Here’s a question: Can you name a service provider that kicks out all its paying and engaged members for no reason after four years? Answer: universities.
After playing this game myself for a while, I haven’t come up with very many examples of organizations other than schools that willfully throw out engaged “users.” When you step back for a second, this sounds like a crazy thing to do.
There are some good reasons why universities operated on a fixed, set-length schedule historically. But technology is changing the game significantly enough that it is time for universities to move away from limited-time engagement and towards a lifelong subscription model.
From a historical perspective a discrete period of engagement was a reasonable model for universities. There are three clear reasons for this.
First, historically, the marginal value of more education used to decline rapidly after a point. There were only so many things to learn in the world (useful or known), and after a few years most people had filled up on what they needed or wanted.
Second, the hard cost for schools to educate students was high, meaning they wanted to get them out as soon as possible. Universities have required an expensive physical and pedagogical infrastructure. Centralizing knowledge into big physical libraries and then clustering students and faculty around them has been the economically most efficient way to deliver service, but it was still a massively expensive fixed cost for the provider—and a pretty huge cost for the student that had to live in dorms near the library.
Third, the opportunity cost of being engaged in education—and not in a productive job elsewhere in society—is high, and, in fact, should increase dramatically the more educated you get, up to a point. A society where everyone is continuously enrolled in a traditional university is going to have a hard time feeding everyone, let alone making progress. If education is an investment by society, that investment needs to be paid back.
So, in a world of diminishing marginal value of the service, high fixed costs and increasing opportunity costs, charging for or covering the cost of four years of school—and then occasionally asking graduates to make a donation out of nostalgia, gratitude and/or ego—is perfectly reasonable.
But a lot has changed for three main reasons.
First, it is pretty clear that there is continuous return on education. There are several reasons for this, not the least of which is that the world is bigger, more complicated and changing far more rapidly than it used to. If before, a snapshot of the state of human knowledge would last you a lifetime, it clearly wouldn’t now.
Second, the cost to universities to provide an education should be dropping precipitously per student thanks to technology. Because of recorded lectures, digital access to the world’s libraries and the collaborative infrastructure of the internet, the marginal cost of educating a student should be declining. There is a lot to say on this, but I don’t think I need to say more to any subscriber to The Information. The cost of moving around knowledge and information is one of the defining characteristics of our time.
Third, I would argue that over a lifetime the opportunity cost of education is declining. If you take my argument that unlike the past, the world changes fast enough that state-of-the-art knowledge and skills quickly depreciate, the reality is that without continuous reinvestment, the opportunity cost of your time will dramatically decline over a few decades—in other words, your earning and productivity potential will decline.
You could perhaps argue that the optimal strategy then is to invest in education, work for a few years and then re-enroll. But that is problematic for all sorts of reasons—not the least of which is that just like a power plant, restarting the old learning machine is expensive.
It would be easy to read the above and conclude that I believe that universities with physical campuses are antiquated and that online-only education is the future. Nothing could be further from the truth. At a basic level I believe that the economics of an on-campus education are going to be extremely easy to continue to justify for otherwise “mostly useless,” low-skill and low-knowledge teens. There is huge “margin” in the current model of education.
Beyond that, however, the real key is that an on-campus education should provide a foundation for universities to provide an amazing amount of ongoing value to graduates far above and beyond the pure MOOCs with which they will increasingly compete for continuing education. Universities are well positioned, in my mind, to provide better service to their alumni than other educational institutions by moving towards a subscription model where “graduates” of a four-year program would continue to be enrolled for a few hundred—or thousand—dollars a year.
First, the on-campus experience creates a community of learning which is extremely hard to replicate. I have always found, in school and beyond, that I learned the most in the context of a community of similarly interested and engaged students. It is a much easier and better collaborative learning experience to take Economics II with your classmates from Economics I, and while many non-university educational institutions have tried to create community through forums, there is no replacement for intimately knowing your fellow students by having learned with them before and in-person. I would far rather keep taking classes with many of my fellow students from college then continuously end up in a new group for each class; a world in which each new course is effectively freshman fall all over again is extremely high friction.
The second reason existing universities are well-positioned to provide continuing education is trust in the rigor of the educational institution. The value of an educational institution is as much being a trusted source of what to study next as it is learning the actual material.
This might be easy enough for some subjects; if you have taken pre-calculus it is relatively clear that calculus is a good next step. When it comes to most higher level disciplines, however, having a trusted source that can guide you in what to learn and study next is unbelievably valuable. I trust rigorous and engaged professors to understand what I know and suggest what to study next more than I am going to trust any purely online system. I would find it amazingly valuable to continue to have access to the curation function provided by an academic advisor and formal higher-level course structures rather than snacking classes and books from around the world a la carte.
There’s much at stake if universities don’t act. Even beyond the competitive reality that MOOCs offered by companies like Coursera and Udemy are poised to fill the continuous education vacuum they are opening up, universities face the reality that the traditional ”value” of accreditation is declining as it becomes easier and easier for employers to assess actual skills. And they exist in a more global and competitive impact-driven market for charitable donations.
In the middle of all of this, colleges and universities are continuing to dismiss their users prematurely—effectively choosing to serve people for just 6% of their adult lives, or serving just 6% of their potential student body (depending on how you look at it). Only dating sites, which put themselves out of business if they are successful, seem to follow such a similar model. And dating sites can at least pour more users into the top of the funnel at any time. Universities accept one new class, of around a similar size, every year.
But some sort of on-going subscription service could help universities provide a huge amount of value to their alums and grow the business necessary to support that mission on an ongoing basis. I personally can’t wait until I can re-enroll indefinitely.