Darwinian change is coming for higher education. Even before Covid-19 hit, students and parents were questioning the skyrocketing cost of a traditional four-year degree. Now, with many universities announcing they won’t go back to in-person classes in the fall, it’s clear the pandemic will accelerate many long-term trends already underway in higher education.
The university experience is likely to change profoundly due to social distancing and related health measures. Some schools may even go out of business: Even before the pandemic, Moody’s Investors Services had reduced its 2019 outlook for higher education from “stable” to “negative,” citing low tuition-revenue growth and increased costs. The American Council on Education expects college revenue to decline in the next academic year by $23 billion as universities request billions in emergency government aid.
But I believe some institutions will adapt and thrive after the pandemic. As a VC investor in education technology and other consumer sectors, I’m closely tracking this transformation and which startups are poised to help usher in this new future.
Here are four long-accepted truths about the university experience that I predict will be different five years from now — partly because of new technology:
1. The best education is a liberal arts education — not job training.
The perceived value of a liberal arts education has stubbornly hung on for years, despite rising costs and how unprepared many grads are for the job market. Liberal arts education and humanities degrees help students cultivate critical thinking and other soft skills crucial for employment. But in a deep recession with historic levels of unemployment, the need for marketable skills will become much more urgent.
I believe the university of the future will offer more of a skills-based curriculum. Majors could be organized around careers (such as data science) or entering a specific industry (such as film or music) rather than traditional academic disciplines. We’re already seeing startups such as Coursera and FutureLearn partner with universities to offer new kinds of classes. OpenClassrooms offers career coaching and professional mentorship alongside online learning. And Yellowbrick partners with both universities and employers to offer courses such as Streetwear Essentials and Music Industry Essentials. These types of alternatives will become more popular as students look to translate their passions into clear pathways to careers.
Next-gen technical schools and boot camps, including Kenzie Academy and Springboard, offer attractive, explicitly career-focused alternatives to the traditional university. And these alternatives aren’t limited to coding: Metis focuses on data science, while SV Academy trains sales professionals. These boot camps emphasize job placement and real-world training from day one. Some programs are run in partnership with big employers such as Google or Facebook to train and fill their talent pipeline.
2. Getting a good education will saddle you with enormous debt.
Even before Covid-19 kicked off the deepest economic downturn since the Great Depression, the student loan status quo was unsustainable. As of this year, Americans owed nearly $1.6 trillion in student loan debt. Politicians have been floating once-radical ideas such as forgiving all or most of that debt.
Whatever the political fate of debt relief, as students and their families struggle to rebuild savings after Covid-19, burdening oneself with student loan debt won’t be attractive. The university of the future may offer alternative financing options such as income sharing agreements (ISAs). Under an ISA, students agree to pay a percentage of their income after graduation for a set period, in lieu of traditional loan payments; payments only begin once the student clears a specific earning threshold.
It isn’t a perfect solution (some high earners might end up paying more under this model), but ISAs do align universities with student success after graduation. For many students, they will be preferable to a fixed debt burden.
3. The college experience will happen live and on campus.
Much of the magic of the college experience is being on your own for the first time, living in a dorm with other students, going to class together, and attending big parties and events. In the time of Covid-19, we’re seeing many schools, including CSU, go entirely or partially online for fall 2020 or even the full academic year.
I believe this crisis will cause many more students and parents to reevaluate how much they’re willing to pay for the campus experience. This may become a perk only the wealthiest families can afford. The university of the future will likely blend on-premises with virtual learning, with the smartest institutions designing the virtual component more intentionally. Digitally native edtech companies can help traditional universities quickly scale up their online offerings and go virtual more effectively.
4. Colleges will glean significant revenue from live sports.
For many schools, football and basketball are huge money-making operations and also provide a focus for alumni socializing — and fundraising. Obviously, stadiums full of fans aren’t coming back any time soon. But the gut-level feeling that big gatherings are risky may persist even after the pandemic has passed.
The university of the future may also shift some of its social life online, organizing virtual events that build that camaraderie and even engage alumni after graduation. When this year’s March Madness was canceled, the University of Kentucky organized a hugely successful NBA 2K tournament online that got massive engagement from students and alums. (Full disclosure: Our portfolio company Gen.G* facilitated this tournament.) The University of Iowa has organized online “Chat from the Old Cap” events where alums talk about their post-college careers. Expect to see a lot more innovation in this space.
Higher education’s “new normal” after the coronavirus subsides won’t look like college today. The institutions — and students — who thrive will be the ones ready to experiment and embrace the transformation.
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