other so-called “nontraditional” students are the latest groups to be accommodated by our national higher educational system.

Meanwhile, the cost of higher education keeps rising. In his book, Kaplan CEO Andy Rosen observes that undergraduate institutions, including many of the original land grant colleges, have been bulking up not only academically but with amenities like ever fancier student centers and athletic facilities, rock climbing walls and jacuzzis.

To pay for all this, public schools have increased tuition on out-of-state and international students, making these students especially remunerative and desirable. In-state tuition has also risen, as legislatures cut budgets. Inevitably, distortions in the mission ensue. Nevertheless (and this applies to American universities in general) if you offer a desirable product whose efficacy is extremely hard to measure, and you have a limited supply of that product, you will inevitably increase prices over time.

College was already expensive enough that students had to borrow heavily to pay for it. Since they pay so much, they demand more luxury features. But 18-year old matriculants aren’t renowned for their financial planning acumen. Many of them have never done laundry before. To a teenager who has not borrowed heavily before, debt is like casino chips: psychologically, it distances them from the long-term consequences of prodigious spending. Colleges engage in an arms race with one another not to offer a better education but a better experience.

It’s like an ecological cycle run amok.

education-borrow-demand-cycleThese trends have encouraged a big chunk of America to seek other venues for low-priced, high-quality education. Some students who could attend a four-year institution choose to spend their first two years at community college. Community colleges offer no jacuzzis or other fluff. They just provide education. Students can take similar introductory courses and average down the cost of a bachelor’s degree. The popularity of community colleges will only increase with President Obama’s initiative to offer more free two-year degrees.

Every year, the Lumina Foundation commissions a Gallup poll that asks people what they think “college” means. The 2015 poll shows significant increases over 2014 in the percentage of respondents who, when they hear “college,” will imagine a two-year community college, a workplace certificate program, or online learning.


Community college is what Harvard Business School professor Clayton Christensen (and inaugural Knewton Symposium keynote speaker) calls a disruptive innovation:

the process by which a sector that has previously served only a limited few because its products and services were complicated, expensive, and inaccessible, is transformed into one whose products and services are simple, affordable, and convenient and serves many no matter their wealth or expertise.

Disruptive innovations are often looked down upon by the incumbent leaders, but slowly these innovations move up the value chain. Just as the original land grant universities have relentlessly moved upmarket, some schools that began as community colleges have expanded from offering two-year associate’s degrees to four-year and graduate degrees, adding “university” to their names in the process.

Does higher education assimilate disruptive innovation the way America’s two major political parties absorb third parties? Will what happened to land grant universities eventually happen to community college systems as well? As economic systems go, education is rife with perverse incentives. Higher education institutions are rewarded by all their major stakeholders for achieving status. To gain status, they climb upmarket whenever they are able to do so.

The way to break this arms race is to break the link between institutional status and perceived educational value. As the price of college goes up, that link breaks for more and more people. Higher education is breaking away from luxury features and expensive textbooks and toward community colleges and the next great disruptive innovation: online programs.

When it comes to disruptive potential, online programs have a fundamental advantage over community colleges or the land grant universities before them: they have no constraints on capacity, and break this capacity constraint in a way that no brick-and-mortar college campus can. In so doing, online education will inevitably create competition between institutions for more and more students and reintroduce the settling influences of supply and demand into this broken ecosystem.

According to Department of Education Statistics, 4.7 million American undergraduates  — more than 1 in 4 — were taking at least one course online in the fall of 2013. That was more than two years ago. Like many disruptive innovations, online education was at first disparaged as inferior to traditional forms of education, and seen not only as a less expensive option but cheap. However, public perception of online education is also changing. In the latest Lumina-Gallup poll, 46% of respondents think that online colleges and universities offer high-quality education, up from 30% in 2011.

Americans have accrued $1.2 trillion in student debt. More debt cannot continue to be the answer to college accessibility. Innovation is the answer. Innovation is the enemy of broken ecosystems. Sometimes innovation has to wait for the right technology. Today that technology is here. In ten years, half of all credit-bearing college courses in America will be delivered over the internet.

The undergraduate experience — and the price of college — will never be the same.