The first installment of the series featured Philip DiSalvio, dean of the College of Advancing & Professional Studies at the University of Massachusetts Boston, interviewing Carnegie Foundation ...]]> In April, NEJHE launched its New Directions for Higher Education series to examine emerging issues, trends and ideas that have an impact on higher education policies, programs and practices.

The first installment of the series featured Philip DiSalvio, dean of the College of Advancing & Professional Studies at the University of Massachusetts Boston, interviewing Carnegie Foundation President Anthony Bryk about the future of the credit hour; the second featured DiSalvio's interview with Fastweb.com and FinAid.org Publisher Mark Kantrowitz about student debt; the third, DiSalvio’s interview with Lumina Foundation President and CEO Jamie P. Merisotis about Lumina’s commitment to enrolling and graduating more students from college.

In this installment of the series, DiSalvio speaks with American Council on Education (ACE) President Molly Corbett Broad about the efforts ACE is making to raise educational attainment in the U.S. and around the world.

The context

The nation’s most visible and influential association representing the presidents of U.S. accredited, degree-granting private and public universities, the ACE remains consistently at the center of federal policy debates in areas critical to higher education.

With a focus on improving access and preparing every student to succeed, ACE convenes representatives from all sectors to collectively tackle the toughest higher education challenges and to address and resolve those issues that most affect access and student success. Among those issues are disparities in access, college completion, student preparation, financial aid, student debt loads, and higher education costs, as well as persistent gaps in access to and completion of higher education by minority groups.

Ongoing challenges remain in making higher education more accessible and attainable. Providing useful insights on the transformational potential MOOCs hold for higher education and how higher education will evolve in the U.S. over the next 20 years, Broad points to the efforts that ACE is making in developing the next generation of higher education leadership. 

The interview

DiSalvio: Although significant progress has been made over the past decade to put higher education within reach of all students, gaps remain in access to and graduation from college. President Obama has made college completion a cornerstone of both his higher education and economic platforms, with the goal of graduating the highest proportion of college students in the world by 2020. What role is ACE playing in responding to these gaps?

Broad: ACE has taken a leading role in advocating for and developing a variety of initiatives aimed at boosting college access and completion, including the National Commission on Higher Education Attainment, which issued its report in January. Raising the nation’s education attainment rate is deeply embedded in the DNA of ACE. It has played a central role in the mission of ACE from our very founding. We were created by the nation’s leaders in 1918 as soldiers were returning from World War I to a jobless economy. We were then called the Emergency Council on Education because raising the education attainment of those veterans was an economic imperative. Again in 1942, ACE was called upon to create the alternative high school credential, the GED, to raise education attainment opportunities for those returning soldiers from World War II who had dropped out of high school to join the armed services. So by passing the GED, those veterans became eligible for the GI Bill and they went on to college and became what we refer to as the “Greatest Generation.” Since 1945, ACE has evaluated military training and experiences to determine their eligibility for credit recommendations. Later, ACE’s credit recommendation programs were extended to the workplace and to major departments of government. So it seemed quite logical for us to help create the attainment commission following President Obama’s call to restore the nation’s higher education preeminence. We’re already helping 34 states to participate in the American College Application Campaign and have created a Center for Education Attainment and Innovation within ACE. One of the greatest strengths of American higher education is the rich diversity of institutional size and mission. Consequently, our community is taking many diverse approaches to raising education attainment and to boosting the number of Americans able to gain a college degree.

DiSalvio: ACE was among a group of higher education associations that convened a national Commission on Higher Education Attainment. In its Open Letter to College and University Leaders, a blueprint was developed for a campus-level college completion campaign that is designed to prevent students from falling by the wayside as they pursue a college degree. What areas of reform and possible strategies to advance the goal of increased attainment are addressed in this document?

Broad: The attainment commission’s open letter is intended as a call to the academy from the academy, to make retention and completion a critical campus priority and to stem the unacceptable loss of human potential represented by the numbers of students who never make it to graduation. The commission raised the issue of new reforms and those already underway and urged campus leaders to consider three main areas for reform: 1) changing the campus culture to focus more on retention; 2) improving cost effectiveness and quality; and 3) making better use of data.

There is a plethora of ways institutions can go about meeting attainment goals. The open letter outlined strategies that are simply examples to guide the attainment conversation on individual campuses. It begins with assigning ownership. Presidents and chancellors must clearly assign responsibility for enhancing student retention and graduation. We urge our colleagues to give retention and completion the same level of priority that campuses afford to the recruitment and selection process in admissions. We further urge our colleagues to create a student-centered culture to improve the academic experiences and ensure faculty see student completion as a central part of their responsibility. In this way, students who need help could get ready access to appropriate campus resources, including support services for the growing numbers of nontraditional students. We also encourage institutional leaders to give credits for prior learning.

DiSalvio: Ongoing challenges remain in making higher education more accessible especially among students from disadvantaged backgrounds. ACE maintains that removing barriers to college education requires elevating student preparation, continued investment in financial aid, and greater flexibility in course delivery. In what ways is ACE committed to removing these barriers in advancing the pursuit of equal access?

Broad: Let me start with student preparation. ACE convened faculty groups from the learned societies to make recommendations on the various drafts of the Common Core standards, which will ensure high school graduates are college-ready. This, I believe, is truly an important effort and college teacher-preparation programs are now hard at work to incorporate these standards. We are seeing temptation to back away from the standards, but I believe that would be a great mistake. There is no better single strategy to improve college retention and completion than to have entering students who are well prepared to do college-level work. That is one place where ACE has invested a tremendous amount of time and effort.

I mentioned earlier that ACE was also the creator of the GED and it has been a part of our organization since 1942. In 2011, ACE and test developer Pearson VUE created a joint venture that will drive the future direction, design and delivery of the GED testing program. Beginning in January 2014, the GED test will be aligned with Common Core standards for high school graduation and offer additional learning resources and preparation materials in order to increase the number of adults who pass the GED test and go on to postsecondary education.

Another area where we are working on student preparation is our ACE College Credit Recommendation Service (ACE CREDIT) and military and veterans programs that assist adult learners and student veterans in speeding their path to a degree.

ACE also plays a central role in advocating for a strong system of federal financial aid that helps extend access to higher education to all students. Our institutions, despite significant financial pressures, are working hard to hold down college costs and to provide generous financial aid to those in need. In partnership with a number of higher education associations, ACE works with the tax-writing committees of Congress in support of higher education tax provisions, including tax credits that support tuition, as well as several kinds of education saving programs and the tax deduction for charitable giving.

I also want to mention our work on the Fisher case heard recently by the Supreme Court. ACE filed an amicus brief in support of the University of Texas at Austin. ACE has long advocated for the ability of our institutions to consider race and ethnicity as one factor when constructing a diverse student body, one where individual talents and personal interests, background, academic skills, and geographic origin all can play a role.

