Whistling past the grave

2022 marked the end of my nine-year sojourn in Higher Education. Over the past nine years, while working for Kaplan, I “studied” higher education – first to help manage Kaplan-owned educational institutions in the United States and after Kaplan exited the business of owning and operating institutions in the United States, to think through all the ways in which Kaplan could partner with other educational institutions to help them accomplish their missions, whatever they may be. These partnership discussions often centered around Kaplan helping institutions improve their online education capabilities and delivery but also extended to other aspects of higher education due to Kaplan’s vast repertoire of educational assets and capabilities. In the process, along with others from the organization, I met with the top academic leaders of several higher educational institutions over the past few years. I and my various teams worked on dozens of creative proposals to partner with the universities.

I was energized by the possibility of having a great impact on the world of education through my work. I also knew better than to anticipate immediate impact – I was willing to toil for years to see my hard work bear fruits. I was well compensated for my job but the possibility of having an impact on the world of higher education was the stronger draw for me.

The work was a great source of energy early on. And then, especially over the past four years, it began feeling like a slog. Not one to give up easily, I wasn’t about to run away from the role - if anything, I wanted to try harder. Until I did not want to anymore – and this feeling began setting in early 2022.

Kaplan had nothing to do with generating this feeling within me. In fact, the organization and its people continued to be inspiring throughout and had it been for a lesser organization or lesser people, I would have been done with higher education long before 2022. This note is a personal reflection on what I learned about the Higher Education system and mindset; it is not Kaplan’s position and I have not run this post by anyone from Kaplan. In writing this note, I want to leave myself a reminder of what led me to leave the sector; should I reminisce nostalgically about my time in the sector or romanticize about returning to it, this note would serve as a reminder of what caused my disillusionment with the sector in the first place. ?

I was attracted to the sector for several reasons. To begin with, my father was a Professor of Economics, and I grew up among academicians – hardly a day would go by without several of my father’s colleagues, from all disciplines, visiting my house in Jamshedpur, India. I quite liked the people and learned a lot from listening to their various conversations. Secondly, I loved being a student, so much so that I have earned more master’s degrees than almost anyone I know. Third, I knew first-hand about the power of education – there is no surer ticket to a rich and productive life. Yes, sure, you may become a professional athlete, an entrepreneur, a musician, enter a trade or do any number of other things not requiring advanced college-level education and out-earn college graduates – attaining great success in life without a college degree is not really that rare of a badge of honor. But may is not the same thing as “will” or “likely will”.

Once Kaplan ceased directly owning and operating higher educational institutions in the United States (it still does so internationally), culminating in the sale of Kaplan University to Purdue University, I saw an opportunity to become part of the solution for many ills afflicting higher education, taking the impact of the role beyond just the home-grown institutions. These “ills” are well known to those familiar with higher education:

• Growing skepticism, even cynicism, about the value of a college degree amid ever-increasing cost of education,
• A grade of C collectively earned by higher educational institutions in graduating their students, and
• A system churning out those it graduates ill-equipped for the world of work.

This is far from an exhaustive list of the ills afflicting the system but you get the picture.

Let me briefly back these up:

• Educational loans are the second largest source of indebtedness after mortgages. Let that sink in for a moment – post-secondary education is a larger source of consumer borrowing than car loans and credit card debt in the United States. Pre-Covid, 44 million Americans had college loans, nearly 20% were in default, and 8-10% were behind on their payments. It is immoral to graduate students into $50-70K (or even lower paying) jobs with $200-300K (or even higher) in educational debt.
• Measuring graduation rate is no simple task – the National Center for Educational Statistics (NCES) measures graduation rate within 150% of the normal time required for completing a program. So, the graduation rate for students attending a two-year program (e.g., an Associate degree) is measured over three years and the graduation rate for students attending a four-year bachelor program is measured over six years. The two-year post-secondary graduation rate for the 2017 cohort was 34%; the four-year post-secondary graduation rate for the 2014 cohort was 64%. https://nces.ed.gov/fastfacts/display.asp?id=40). Talk about rigging the game: the system allows higher educational institutions 50% more time than needed to complete a program to deliver on their implied commitment to graduate their students. And yet they do this only ~60% of the time, giving them a letter grade of C, using their own grading system. Graduation rate for universities is the same as customer satisfaction, NPS, or on-time delivery for companies - it’s a measure of universities’ success in delivering on the promise they have made to their customers, every incoming cohort of students. There are ~40 million Americans with some college education but no college degree. That’s 40 million failed customers. With ~4,400 institutions in the country, that’s ~9,000 failed customers per institution – although the distribution of failures is highly likely to vary from one institution to another. The number of failures aside, the impact of each of these failed graduations is a lifetime of lower income and lost opportunities. This doesn’t even include the failures those with degrees experience over their lifetime when they find their return on their educational investments lagging their ingoing expectations. ?
• Countless companies spend billions of dollars retraining/re-skilling their workforce. They put finishing touches on freshly minted graduates: they would not have to do this if the colleges did their job well to being with. Many of these companies are also taking matters in their own hand, rolling out completely free tuition programs to help their employees afford college education.

