A New U: Faster + Cheaper Alternatives to College’
A New U: Faster + Cheaper Alternatives to College’
A Q&A with Ryan Craig, investor and author of a new
book about the changing landscape for education and training credentials and
the implications for traditional higher education.
Doug Lederman and Paul Fain August 22, 2018
When he co-founded University Ventures in 2012, Ryan
Craig took turns describing the private equity fund as focused on “establishing
next-generation postsecondary education companies through partnerships with
traditional colleges and universities” and as a “fund focused on innovation
from within higher education.”
The investment firm seemed to be betting that, with the
right mix of outside help from Silicon Valley-backed companies, colleges and
universities could meet the growing demands on them to provide affordable,
high-quality education and training to satisfy graduates and employers alike.
Six years later, Craig’s doubts about higher education’s
ability to step up to that challenge appear to have grown, to judge by his new
book, A New U: Faster + Cheaper Alternatives to College (BenBella Books). In
it, he explores the emergent landscape of new credentials, providers and
pathways aimed at helping people find jobs, which he describes as part of a
“revolution that will transform -- or make obsolete -- many colleges and
universities.”
Language like that might lead some higher ed partisans to
dismiss Craig as another latecomer to Clay Christensen’s “disruption”
bandwagon, drawing lessons from other industries to write higher education off
from the outside as doomed.
That would be a mistake, though. While Craig is, as his
subtitle suggests, enamored of (and bankrolling) “faster and cheaper
alternatives to college,” he writes thoughtfully about traditional higher
education’s virtues as well as its perceived flaws, and has a vast store of
knowledge about the postsecondary education and training ecosystem. Disagree
with him if you like, but don’t ignore him.
Craig agreed to answer questions about his book via
email; the (lightly edited) exchange follows.
Q: In the book you
argue that colleges are bad at adapting to the changing job market. Why? And are
some colleges bucking this trend?
A: Determining what skills are required for a particular
job is difficult. Most hiring and HR managers aren’t particularly adept at this
-- which is clear from looking at job descriptions and seeing that there’s
little correlation to top performers in those roles. A second complication is
that employers aren’t particularly interested in having a conversation with
colleges and universities about their talent needs. And the few conversations
that occur are probably with a philanthropic or external-facing arm of the
employer -- not with anyone directly involved in a large number of hiring
decisions.
Having said this, higher education’s official interface
to the labor market -- career services -- is suboptimal. The concept of “career
services” as a separate office, distinct from every other part of the
institution, conveys to students that they aren’t expected to think about
employment until senior year. Not surprisingly, only half of all students ever
visit career services. When they do, they’re not meeting with professionals in
their fields of interest (with relevant experience and networks), but rather
with career services lifers, who are probably best positioned to help students
get jobs working in career services.
Of course, adapting to employer needs means adapting
academic programs and curricula, which the career services function -- well
outside the academic structure -- has never done. So it’s left to individual
faculty to take the initiative, even though they’re never measured or
incentivized on graduate employment outcomes.
One of my favorite stories, which I recount in the book,
is an article by The Chronicle of Higher Education on Texas A&M’s effort to
launch courses in cybersecurity. While the first part of the article was
laudatory, the second part takes an ominous tone: “Work-force demand can lead
some institutions to teach students the skills needed for today’s entry-level
jobs. But those tools may well be obsolete five years from now.”
The implication -- one that I believe is absolutely in
the mainstream of faculty thinking -- is that updating curriculum to reflect
current employer needs may be a waste of time because such needs will change in
five years. Can you imagine similar thinking in any other sector of the
economy? Does Apple let a year go by without a new iPhone, let alone five? Do
health-care professionals skip continuing medical education for years at a time
because the new information will be outdated? That would cost lives. Likewise,
it should be unacceptable to sacrifice one class of college graduates, let
alone five.
Q: What is a
"last-mile" program, and why can they better bridge the gap between
colleges and employers?
A: Last-mile training is the inevitable by-product of two
crises, one generally understood, the other less so. The crisis everyone
understands is affordability and unsustainable levels of student loan debt. The
other crisis is employability. Nearly half of all college graduates are
underemployed in their first job. And we know that underemployment is
pernicious and lasting. According to the recent report from Strada’s Institute
for the Future of Work, two-thirds of underemployed graduates remain
underemployed five years later, and half remain underemployed a decade later.
So today’s students no longer buy that tired college line that “we prepare you
for your fifth job, not your first job.” They know that if they don’t get a
good first job, they’re probably not going to get a good fifth job. As a
result, today’s students are laser-focused on getting a good first job in a
growing sector of the economy.
