You might not need that college fund after all When higher education transforms, the price of a degree will plummet

Wouldn’t it be wonderful if we, as parents, didn’t have to set aside tens of thousands of dollars for the future for our children’s education? Wouldn’t it be nice if a decade from now, kids in America could get a college education for cheap — or free?

No, I’m not waiting for the federal government to abolish tuition fees for undergraduates, like Germany has done. Nor do I think the cost of college is going to go down — after all, the cost of tuition has more than tripled since 1977, adjusting for inflation.

Actually, I believe that spiraling-out-of-control-tuition is one of the forces that has triggered an explosion of alternatives to college during the last decade. These alternatives, which range from the free online lectures of Khan Academy to the merit-based degree offerings of Teachur to the modern apprenticeship model of Praxis, aim to use technology to solve the problems that the old model of education has accumulated over its long lifetime.

The problems are twofold: first, college tuition and college debt are skyrocketing, and have become for many people an unbearable burden; and second, college education has become more of a race for credentials than a genuine learning endeavor.

The problem of college debt

For most of the twentieth century, the American Dream has been thus: go to college, get good grades, get a degree, and then get a good job. But today, this is a myth — a college degree doesn’t guarantee a good job, although it does promise to put a big burning hole in your bank account.

In the article College Debt and Permanent Indentured Servitude: The New American Dream?, James Altucher interviewed some people at NYU. One recent graduate said,

“My assumption was Iʼd go to a great university and get a great job. But I didnʼt realize you can go to a great university and then get a mediocre job… If youʼre lucky. Most of my friends who just graduated donʼt have jobs. They feel like they just got dropped off a cliff.”

Altucher says the graduate is right: over 50% of the unemployed have college degrees. And many of those college graduates who are employed end up working jobs they could have done just as well without their degrees. Altucher concludes:

“Student loan debt topped one trillion this year for the first time ever. For the first time ever it was greater than credit card debt. For the first time ever, we are graduating a generation of indentured servants instead of innovators who will bring about the next technological evolution in America.”

Certainly those people with massive student loan debt which they will never pay off make great headlines. But does that mean you shouldn’t take out student loans to pay for college? Don’t graduates, on average, earn more in a lifetime than non-graduates?

Writer for the Atlantic, Derek Thompson, thinks that, counterintuitively, the scariest student loan number is, in fact, zero. He argues:

“Studies comparing students from low-income families found that graduating from public college has sizable increases in earnings compared to those who don’t attend. Even after accounting for typical debt burdens, college is largely one of the best investments a young person can make. For that reason, a student debt burden of zero is, for many high school grads, far more dangerous than being thousands of dollars in debt.”

Perhaps even more incredible than the one trillion student loan debt figure is the average return on investment of a college degree, as illustrated in the chart below.

Apparently college comes at a great cost, though for many people it pays huge dividends. But what is actually paying the dividends? Is it the credential — the piece of paper, coveted by employers, that says you’ve graduated from a prestigious university? Or is it the knowledge and skills you’ve acquired during your four-year learning journey? That brings me to problem number two.

College is about credentials, not learning

In 2006, Salman Khan founded the non-profit organization Khan Academy after he created a series of tutoring videos for his cousins which eventually gained widespread popularity. Khan realized that it was now unnecessary for professors to give lectures themselves — a lecture only needed to be recorded once, by the most talented lecturer in the world, and then it could be shared with everyone forever. Today Khan’s platform is used by 40 million students worldwide and by 2 million teachers as a classroom aid.

In 2001, MIT started OpenCourseWare, an initiative to publish all of their course materials online and make them available to everyone. They currently have 2400 courses published. The initiative has inspired more than 250 other institutions to make their course materials available through the Open Education Consortium.

So if college is not needed for learning anymore, what is it for? The answer is the credential — employers need a convenient and reliable way of determining which candidates are qualified for the job. Schools serve the function of putting their students through the wringer and noting which ones come out the other side, which they mostly do by requiring students to sit through hundreds of hours of class. Not only is this extremely costly, it’s a waste of students’ time. Fortunately, technology is revolutionizing the credential as well.