DiSalvio: In what could be a major step toward bridging the gap between massive open online courses (MOOCs) and the college credit system, the ACE has reviewed and made credit recommendations for five Coursera MOOCs. If some colleges decide to grant credit for those courses, the council's recommendations could go a long way toward helping students who complete MOOCs gain valuable college credits. How could this raise education attainment in the U.S. and around the world?

Broad: I believe MOOCs hold the promise of extending to students, including minority students and adult students around the world, greater access to high-quality education on their own timetable. We are seeing a growing number of post-traditional students enrolled in American higher education who are not full-time, first-time students coming to college right after high school.

The Coursera and Udacity MOOCs that we have recommended for credit are part of ACE’s overall MOOC evaluation and research initiative. This is a small but important part of ACE’s broader push to expand prior learning assessment. Of course, the decision to utilize MOOCs or accept those credits in transfer is one made by each institution on a case-by-case basis.

We have created a Presidential Innovation Lab that will offer opportunities for leaders in higher education, both those who are producers of MOOCs and those who are skeptics, to engage in some proactive thinking about this new learning space. We believe this effort will help us guide a national dialog about potential new models that can help close persistent attainment gaps not only among the young, but also among older students and low-income students. The outcome of the Presidential Innovation Lab will be shared widely with the ACE membership, the press and policymakers.

I also believe prior learning assessment is an area where we are seeing new ideas for raising education attainment. Many of our member institutions are asking questions about courses outside traditional degree programs—whether they can help raise completion, whether they can meet the college curricula and whether they can increase learning productivity. ACE is well positioned to help uncover those answers.

DiSalvio: The higher education landscape is transforming at a rapid pace. How will higher education evolve in the U.S. over the next 20 years? How will it affect higher education leadership and what can higher education leaders do to prepare for future challenges and opportunities?

Broad: Higher education has been an industry that for decades hasn’t seen much change in its delivery and its teaching methods. However, in recent years we have seen significant innovations. I believe there will continue to be more emphasis on the role of information technology and the cognitive sciences, as well as online learning.

Another trend in higher education is the graying of the presidency. Fifty-eight percent of college and university presidents in 2011 were 61 years of age or older. Over the coming years, we are going to see a significant turnover of college and university presidents. ACE is committed to developing the next generation of leaders who will take on those presidential positions and help sustain the preeminence of American higher education. Among the programs we offer are those for new presidents and new chief academic officers, the ACE Fellows Program, and an array of other leadership development activities.

We also should anticipate that higher education institutions will develop more flexible options for students looking to ease their path to degree completion and to gain credentials they can show employers. At the same time, new types of credentials appear to be emerging. Some call these "stackable credentials." Digital badges for the completion of certain learning activities, credits for prior learning outside the classroom and portfolio reviews are good examples. Some of this involves helping students earn degrees and some may be helping students gain other kinds of new credentials beyond degrees that will help them in both employment and their career. These are just some of the pressures for change that we will see in the years ahead.

The first installment of the series featured Philip DiSalvio, dean of the College of Advancing & Professional Studies at the University of Massachusetts Boston, interviewing Carnegie Foundation President Anthony Bryk about the future ...]]> NEJHE's New Directions for Higher Education examines emerging issues, trends and ideas that have an impact on higher education policies, programs and practices.

The first installment of the series featured Philip DiSalvio, dean of the College of Advancing & Professional Studies at the University of Massachusetts Boston, interviewing Carnegie Foundation President Anthony Bryk about the future of the credit hour; the second featured DiSalvio's interview with Fastweb.com and FinAid.org Publisher Mark Kantrowitz about student debt.

In this installment of the series, DiSalvio talks with Jamie P. Merisotis, president and CEO of Lumina Foundation, about Lumina’s commitment to enrolling and graduating more students from college and the changes needed in higher education to help encourage that goal.

The context

The U.S. ranks ninth in the world in the proportion of young adults enrolled in college and has fallen to 16th in the world in its share of certificates and degrees awarded to adults ages 25 to 34—lagging behind Korea, Canada, Japan and other nations. In addition, while high school graduates from the wealthiest families are almost certain to continue on to higher education, just over half of U.S. high school graduates in the poorest quarter of families attend college.

A Schott Foundation report suggests that without a policy framework to create opportunity for all students, strengthen supports for the teaching profession and strike the right balance between support-based reforms and standards-driven reforms, the U.S. will become increasingly unequal and less competitive in the global economy

In February 2009, President Obama declared that “ ... by 2020, America will once again have the highest proportion of college graduates in the world.” Around the same time, Lumina Foundation released its first strategic plan in 2009 with the goal that 60% of Americans obtain a high-quality postsecondary degree or credential by 2025—a goal Lumina now calls Goal 2025.

Expansion of undergraduate enrollments and the need to improve degree-completion rates—essential in both the Obama plan and Goal 2025—call for recasting the role of American colleges and universities and system-level change to improve student access and success in higher education.

Merisotis observes that there are significant obstacles that stand in the way of these attainment efforts. Expressing urgency for widespread systemic change, he provides useful insights on what reforms are necessary and offers recommendations on how higher education campus leaders and policymakers can help manage those changes.

The interview

DiSalvio: You have said that the current generation of college-age Americans are on the way to being less educated than their parents. Why is the educational attainment rate so important to America's future?

Merisotis: The drive for American success in the 21st century is going to be talent. Talent is the driver of our economic success, cultural success and social success. What we know from extensive research in this area is that the talent that is required now is different from what it was in the past. The talent that we need as a society is overwhelmingly that which is attained by having a high-quality education at the postsecondary level.

Now that doesn’t necessarily mean you have to enroll in a postsecondary educational institution, because what we know is that there are many different ways in which postsecondary learning is now taking place. But postsecondary institutions, i.e., higher education institutions, are going to continue to be extremely important for the foreseeable future.

I think what we’re facing as a nation is this rapidly increasing demand for talent and the challenge of being able to actually meet that talent demand with our educational system. This challenge is growing more acute, and the gaps between those who have talent with a postsecondary education and those who do not, is increasing. You see it in terms of wages and employment rates and other economic indicators. You see it in terms of quality-of-life indicators, in terms of the way in which communities that have high aggregations of people with college education, postsecondary education, actually drive the cultural and the social well-being of communities. And you see it in the ways in which people who have postsecondary education literally have a higher quality of life. They live longer, their family structures are better, and their quality of life in general is much higher.

So for lots of reasons, increasing educational talent is extremely important to our country’s future. And the challenge before us is to figure out how we’re actually going to get there given the significant challenges that we face at a government level and at a personal level.

DiSalvio: Lumina Foundation's most recent strategic plan released in 2013 identifies two broad areas of action that will help the nation increase the number of college graduates. You have characterized this as another step in the organization's long-term shift away from simply awarding grants as the key strategy for fulfilling its mission. What are these two areas, and how successful has the effort been thus far in helping the nation increase its number of college graduates?