One reason for the crisis of employability is that
colleges haven’t figured out how to align academic programs and curricula with
what employers want. But the other reason is that while colleges and
universities continue to do an unparalleled job of preparing graduates with key
cognitive skills like critical thinking and problem solving, employers have
moved the goalpost. Technology has fundamentally changed hiring in two ways,
particularly for entry-level jobs.
First, as enterprises have digitized, digital skills now
outnumber all other skills in entry-level job descriptions, across nearly every
industry. Second, because every job is posted online and generates hundreds of
résumés, employers utilize keyword-based filters called applicant tracking
systems to determine which résumés are actually seen by a human. If you don’t
have sufficient keyword density, you’re not visible. And without the digital
skills employers are increasingly listing in their entry-level job
descriptions, too many college graduates are invisible.
Last-mile training is the missing link in that it
provides immersive training on the exact digital skills employers are listing
in job descriptions -- from SQL and Python to Salesforce, Marketo or any of
thousands of SaaS platforms increasingly utilized to manage business functions.
Increasingly, this digital training is occurring in conjunction with education
on the industry in question. So you might see a program training students on
Salesforce for employers in the insurance industry, and they’ll not only be
equipped as a Salesforce administrator, they’ll also understand the business
processes of an insurance company in order to be productive on day one.
Finally, because last-mile training always occurs in an
in-person setting, with students working on real projects derived from
employers, it also helps build key soft skills that employers care a great deal
about in the hiring process and in the early months of employment. These are
skills like teamwork, communication, organization, creativity, adaptability and
punctuality. The combination of digital and soft skills is what most employers
are seeking in entry-level hires.
Q: Where do you
see income-share agreements -- arrangements in which students agree to repay
percentages of their future incomes in lieu of tuition -- playing a role in
alternative pathways to jobs?
A: Why do we have such underemployment among college
graduates when there are nearly seven million unfilled jobs in the U.S.? The
persistent and widening skills gap can best be explained by two distinct
frictions in the talent market. On the candidate side, you have what I call
“education friction.” Education friction is why individuals fail to upskill
themselves. This is a result of the time, the cost and -- most important -- the
uncertainty of a positive employment outcome. Education friction is a major
cause of the continuing skills gap.
On the employer side, there’s also “hiring friction.”
Hiring friction is why employers are loath to hire candidates who haven’t
already proven they can do the job, due to risk of a bad hire, or higher churn.
And given the rapid growth in the number of (primarily digital) skills in job
descriptions over the past decade, because so few candidates check every single
box, many employers have convinced themselves that they can really only hire
candidates with directly relevant experience. Of course, this defeats the point
of so-called entry-level jobs. This is why so many entry-level sales jobs
require Salesforce experience (even though few of current salespeople knew
Salesforce before starting their positions). A recent survey found that 61
percent of all full-time jobs seeking entry-level employees require at least
three years of experience.
The key to closing the skills gap is to reduce or
eliminate these frictions. All good last-mile training programs reduce the
uncertainty of the employment outcome, thereby reducing education friction.
Income-share agreement (ISA) programs practically eliminate education friction
by addressing the financial risk for candidates: you don’t pay if you don’t get
a good employment outcome. That’s a great message for any postsecondary
education institution to send to students. And we see from the market that ISA
programs have a much easier time attracting a large number of very talented
students; it’s simply a better value proposition for students.
In a few years, outside of the most selective colleges
and universities, tuition-only models may become anachronistic. Failure to
include ISAs as at least one component of the total cost of a postsecondary
program may be seen as a lack of confidence in employment outcomes, and
perceived by students as a negative market signal.
Q: You suggest
that more employers are willing to pay for outside providers to train their
employees and potential hires. Why? In which fields?
A: While last-mile training boot camps, and especially
ISA programs, go a long way to eliminating education friction, they don’t do
much about hiring friction. Employers still struggle to hire candidates without
directly relevant work experience from these programs, and certainly in the
hundreds of thousands. This is where employer-pay models enter the picture.
Closing the skills gap at scale isn’t just about seven million unfilled jobs.
It’s about moving tens of millions of Americans from declining or stagnant
sectors of the economy to dynamic sectors like technology and health care. And
streamlining the path to work requires eliminating hiring friction.