Colleges and universities may not bear 100% of the blame for these systemic failures -society and government share in some of the blame - but it is hard to argue against the assertion that they haven’t done much to solve these problems. Their business model has remained intact and unchanged over the past ~400 years. We entrust a system that has not learned new things in four centuries with teaching us all.

Very few entities and organizations have this kind of runway in the face of abject ineptitude to live up to their missions. Only 52 US companies that were on the Fortune 500 list in 1955 were on the Fortune 500 list in 2019 (https://www.aei.org/carpe-diem/only-52-us-companies-have-been-on-the-fortune-500-since-1955-thanks-to-the-creative-destruction-that-fuels-economic-prosperity/) – despite some college closings over the past decade, most of the educational institutions continue to be in the business of higher education. Creative destruction that is the hallmark of capitalism and the major driver behind innovation is not really a thing in higher education.

Not yet.

If the Fortune 500 companies from 1955 did right by just 60% of their customers, not one, let alone 52, would be in business, much less on Fortune 500 list, today – can we imagine Amazon (replace with any other company) being in the business if it got deliveries (replace with appropriate outcome metric/measurement criterion for that company) right only 60% of the time? God forbid if they got deliveries right only 60% of the time when allowed 50% more time to deliver over their committed delivery window.

Why do these failed educational enterprises continue to be in business? For one, they hide behind the “not-for-profit” (NFP) moniker. Since they have a different tax filing status, they can get away with failing 40% of their customers every year – NFP might as well stand for not-for-performance. Never mind that some of the employees of these NFP’s make hundreds of thousands, even millions, of dollars - they are not in it because of “mission orientation”; their households have “profit” all over their “income statements”. For another, they do not innovate. Because they do not have to. They perpetuate status quo. They are content – at least among the strong university brands, they are monopolies, deriving great power from their privileged position, unfettered access to natural catchment areas of demand, secure in the knowledge that demand for whatever they are vending far exceeds supply. Why bother changing a system that works great for the academicians and the employees of these universities?

However, stars may be aligning for a large-scale disruption of the educational business complexes: education is no longer confined to the boundary of time and place nor is its delivery the sole prerogative of those anointed to professorships and tenure. With the pace of change today, most companies need rapid skill re-pivoting of their workforce. And they cannot be held hostage by an educational system doing things the same way it always has – confusing degrees with skills and taking far too long to grant a degree, any degree; as a result, by the time a degree signifies the attainment of a skill, newer skills are needed. Just-in-time has been a management mantra in supply chain and production for some time now; it applies even better to skills. Today’s businesses need their workforce to learn in days and weeks, if not hours, and apply this learning to their work in real time.

These changes do not obviate the need for learning in a higher education setting nor do they even obviate the need for higher educational institutions. For one, they are probably needed to train some professionals over long periods of time - scientists, doctors, and future academicians, for example. These are also probably better suited for those engaging in fundamental research to keep pushing the frontier of human knowledge. And for those who are expressly going to higher education to have an upgraded high school experience and for whom time and resources are no constraints. I am most certainly not being exhaustive here. However, it is a mistake to assume that a majority of the college bound population needs four years of education.