Merisotis: Lumina’s focus is essentially around two imperatives. We think these two imperatives are going to be critical in aligning the country’s efforts on getting to Goal 2025.

The first imperative is mobilizing all of the key actors that need to focus on increasing educational attainment to get to that 60% goal. That mobilization includes policymakers and employers. It includes regions and communities. And most importantly, it includes higher education institutions and their ability to focus on student success. It also includes the broader public, particularly students.

In our mobilization strategy, there are five strategies aimed at helping to support those actors to focus on increasing attainment and to give them tools that they can actually use to help increase high-quality postsecondary attainment.

The second imperative is to help design and build a 21st century higher education system. Here the idea is to help build greater system capacity so that we can actually support that mobilization. Focusing on designing and building that system is an acknowledgement that we won’t be able to supersize the current one. We are actually going to have to help create a better system that takes advantage of all the successes we’ve had but gives us a lot more capacity to increase high-quality attainment rapidly. That includes things like redesigning student finance and the systems that support student financing, helping to create new delivery models and a different business model for higher education and helping to support the advancement of a different system of credentials that are focused on high-quality learning that can actually be better articulated in our labor market and for society at large.

DiSalvio: In 2012, Lumina Foundation made more than 100 grants for a total commitment of roughly $45 million. How will these grants advance that focus on increasing Americans’ success in higher education and increasing the proportion of Americans who have high-quality, college-level learning?

Merisotis: ​The Lumina overall approach is that we see ourselves as a leadership organization. By that I mean that we have a large base of assets … the largest private foundation in the country focused on higher education. Therefore, we have both capacity and expertise. And so we’ve tried to apply that through our work—through our grantmaking, but also through a lot of the other activities we undertake, whether it’s our work in terms of communication in public will building, whether it’s our efforts around informing the public policy process, etc.

Grants are obviously a critical tool for that, and the grants that we’ve made are important in terms of our capacity. But we see ourselves as an organization that does more than simply make grants. Our hope is that we are providing leadership for system-level change. I think that is the key issue. Our efforts, in terms of our grants and the rest of our work, are really aimed at creating system-level change that will help increase educational attainment in the country. Goal 2025, the goal we’ve been operating under for the last five years, is the “north star” for our work. It’s a way of organizing all of those efforts in a very coherent and cohesive way.

The focus of what we’re trying to do is to create system-level change that will improve student access and success in higher education. Toward that end, we hope our efforts will work toward increasing the capacity of the higher education system to serve more students in a better way and to help ensure that there is high-quality learning associated with the degrees and other credentials. That will help the outcomes of higher education to be shared broadly, both from an individual perspective as well as from a societal perspective, particularly from the perspective of employers.

DiSalvio: Most agree that a preeminent higher education system is needed to meet the global economy’s growing need for talent. With that in mind, you have said that the American higher education system is in need of systematic change. What elements of change in higher education are necessary to further America’s preeminence?

Merisotis: I see three elements that undergird the need for change: student finance, new business and delivery models, and new systems of credentialing.

Keep in mind that for student finance, the current tuition and financial aid systems were developed decades ago for a student cohort that essentially doesn’t exist anymore. Only one out of five college students today attend a residential institution where they  go immediately to college after graduating the prior year from high school. The diversity of students is dramatically greater than in the past. And perhaps most importantly, our tuition structures simply are not supportable by a growing number of families. That is, affordability has become a serious challenge for families. So for lots of reasons, creating a different model of student finance is very important.

Similarly, it’s important to develop new and improved delivery models to better serve more students. We need to take advantage of technology and use what we’ve learned from a pedagogical perspective to advance ideas such as competency-based learning. In the area of credentials, I think the current system of credentials has served us well historically, but it clearly falls short now. We need to make sure that each credential has meaning—that is, that what students know and are able to do with their credential is clearly understood by the student, by the employer and by the people who are delivering the higher education. We must make sure that high-quality learning is represented in those credentials so that the learning is cumulative and that students can actually take that knowledge and apply and apply it in work and in life.

DiSalvio: You have expressed urgency in higher education reform and have suggested that business-higher education partnership is a natural extension of the investment that private business already makes on education and training. Are there specific forms of partnership you see as especially effective in increasing the nation’s number of college graduates? How can business leadership help colleges meet the needs of students and employers?

Merisotis: This is really important. We’ve spent two decades in a discussion with employers about what employers need and what higher education does. I think there has been some disconnect in that conversation. We’ve got to be clear with employers about how they can actually contribute to increasing educational attainment in this country.

There are three core ways that they can do that. The first is to literally support educational attainment in their companies or organizations. That is, by actually “walking the walk” on increasing educational attainment, by supporting tuition reimbursement, by helping their employees develop learning plans, and by actually supporting the advancing skills and knowledge of their own employees. That’s one way which I think employers need to be better engaged.

The second way is the idea that companies, organizations and employers have to see increasing postsecondary attainment as part of their corporate social responsibility efforts. That is, they have a social investment, a social obligation to support increasing attainment. Finding ways to support community-based efforts, to work in metropolitan areas to actually advance things on a community level is really important.

And the last way is that employers need to engage in public policy advocacy. We’ve seen employers have a measurable impact on the K-12 debate and efforts in increasing educational attainment at the K-12 level. They have to weigh in on a public policy level around the issues of financing higher education, about student learning outcomes, and about productivity of higher education. In all of these ways, they can actually add value and be more than just a bystander to this conversation. They can truly be advocates for systemic change that will lead to increasing educational attainment for a much larger number of Americans.

DiSalvio: As trustees and campus leaders, what specific steps can be taken to help mobilize those who must act to implement that change?

Merisotis: I think it’s vital for campus leaders and trustees and policymakers to be actively engaged. The engagement is important because changes in higher education are occurring rapidly, and we want higher education leading the charge, not playing defense. So I want to see higher education institutions and their leaders focus on such issues as increasing innovation to deliver more high-quality learning to larger numbers of students. I want to see campus leaders focus on mission reinvention and find ways to either focus more tightly on an existing mission or consider a new mission focus. I want to see campus leaders focus on improving equity and making sure that there is equity of opportunity for low-income students, for first-generation students, for students of color and for the large numbers of adults needing to be served by higher education. And the focus on equity should include both creating more opportunity and helping more of those students actually succeed in our higher education institutions. Those kinds of things, I think, are really important in terms of trustee and institutional leaders to better articulate the attainment agenda for the nation.

The first installment of the series featured Philip DiSalvio, dean of the College of Advancing & Professional Studies at the University of Massachusetts Boston, interviewing Anthony Bryk, ...]]> In April, NEJHE launched its New Directions for Higher Education series to examine emerging issues, trends and ideas that have an impact on higher education policies, programs and practices.