We are seeing new intermediaries like staffing companies
and service providers -- organizations that had very little or nothing to do
with education or training previously -- starting to close the skills gap at
scale in sectors like technology and health care. Think about a staffing
company. They’re in the business of having their finger on the pulse of
employers’ talent needs. They have relationships with hundreds or thousands of
employers. And they’re accustomed to taking risk: hiring the talent themselves
and staffing the talent out to clients. The best way to eliminate hiring
friction is for intermediaries like staffing companies to provide the last-mile
training (preferably for free, thereby reducing education friction) and to hire
the talent directly (thereby eliminating education friction), and then --
crucially -- to provide employers with the opportunity to “try before they
buy.” What was previously a tough hiring decision for employers becomes a
no-brainer. Often, these new employer-pay pathways are able to circumvent the
HR function (which increasingly has become a compliance/risk-management
gatekeeper) by working directly with hiring managers and business units
(because the hiring decision comes later, after the talent proves they can do
the job). We know employers are willing to pay a premium (over a limited period
of time) for this lower risk (which is how tuition and debt are eliminated from
the equation). By absorbing the hiring risk away from employers, intermediaries
like staffing companies and service providers with outsourced apprenticeship
models are producing new friction-free pathways to employment that we are
certain will close the skills gap over the next decade.
Many of these employer-pay models will seek to partner
with traditional colleges and universities, as our company Revature has done.
But others may partner with community colleges or even high schools --
particularly for entry-level jobs that are best described as “middle skill.”
And there you’ll find faster and cheaper alternatives to college that will
significantly alter enrollment patterns. As these new pathways become more
prevalent, nonselective universities -- and particularly nonselective private
schools charging “selective” tuition -- will be increasingly challenged to
attract students.
Q: The book
describes "placement colleges" -- what would they look like and how
could such programs better prepare graduates for first jobs?
A: Community colleges are certainly cheaper, but rarely
faster: only 20 percent of community college students earn an associate degree
in three years (and only 16 percent eventually earn a bachelor’s degree in six
years). Last-mile training should already be a common feature of community
colleges. But it’s not. The fundamental reason is that community colleges
maintain a split personality. On one hand, they’re supposed to be vocational
and labor market aligned. And many do a great job with a range of shorter
certificates and industry certifications, although primarily in old-economy
blue-collar professions. But most community college students are enrolled in
academic programs conceived of and led by academics who, by and large, would
prefer to work at a four-year college or university, and a selective one at
that. (My mother taught sociology at a community college for over 30 years and
certainly falls into this category.) Most community colleges have been firmly
established on an academic foundation with presidents or chancellors,
registrars and bursars, not to mention sociology departments.
A placement college is a reconceptualization of the
community college, not as a vocational school as President Trump might like,
but away from an academic paradigm and toward a focus on placement into good
jobs in growing sectors of the economy. Placement colleges are a hybrid of
today’s community colleges and the work-force investment boards responsible for
placing unemployed workers in open jobs but which fail to provide meaningful
training. Rather than starting by asking faculty what curriculum they might
like to offer, placement colleges start with employers and available jobs, then
aim to provide the last-mile training that students need to be considered for
these jobs. Whether or not students would receive a recognizable academic
credential for such training would be a secondary concern. Pathways to good
first jobs in growing sectors of the economy don’t need to be shoehorned into
credentials.
Q: Have we passed
"peak credential"?
A: In certain sectors, like technology, we’ve already
passed “peak credential.” When it comes to software development, only the
choosiest employers care where you went to school (or whether you went to
school). They look at your GitHub account and evaluate your code.
Once faster and cheaper alternatives to college become
common paths to good entry-level positions across a wide range of growth
sectors, the natural question is how will these 20-something new workers land
their second and third jobs without a recognized credential? What we’re seeing
is that -- beyond coding and GitHub -- there are many ways in which candidates
are establishing a record of their competencies. This could be with an
eportfolio, or digital credentials, or even recognized assessments; archiving
the record and making it digitally accessible to employers goes a long way to
mitigating the credential concern for the second and third jobs. Many employers
in technology and other sectors care much more about the first job, performance
in the first job and the digital record of competencies than about whether a
candidate has a traditional credential.
It used to be we’d wonder whether we had passed “peak
oil.” Then came the fracking revolution, and it was clear those concerns were
misplaced. Colleges and universities who share my view that we’ve passed “peak
credential” should connect with employers and especially intermediaries like
staffing companies and service providers, think out of the box and develop
innovative and more market-relevant credentials. Then maybe we’ll look back on
this “peak credential” scare in the same way.
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