If time is money and education costs an ungodly amount of money (why else has it grown to be the second largest source of indebtedness?), why not cut the cost of education by first, cutting the amount of time needed to get the education, and second by discouraging inbound cohorts of students from making expensive decisions? As for the first, let’s try teaching the students in one year what currently takes four: this will require that universities put them up in classrooms for 8-10 hours per day vs. just three hours a day currently. As for the second, universities need to have the moral fortitude to identify the 40% of prospective students who will not graduate (we have predictive models for everything else, after all) and offer them alternative paths; if universities are being generous and moral, for the 60% who are likely to graduate, they should show them better alternatives than the one they currently offer. They do not need to force a decision on students against their will but they owe it to the students to help them make an informed decision. Otherwise, this is deceptive marketing.

Colleges and universities - yes, these actions will hurt your profits but it should not really matter as you are an NFP. And, if you are really concerned about this, there are some easily accessed levers to offset the lower revenue: cut back on all kinds of investments in things (Olympic-size pools, 3 /4 star level dormitories, high-end cafeterias and food service, to name just a few) that do nothing to improve education delivery and outcome and take advantage of technology to improve faculty productivity so you don’t have to hire an army when a platoon will do, to name just two. ?

No matter how we look at it, change is needed.

What might this change look like? For one, this should involve a radical rethinking of the education model to veer away from the default 4-year undergraduate degree. For the vast majority of students, but certainly for a large minority early on, this may mean redirecting the pipeline from high school-to-college-to-work to high school-to-work-to-college-to-work or better still, to high school-to-work-to-college while working. For another, this will require the use of technology to vastly increase the leverage of the inherent high-cost structure of the educational apparatuses.

Time for incremental changes is over; it is time to fundamentally rethink education. ?

What will be needed to bring in these changes? For all the talent the higher educational system has, these changes cannot be brought by in-sourcing solutions. If I have experienced one thing first-hand, it is that higher education moves at glacial speed and there is no such thing as consensus-building in higher education. I recall one meeting with a state institution where the President quipped “…if I gathered all my faculty into one room and ordered them to breathe, they will suffocate to death.”

For these changes to work, higher education will have to let go of its special affinity for control. It will also have to learn to welcome private capital and expertise; some universities have welcomed private capital but they cannot help but let their need for control subvert and undermine the knowledge and expertise private capital brings. Arrogance is a real issue in the corridors of power in higher education – their “holier than thou” attitude against private capital leads them to violate contracts without any moral compunctions.

Unfortunately, higher education does not have a good track record along these lines. The system itself should consider taking a short-term course in entrepreneurship, innovation, and partnerships. There is too little time to waste on a four-year degree learning about these things. ?

I truly hope that the system does not continue to whistle past the graveyard. But if it does so, high school students should self-regulate (I know that this is asking a lot of the teenagers as their prefrontal cortex has not fully developed and they are bound to make sub-optimal decisions) and not risk financial servitude by mindlessly enrolling in ever-so-expensive degree programs with suspect outcomes; businesses should collaborate amongst themselves to redouble their investment in training high school graduates on-the-job, perhaps partnering with progressive institutions (existing or purpose built); and society should be more forgiving of the so-called “for-profit” businesses focused on adding real value to education.

As for the last point, it is baffling to me that the society is, the media certainly is, inherently distrusting of the so-called “for-profit” education companies. We never see the for-profit prefix in the case of Apple, Boeing, Caterpillar, ….Zebra Technologies and yet you never miss to see this prefix in the case of a private education company. If you didn’t know any better, you would think that all the for-profit education companies have a profit margin of 30-50%.

We should stop using the tax-filing designation to allow NFP colleges and universities to eschew accountability. We should control our automatic reflexes to think of every for-profit education company as less than an NFP institution. ?

Dear Higher Education – please stop whistling past the graveyard of ~40 million degree non-completions and countless dreams buried under the unforgiving weight of unbearable debt. If you don’t stop, you should not be surprised when the society finally accepts that “university degrees are the new taxi medallions” (source: Navalism)

PS: One of these graves is where I have buried nine years of my relentless efforts to make a difference to higher education. ??