The first installment of the series featured Philip DiSalvio, dean of the College of Advancing & Professional Studies at the University of Massachusetts Boston, interviewing Anthony Bryk, president of the Carnegie Foundation, about the foundation’s efforts to study alternatives to the current system and the possibility of recommending revisions to the credit hour.

In this second installment of the series, DiSalvio speaks with Mark Kantrowitz, publisher of Fastweb.com and FinAid.org and author of “Secrets to Winning a Scholarship,” about what some say is a looming student loan bubble.

The context

The public has begun to question whether the high cost of a university degree is worth the price, especially at a time when more and more graduates with crushing student-loan debt cannot find jobs after college.

Student debt burdens have reached $1 trillion this year, according to the Consumer Financial Protection Bureau, up from $200 billion in 2000.

A recent study by Sallie Mae, showed that 70% of families are eliminating college choices based on cost. At the same time, three of four students ages 14 to 23 have “some” or “major” concerns about how they’ll pay for college, according to a new study released by the Northwest Education Loan Association.

Concurrently, the annual price tag for a college credential has risen dramatically with no sign of slowing down. The cost of college rose 440% between 1982 and 2007, compared with the cost of living rising by 106% and family income growing 147% during the same period.

Exacerbating what Kantrowitz refers to as "widespread struggling to repay loans" are the job prospects for graduates. Growing numbers of college students are ending up in relatively low-paid jobs traditionally held by people with modest levels of educational attainment, or worse, unemployed. Current figures show that more than 30% of recent college graduates are employed in low-skilled jobs.

Kantrowitz points to the increasing number of college graduates burdened with excessive debt. And when the debt is out of sync with incomes, he notes, the problem reaches critical mass. He envisions a legacy of debt, where today's graduates will still be paying back their own student loans when their children are in college—with the debt burden on the next generation that much greater.

These issues pose significant challenges to students, parents, college leadership and higher education policymakers. For students and parents, it will be making wise choices and hard decisions about the future. Alternative pathways to a higher education without the burden of strangling debt might be an option for many.

For higher education institutional leaders, it will mean a greater awareness of the debt levels incurred by their graduates and an understanding of the implications those debt levels will have on their graduates’ lives. Differential pricing, programmatic strategies and an institutional commitment to minimizing student debt will have to be considered.

Policymakers will need to break down access barriers to a quality higher education without breaking the financial backs of students and their families.

The interview

DiSalvio: Some see a looming student loan bubble with student debt burdens adding $110 billion in new debt last year and America’s overall student loan burden hitting $1 trillion this year. Student debt is piling up so quickly; it now outpaces credit card debt growth. Do you see this rapidly rising debt burden trend bursting? 

Kantrowitz: I don’t think we are in a student loan or higher education bubble as much as a severe decline in college affordability.

For there to be a bubble, you have to have a disconnect between the price and value of an asset, fueled by an oversupply of liquidity, i.e., easy access to credit. When that easy access is withdrawn, the bubble bursts and the price of the asset drops back to the intrinsic value of the asset.

Higher education is different than the real estate market. You can’t flip an education the way you can flip a house. There isn’t really much of a disconnect between the average price of a higher education and the intrinsic value. One method of valuing an education, at least financially, is in the income that it enables. Currently, the average income of a college graduate is sufficient to repay the average debt of a college graduate. Individual students may vary from the averages. Some may borrow more to go to a more expensive college and earn less. But on average most students who graduate from college with a bachelor’s degree are able to repay that debt. The average debt at graduation for bachelor’s degree recipients is around $27,000 and the average income is $35,000 to $45,000.

You can define excessive debt in various ways. I tend to define it as when the total student loan debt at graduation exceeds the student’s annual starting salary. If your total debt is less than your annual income, you’ll be able to afford to repay your student loans in 10 years or less. You could also look at debt-service income ratios where 10% or lower is affordable, where 15% is a stretch, and above 15% the borrower will struggle.

I find comparing total debt to total income is something that students and parents are much more capable of doing than trying to remember a debt-service-to-income ratio and what that means. Also, when a borrower’s student loan debt exceeds their annual income, they are going to qualify for income-based repayment.

For the most part, less than 10% of borrowers currently graduate with excessive debt by any definition of excessive debt. The income-based repayment plan has less than 3% of borrowers participating in it. It’s a safety net for people who have too much debt. It bases payments on income instead of the amount owed. Looking at the distribution of student debt at graduation at around 10%—a conservative estimate—many are struggling. For there to be a bubble forming, we’d have to have at least a quarter, maybe a third of borrowers with excessive debt. We are not there—at least not yet. But, fast forward 20 years, we may very well be.

Another part of the definition of a bubble is the bursting of the bubble. In order for a student loan bubble to burst, you would have to have new loans evaporate. Currently, 93% of new education debt comes from the federal government, with the remaining 7% comprising private student loans and state loan programs. The private student loans are all credit-underwritten for the most part and consequently they are not lending to sub-prime borrowers. Federal student loan programs as a whole are profitable for the federal government. The subsidized Stafford Loan may be unprofitable, but the unsubsidized Stafford and Plus loans compensate for the losses from the subsidized Stafford loans.

Reaching a $1 trillion milestone may be impressive, but it is a natural consequence of the nature of student loans. Student loans are repaid over decades, not months to years like credit cards and auto loans. Each year, there are new students borrowing new loans, ensuring continued growth in the outstanding debt levels. The failure of government grants to keep pace with increases in college costs are a primary driver of the growth in student loan debt.

DiSalvio: A recent study by the Federal Reserve reports that 27% of the 37 million student-loan borrowers in the U.S. are delinquent on their loans. Will this growing tendency affect higher education enrollments? If so, which sector of the higher education industry will it impact most?

Kantrowitz: I dispute the Federal Reserve numbers. The Federal Reserve relies on Equifax data and the Equifax data has been wrong in the past and I think it’s wrong this time.

Let’s compare this with the 90-day delinquencies as reported by Sallie Mae, the largest private student lender and still the largest holder of federal education loans outside of the direct loan program as reported in recent 10-K filings. They have a 4% 90-day delinquency rate on private student loans and an 8% 90-day delinquency rate on federal loans. Admittedly, they haven’t made a new federal loan since July 1, 2010 when the Health Care and Education Reconciliation Act switched over to 100% direct lending. The aging of a portfolio does have an impact on the delinquency rate, but we’re talking about a factor of four difference between what Sallie Mae is reporting and what the Equifax data is claiming. I think they may be mis-classifying the six-month grace period as though it were part of a delinquency period.

The delinquency rates may affect enrollments somewhat. Increases in delinquency and default rates have the potential to change the public’s impression of the value proposition and that may impact enrollments. The news media coverage makes people more wary of debt.