In 2012, a pair of Stanford computer science professors founded Coursera, an online platform which now offers more than 2,000 MOOCs (Massive Open Online Courses). A MOOC is similar to a traditional college course, except it’s available on demand, and students can complete the coursework at their own pace. Coursera offers certificates to students who complete its courses, which function like degrees, at a fraction of the cost of traditional degrees.

Born in 2016 and still in development, the online platform Teachur, created by two former professors, is offering an entire B.A. for $1000. Teachur doesn’t provide any learning materials — those are already widely available from other sources — but instead focuses on laying out a path for students, including a series of assessments, depending on the degree they’re pursuing. Teachur doesn’t care where you learned it, as long as you learned it — in other words, it’s competency-based education. This means that people who already have skills don’t need to sit through hours and hours of class in order to get their credentials.

These programs are not the future — they are here today. Technology is already disrupting the establishment of higher education in a big way, providing legitimate career paths without a four-year degree. So, what will the future hold?

In the coming years, more and more of the conventional teaching tools of college will become available at low cost or no cost to everyone online. I predict that we will see an explosion of competency-based evaluation models which will allow students to design their own unique learning paths to aquire the knowledge and skills that they desire or need for their chosen careers. I predict that students will be able to obtain a degree with no debt and in much less than four years time.

What if future students won’t need degrees at all?

We all know that Steve Jobs and Bill Gates never obtained college degrees. But more and more employers are starting to realize that success without college is not just for super-geniuses. For example, in a video interview, Elon Musk stated regarding his hiring process:

“There’s no need to even have a college degree… at all. Or even high school. [We’re] just looking for evidence of exceptional ability, and if there’s a track record of exceptional achievement, then it’s likely that that will continue into the future.”

Laszlo Bock, the senior vice president of people operations for Google, stated in an interview that “G.P.A.’s are worthless as a criteria for hiring, … they don’t predict anything,” and that “the proportion of people without any college education at Google has increased over time.” And this is Bock’s opinion on people who didn’t attend college:

“When you look at people who don’t go to school and make their way in the world, those are exceptional human beings. And we should do everything we can to find those people. … [Too many colleges] don’t deliver on what they promise. You generate a ton of debt, you don’t learn the most useful things for your life. It’s [just] an extended adolescence.”

Even Musk and Bock, however, would say that a degree doesn’t hurt your prospects. They are simply looking for some indication of achievement. But Isaac Morehouse, the founder of the modern apprenticeship platform Praxis, thinks that there are better ways to demonstrate excellence than a degree:

“If you’ve already done a lot of things, or you’re capable of doing a lot of things, that are rarer and more interesting than getting a BA, why get one? If you’ve started a business, worked for a year or longer at a good company, traveled the world on your own steam and your own dime, built a website, written some articles, sold products, learned a foreign or programming language, or any number of interesting things, those will be more valuable on your resume and in building your network and reputation than a generic degree.”

Praxis is an organization that matches up young people with startup companies, allowing them to become educated through hands-on experience. Praxis boasts impressive numbers, with 98% of their graduates going on to full-time employment with their business partner. And since the students are doing real, valuable work, the program pays for itself.

Praxis is primarily geared towards entrepreneurs, and certainly entrepreneurs (like Steve Jobs and Bill Gates) have historically had more success without college. In a TEDxYouth talk, 16-year-old entrepreneur Eddy Zhong described how schools seem to interfere with students’ ability to innovate, by directing them down rigid paths that leave little room for creativity or challenging the status quo — both of which are necessary ingredients for starting a successful company.

And of course, if you start your own company, nobody is going to care whether you have a degree or not.

About that college fund

So, do you need the college fund or not? I can’t say for sure what the future holds — I only know that higher education in ten years will look totally unfamiliar to us. The existing system desperately needs to be overthrown, the way Netflix overthrew Blockbuster, and the way Uber is currently overthrowing traditional taxis.

A radical transformation is on the horizon — and that’s a good thing for future students.

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