The affordability of a college education will have a much greater impact on enrollments. The failure of grants to keep pace with increasing college costs causes declines in college affordability. Decreases in college affordability forces students to borrow more or shift their enrollment from higher-cost colleges to lower-cost colleges. For example, they shift from nonprofit colleges to public colleges and from four-year colleges to two-year colleges and—especially among the low income students —to not pursuing a college education at all. Low- and moderate-income students are increasingly being priced out of getting a college education.

Fastweb.com conducts an annual survey of high school seniors about how they select where to apply and where they choose to enroll. We identified—in our 2011 survey—some students as being “switchers” if the initial set of colleges to which they were applying were predominantly public colleges and they ultimately enrolled in a private nonprofit college or vice versa. What we found is that 24% of students who preferred private nonprofit colleges ended up enrolling in public colleges, and 9% switched in the other direction. In both cases, the primary reasons for the switch all had to do with money. The switchers from private nonprofit to public colleges couldn’t afford the private nonprofit colleges. For the students who switched from public to private nonprofit colleges, the primary reason for switching was the receipt of a generous financial aid offer from the private nonprofit college.

DiSalvio: Will these issues around affordability for a college education change the way higher education will do business in the future? 

Kantrowitz: Families are becoming increasingly price-sensitive and more sophisticated in their understanding of college costs. Rather than looking at the sticker price, middle- and upper-income families are looking at the net price, much more so than low-income families.

The net price is having an effect on college choice. If the difference in net price between two colleges is $1,000 or less, families are choosing the colleges they perceive to be the better quality or the better fit, or whatever their criteria may be. If the difference is more than $5,000, then they are choosing the college with the cheaper discounted sticker price. In between these two extremes, they are agonizing over the decision. A $5,000 difference in net price multiplied by four years is the equivalent of $20,000 that they must either pay out of pocket or borrow. It’s a significant amount of money. It increases the $27,000 average student loan debt up to $47,000. You’re taking something that would have been an average amount of debt all the way up to more debt than 90% of their peers.

They are becoming increasingly price-sensitive, especially as the new U.S. Department of Education disclosures have come online and are providing families with clear, correct and comparable information on college costs and affordability. First there are the net price calculators, which may have some teething problems, but are still a step in the right direction. The net price calculators help families make more informed decisions about the trade-offs between college affordability and the other factors they typically consider. Then, there are the financial aid shopping sheets. They standardize the financial aid award letters and provide families with more clarity. Right now, adoption of the financial aid shopping sheet is voluntary. Only about 10% of colleges by enrollment have adopted the standard. These are mostly public colleges who look a lot better than private nonprofit colleges as to college costs and college affordability.

There are proposals in Congress to make the financial aid shopping sheet mandatory. The next time families complain to their members of Congress about how college costs continue to rise, making the shopping sheet mandatory is a very easy solution for Congress to pursue. It doesn’t cost the government anything to implement this. So I think it will eventually be mandatory either by Congressional fiat or by peer pressure. If you have a critical mass of colleges using it, families will begin to ask: “What does the college that doesn’t use the shopping sheet have to hide?”

DiSalvio: In this time of rising student loan debt with decreases in household income and the sense that a college degree no longer guarantees a good job, is there a value gap in higher education? 

Kantrowitz: We have to distinguish the current economic downturn from the long-term trends. During periods of high unemployment, college enrollment increases. This is known as the countercyclical effect. More borrowers also struggle to repay their student loans—a temporary scenario.

Nevertheless, baseline college affordability continues to decline, especially because the federal and state governments, despite rhetoric to the contrary, continue to cut their support of postsecondary education on a constant dollar per student basis. This has been the trend for the last 40 years and it will probably continue for the next 40 years. That is, unless there is some sort of a watershed event that changes the thinking of policymakers.

Cutting investment in student aid is shortsighted, because college graduates pay more than twice as much in federal income tax as high school graduates. It’s an investment not only in the future of the particular student, but an investment in the future of the United States of America. Members of Congress and state legislators don’t seem to realize that now, but eventually they will. The pendulum doesn’t swing in the other direction very quickly.

Over the next 20 years, the spending per student on a constant dollar basis will continue to decrease despite increasing total dollars spent on higher education. The failure of grants to keep pace with increases in college costs will cause ever-increasing debt.

In addition, about one-third of the students graduating this year with bachelor’s degrees have enough debt that they can qualify for a 20-year or longer repayment term. That means they will still be repaying their own student loans when their children—the next generation—are in college. They won’t be able to save for their children’s education and they won’t be willing to borrow to help their children pay for college because they’ll still be up to their eyebrows in debt. Accordingly, the burden on the next generation is going to be that much greater and they will be forced to borrow more.

The problem occurs when debt is out of sync with income. Overall, family incomes have been stagnant for a decade and their ability to pay for college has not improved. Starting salaries have continued to increase somewhat. The average starting salary for a bachelor’s degree, depending on the data source, is about $45,000. Some say $35,000, but it’s somewhere in the range of $35,000 to $45,000. The average debt at graduation is $27,000 and that goes up by about $1,000 a year. So if income is not increasing by much and debt at graduation is increasing by about $1,000 a year, $45,000 minus $27,000 yields about 18-year’s worth of debt increases before debt catches up with incomes.

DiSalvio: Where are these trends leading higher education? What is in store for the academic enterprise and how can higher education leaders and policymakers prepare for the future? 

Kantrowitz: Twenty years from now, we’re going to reach the point where the debt at graduation will routinely exceed starting salaries. So borrowers will struggle to repay their student loans on a widespread basis. There are always going to be some students who vary from the averages. Some students will always enroll in the most expensive college and major in a field of study that doesn’t pay very well. In contrast, students who graduate with a bachelor of science degree in nursing, with a $60,000 to $70,000 starting salary, will be fine regardless of whether they fall at the 90th percentile or just the median amount of debt.

We’re going to have many more students each year graduate with excessive debt, so I think the one thing that policymakers, presidents and financial officers of the institutions need to start doing is monitoring the situation of their graduates.

Institutional leaders need to know what percentage of their graduates are graduating with excessive debt—by whatever measures they choose. That means they will need to survey their recent alumni to ask about their employment status and starting salaries. This information would add to our understanding of which majors have high levels of debt. This would give institutions a greater awareness of the trend as it occurs, enabling them to watch as it gets worse. By monitoring the trends, they may be able to do something about it. One alternative is to adopt a differential tuition policy with lower tuition rates for the less lucrative fields of study. In some states, they’ve been proposing to do the opposite to encourage students to go into the STEM fields (e.g., Florida). I don’t think you’ll get a student who isn’t attuned to STEM fields to go into it—the National SMART Grant tried this approach and had only limited success—rather, reducing the cost of education for STEM majors may be a recruiting tool to get more STEM students to enroll in Florida colleges. An awareness of the problem will help people think about possible solutions.

The convergence of forces driving change in higher education is transforming the academic enterprise—reinventing what a university is, what a course is, what a student is and what the value of higher ...]]> NEJHE’s New Directions for Higher Education series examines emerging issues, trends and ideas that have an impact on higher education policies, programs and practices.

The convergence of forces driving change in higher education is transforming the academic enterprise—reinventing what a university is, what a course is, what a student is and what the value of higher education is.

One significant sign of change could be the end of the credit hour—higher education's prevailing unit of measure. This century-old, time-based reference for measuring educational attainment used by American universities and colleges is under serious scrutiny by its creator, the Carnegie Foundation for the Advancement of Teaching.

In this first installment of the series, Philip DiSalvio, dean of the College of Advancing & Professional Studies at the University of Massachusetts Boston, speaks with Anthony Bryk, president of the Carnegie Foundation about the foundation’s efforts to study alternatives to the current system and the possibility of recommending revisions to the credit hour.

The context

The Carnegie Foundation’s scrutiny of the credit hour and the recent decision by the Department of Education clarifying and outlining a process for providing federal aid to students enrolled in “competency-based” programs could represent a re-thinking of how colleges might award “credit”—based not on time spent in class but what students actually know. Up until now, the federal financial aid system has generally run on the credit hour.

Since 2003, the federal government has been examining the idea that federal financial aid could be awarded based on the amount of learning a student had achieved, rather than the amount of time spent in class. However, the recent decision by the department outlining a process for providing federal aid that utilizes direct assessment of student learning could have a sweeping impact on higher education.

Jeff Selingo of the Chronicle of Higher Education sees the “breaking free of the tyranny of the academic calendar” and offers the scenario where undergraduates mix the direct-assessment approach with the seat-time approach. This would allow students to increasingly take advantage of such experiences as study abroad, apprenticeships and research.

While some in the higher education community are already engaged in an effort to move away from the credit hour toward the development of more meaningful evidence about students’ competency, complications will certainly arise.

In the book How the Student Credit Hour Shapes Higher Education: The Tie That Binds: New Directions for Higher Education, editors Jane Wellman and Thomas Ehrlich observe that the credit hour measures everything from student learning to faculty workload. It shapes how time is used, how enrollments are calculated, and underpins cost and performance measures. Wellman and Ehrlich note that examination of the rationale for the metric is long overdue and the measure itself may be “perpetuating bad habits that get in the way of institutional change in higher education.”

As the basis of a measurement that knits together our otherwise disparate system of higher education, it is conceivable that the credit hour is an outdated artifact. However, thoughtful reflection by higher education leaders will be required to align internal institutional processes and procedures with new measures of attainment and the new directions transforming the academic enterprise.

Carnegie Foundation President Anthony Bryk.

The Interview

DiSalvio: The Carnegie Foundation has a legacy of educational leadership. Its work as an initiator, innovator and integrator to improve teaching and learning has had enormous impact on higher education. What was the original motivation in creating the credit hour as a time-based reference for measuring educational attainment?

Bryk: The Carnegie Unit emerged in the early 20^th Century, when only 10% of students completed high school and a very small number attended college. Standards were low or non-existent in many secondary and postsecondary institutions and the boundaries between the two sectors were blurry. It was a very different educational landscape than today’s.

Andrew Carnegie believed professors to be “the poorest paid and yet one of the highest of all professions” and sought to support them financially in their retirement. But in an era of widely varying standards, creating a pension system for professors required a definition of what constituted a legitimate “college." The foundation's key criteria included a requirement that institutions had to have no fewer than six full-time professors, offer a four-year course of study in the liberal arts and sciences, and require for admission “not less than the usual four years of academic of high school preparation” This last standard suggested that four years of high school should total 14 “units” of instruction, each unit representing 120 hours of class time with an instructor.

Because colleges wanted to participate in the Carnegie pension system, they worked hard to meet the foundation’s eligibility criteria, causing the credit hour to be widely implemented in higher education. And because high schools wanted their students to be eligible to attend Carnegie-eligible institutions, they quickly adopted the credit hour as a standard for high school graduation.

So, in its time, the Carnegie Unit was a progressive reform of the American education system. Over time, however, its uses have moved far beyond those originally intended.

DiSalvio: The Carnegie Foundation for the Advancement of Teaching has announced it would use a $460,000 grant from the William and Flora Hewlett Foundation to study the Carnegie Unit. Why is the Carnegie Foundation interested in putting this higher education measuring stick for academic quality, accreditation and access to federal financial aid under scrutiny?

Bryk: The Carnegie Unit helped standardize course requirements. But it was never intended to measure the quality of teaching or learning, and it isn't well-equipped to do so.

As a result, many in higher education (and secondary education) have called for new measures of student progress tied more closely to what individual students know, measures that can more effectively than the current Carnegie Unit strengthen teaching and learning.

There is also a growing body of research suggesting that students learn in different ways and at different paces, and that organizing schools and colleges to reflect these realities might enhance student learning.

And others suggest that the Carnegie Unit impedes the introduction of new technology-delivered instruction and assessment that could increase access to higher education by reducing costs and giving students great flexibility in where and when they learn.

We want to hold up the Carnegie Unit to the light of these and other emerging perspectives, especially given our focus on improving the quality of teaching and learning.

DiSalvio: Some have observed that there is a growing opposition to the credit-hour status quo and some have said that the credit-hour model is outdated and inefficient. What is the Carnegie Foundation’s view?

Bryk: The project is a broad exploration of such issues. It doesn’t start with any preconceived notion about what a better solution would look like. It’s open to whether there are alternatives or supplements to a time-based unit of measurement, but there’s much terrain to explore and many conversations to organize to answer that question.

DiSalvio: The federal government has signaled support for the nontraditional credit-earning model. In rethinking the value of the Carnegie Unit, would a likely alternative be a standardized unit of measure around competency, rather than time spent in class? How will this shift help advance competency-based higher education?

Bryk: The most obvious way to shift away from a seat-time-based measure of student progress would be to measure their mastery of material regardless of the where and when they achieve that mastery. So a competency-based model is certainly one of the topics we will be exploring. But there are substantial challenges to implementing competency-based systems at scale. There’s a groundswell of enthusiasm about the potential of competency-based models. Our job is to dig deeply into all of this, asking questions such as: Who sets the standards for competency? What kind of infrastructure would be necessary to create and sustain a competency-based system? What would we lose if we moved away from a time-based metric?

A re-envisioned Carnegie Unit sounds exciting, but it becomes very complicated when you think about implementing a change of that magnitude.

DiSalvio: The effects of changing the credit hour as a time-based measurement of student learning could be considerable since the credit hour drives student and faculty workloads, schedules, financial aid and degree requirements. What impact will a possible change have on American colleges and universities?

Bryk: The effects of changing the credit hour as a time-based measurement of student learning could be considerable. As you’ve noted, student and faculty workloads, institutional accreditation, access to federal financial aid and other critical elements of the higher education system are linked to the Carnegie Unit.

Our goal over the next year is to broadly engage experts and critical actors in colleges, universities, school districts and professional organizations—those who endorse change and those who point to the current Carnegie Unit's strengths—to explore the future prospects of the Carnegie Unit. Understanding how a change in something so deeply embedded in the fabric of secondary and postsecondary education as the Carnegie Unit is the challenge.

If change does occur we must be extremely thoughtful about what we are doing.  We could do both harm and good. It’s difficult to introduce change into complex systems like secondary and postsecondary education. It will be important to anticipate and fairly evaluate all of what could likely happen if a change of this magnitude were put in motion. Being thoughtful about all sides of the issue is a critical approach we plan to take.

Related Posts:

Seeking New Directions: Be Part of a Bold NEJHE Series Exploring Models that Will Change Higher Ed Forever

The series called “New Directions for Higher Education” will feature interviews with key visionaries by Philip DiSalvio, dean ...]]> The New England Journal of Higher Education (NEJHE) invites you to be part of a new series examining emerging issues, trends, innovations and ideas that will make a profound impact on higher education in New England and globally.

The series called “New Directions for Higher Education” will feature interviews with key visionaries by Philip DiSalvio, dean of the College of Advancing and Professional Studies at the University of Massachusetts.

We are seeking experts in their respective fields who would be interested in being interviewed by Dean DiSalvio for this new series of articles.

If you would like to participate, please send your contact information, a brief bio and topics on which you’re willing to speak, to me at jharney@nebhe.org.

Recently, NEJHE has featured the following about the transforming nature of higher education ...

University Unbound! Higher Education in the Age of "Free"

Innovators and entrepreneurs are using technologies to make freely available the things for which universities charge significant money. MOOCs ... free online courses ... lecture podcasts ... low-cost off-the-shelf general education courses ... online tutorials ... digital collections of open learning resources ... open badges ... all are disrupting higher education's hold on knowledge, instruction and credentialing. NEBHE convened more than 400 New England educators and opinion leaders in Boston in mid-October to discuss these new opportunities for students and challenges for traditional higher education institutions.

"University Unbound" Rebounds: Can MOOCs Educate as well as Train?

George McCully, founder of the Catalogue for Philanthropy, praises NEBHE's University Unbound conference, even wonders if it should become an annual event. But he worries that the massive open online courses (MOOCs) at the center of the discussion are better suited to training than to development "of personal values, life-experience, qualities of feeling (empathy, sympathy) sensitivity and insight, inspiration and aspiration, interest and concern."

No Stinkin' Badges? Mozilla's Erin Knight on "Open Badges" (Video)

Mozilla's Erin Knight speaks about her "Open Badges" work—an alternative credentialing system allowing learners to control their credentials and move away from seat time.

I Am Not a Machine

If all we have experienced in college classrooms is being lectured at, then Wikipedia, the Khan Academy and MOOCs should replace us, concedes Dan W. Butin, associate professor and founding dean of the school of education at Merrimack College, But Butin says he hopes "MOOCs will prompt us to refashion what we do in the college classroom and how we do it. For we all yearn for that 'dynamic, charismatic' teacher who can rock our world. We want our education to matter." Butin concludes, "MOOCs may indeed transform higher education, but they cannot transform my students."

Coming to Terms with MOOCs: A Community College Angle

Bunker Hill Community College President Mary L. Fifield explains how MOOCs and community colleges share common values. 

And Dean DiSalvio’s NEJHE articles on:

Pardon the Disruption ... Innovation Changes How We Think About Higher Education

Ventures such as edX, Coursera and Udacity may be catalysts that displace established ways of thinking about higher education institutions. How these innovations could move higher ed from an "instruction paradigm" to a "learning paradigm."

Shifting Landscapes, Changing Assumptions Reshape Higher Ed 

MIT and Harvard's collaboration to offer online courses free of charge points to something much deeper within the higher education fabric. A convergence of forces driving change in higher education is forcing us to ponder such fundamental questions as what a university is, what a course is, what a student is and what is the meaning of a college credential.

Degrees of Durability and the New World of Credentialing

Is the "college degree" an artifact ... an outdated higher education credential?

Bubble Wrap: Higher Ed and the Value Gap

There are many roads to an educated life, and higher education institutions may be the perfect incubators for non-degree credentialing and expanded learning options.

Will MITx Change How We Think About Higher Education? 

MITx is lowering the existing barriers between residential campuses and the millions of learners around the world by making MIT educational content accessible and providing those learners with an opportunity to earn an MIT-related credential.  

In its latest annual ...]]> A recent report by the College Board might be an indicator of how fast the sands of higher education are shifting. The prices that most people actually pay for college, which had remained stable for several years, are on the rise again, as tuition and other cost increases outpace financial aid awards.

In its latest annual survey, the College Board reports that after rising swiftly since the 1980s, these "net prices" began to level off in the past decade and actually dropped a little during the recession, before climbing again.

Concern is rising that this year’s increases in what students really pay at four-year colleges could be a sign of things to come—and might intensify what many already feel about the value proposition of an undergraduate degree.

Rising rates of student loan debt (up 15% since 2007) and decreases in reported household incomes (down 11% since 2007) could conspire to cause a drop in college enrollments. Although official numbers have not yet been published, state-by-state enrollments appear to be down.

Some suggest colleges will price themselves out of the market as tuition and fees rise a good deal more than the rate of inflation. The National Association of Independent Colleges and Universities has announced that its members raised fees an average of 3.9% for 2012-13, almost double the 2% increase in the U.S. Consumer Price Index. Public higher education tuition and fees have risen even more—up close to 5%, about 3% after adjusting for inflation on average from last year. 

Others are concerned about the rate of return on the college investment. According to The Institute for College Access and Success, two-thirds of the national college class of 2011 finished school with loan debt, and those who borrowed walked off the graduation stage owing on average $26,600—up about 5% from the previous class.

Does a value gap exist?  In considering the return on investment of a college education existing data suggest that it does. Companion surveys conducted by The Chronicle of Higher Education and the Pew Research Center in 2011 reported that 80% of the general population thinks that education at many colleges isn’t worth the price.

Reflecting the dilemma many are experiencing, consider the recent New Yorker cartoon depicting a student in his advisor’s office, explaining “I’m looking for a career that won’t be obsolete before my student loan is paid off."

With tuition and fees relentlessly increasing, student loan debt climbing and unemployment receding at a glacial pace, the numbers may not add up for most of this year's college graduates. The number of recent graduates in the job market grew to around 1.5 million in 2011, and the time to complete a degree is also increasing. According to the National Center for Education Statistics (NCES), many college students are not completing college in six years—let alone four. NCES found that nearly two of every three students who started college did not graduate from that same college in four years, and more than 40% did not graduate in six. Accordingly, the U.S. has the highest college dropout rate in the industrialized world.

Moreover, research shows that even a college degree no longer guarantees a good job.

Assessing the cost and the value

So, here is where we stand today. The annual price tag for a college credential has risen dramatically with no sign of slowing down. The cost of college rose 440% between 1982 and 2007, compared to the cost of living rising by 106%, and family income growing 147% during the same period.

Accompanying all of this is a looming student loan bubble with student debt burdens amounting to $110 billion borrowed last year.

And just when the need for career preparation is becoming more obvious, the cost obstacle is growing dramatically. Consider the following:

• Growing numbers of college students are ending up in relatively low-paying jobs traditionally held by persons with modest levels of educational attainment, or, worse, are becoming unemployed.

• A recent study by the Federal Reserve reports that 27% of the 37 million student-loan borrowers in the U.S. are delinquent on their loans.

• America’s student loan burden is poised to hit $1 trillion this year, according to FinAid.org and Fastweb.com (note: in 2000, student debt was $200 billion).

• Student debt is piling up so quickly, it now outpaces credit card debt growth.

With most institutions hiking tuition, traditional universities under attack on many fronts, and state and federal support in flux, some observers question the worth of a degree.

There is a growing recognition that something is not quite right—that the focus on a college degree may in fact be an outmoded concept—not serving the needs of all citizens in a knowledge-based economy. There are many roads to an educated life, and higher education institutions may be the perfect incubators for non-degree credentialing and expanded learning options.

Next: Credentialing

Philip DiSalvio is dean of University College at University of Massachusetts Boston.

MIT reports that 155,000 people registered ...]]> The first online course from MITx titled 6.002x: Circuits and Electronics, offered earlier this year, had more students than the entire number of living students who have graduated from the university. Indeed, that number is not far from the total of all the students enrolled there since the 19th century.

MIT reports that 155,000 people registered for MITx 6.002x and of those, approximately 23,000 tried the first problem set, 9,000 passed the midterm, and 7,157 passed the course as a whole. According to MITx: "… if the number is looked at in absolute terms, it had as many students as might take the course in 40 years at MIT.”

These statistics illustrate the landscape-changing potential of this "disruptive innovation" taking place on the shores of the Charles River. Learning technologies now being used in the massive open online course (MOOC) movement, some suggest, will change the way we think about higher education. MOOCs are based on an open-networked learning pedagogy where participants are typically distributed and course materials are dispersed across the web.

The new generation of MOOCs offered by MIT and Harvard (edX), are free to anyone with Internet access, feature interactive technology, open admissions, and provide the ability to teach tens of thousands of students at once. MIT/Harvard edX contends that these courses are as rigorous as their campus counterparts and offer exceptional instruction with the best of technology–including online interactive learning, automated assessment, and a credential of mastery for individuals successfully completing the courses.

"We've crossed the tipping point," says Anant Agarwal, president of edX, the worldwide online learning initiative of MIT and Harvard University. Agarwal anticipates that the courses being launched in the autumn of 2012 will have at least a half-million students—and probably many more.

Ultimately, students from more than 160 countries registered for 6.002x. The majority of the traffic on the MITx site came from the U.S., India and the United Kingdom. The countries that followed these top three were Colombia, Spain, Pakistan, Canada, Brazil, Greece and Mexico.

Truly worldwide in scope, MITx reported that a 15-year-old from Mongolia received a perfect score on the final exam - an achievement that should not be diminished. According to Agarwal "... the Mongolian teen shared that distinction with only 300 students enrolled in the 6002x course."

Embracing the fast-moving changes

Popularized by Clayton Christensen of the Harvard Business School, "disruptive innovation” is described as change, usually technological, that causes upheaval of an entire industry sector.

Indeed, some observe that what we are seeing at edX and other similar ventures (e.g., Coursera, Udacity, etc.) may be the catalyst that will displace established ways of thinking about the role of higher education institutions—and as some observers posit—move us from an instruction paradigm to a learning paradigm where instead of colleges existing to provide instruction, colleges will have to exist as institutions that produce learning.

By leveraging the vast resources available via the Internet and by using the technology available today through the use of multimedia, instructional design, automated assessment and web-based faculty-student interactive strategies, the classroom experience is being re-created and high-quality learning is now available to those individuals who might not otherwise have access or the financial wherewithal – here and around the world.

An unsustainable business model?

Those who say that MOOCs have the potential to undermine the finances of colleges and universities refer to the destabilization of the newspaper business brought about by the Internet and disruption of the fixed-line telephony business brought about by cellular phone technology.

Questions arise that challenge the status quo. If students can access high-quality academic material for little or no cost, will higher education institutions be obliged to prove the value of their institutions’ educational experience? If the content of university courses are freely available and a click-away, especially from institutions such as MIT or Harvard where individuals can learn from world-renowned scholars and scientists, what exactly are students paying for?

Some make cogent arguments about the value of the traditional college experience, but at a time when many higher education institutions are dealing with protests over soaring tuition and student debt, rising costs and shrinking budgets, questions about value are becoming increasingly relevant.

Industry upheaval as seen through the lens of financial viability is becoming more apparent. In the U.S. News & World Report's 2010 college rankings edition, the authors write that the existing structure invites aggressive new forms of competition. "If colleges were businesses, they would be ripe for hostile takeovers, complete with serious cost-cutting and painful reorganizations." They further observe that questions such as “Is the consumer getting the product we promised? What do you actually learn here?” will be increasingly asked.

Foreshadowing change are questions about the unsustainable business model of the university. A recent Bain study of more than 1,700 colleges and universities shows that one-third of all colleges are on an “unsustainable path.” This study also shows that an additional 28% are” … at risk of slipping into an unsustainable condition.” Similarly, debt taken on by colleges has risen 88% since 2001.

As higher education institutions move toward opening up their digital campuses worldwide, other converging forces are accelerating the transformation of the American higher education landscape—and it’s happening at light speed.

Next: The Value Gap in Higher Education

Philip DiSalvio is dean of University College at University of Massachusetts Boston.

The prototype version of MITx is scheduled for launch in spring 2012. MITx is an outgrowth of MIT OpenCourseWare (OCW), which began in ...]]> While many colleges and universities are trying to adapt to the forces affecting higher education today, a recent move by the prestigious Massachusetts Institute of Technology is about to cause a seismic shift.

The prototype version of MITx is scheduled for launch in spring 2012. MITx is an outgrowth of MIT OpenCourseWare (OCW), which began in 2002. Building upon the inventory of nearly 2,100 MIT courses, MITx will offer the online teaching of MIT courses worldwide and the opportunity for able learners to gain certification of mastery of MIT material.

The launch of MITx represents a milestone both in terms of access to higher education and higher education credentialing. The significance of this event is that this shift is coming from MIT, more often thought of as a premier global university than a radical institution.

Beginning with a portfolio of selected courses, MITx is expected to grow over time. It will offer a compendium of courses needed for demonstrated competence in a given subject, including lectures, syllabi, online tests, feedback, group discussions, labs and interaction with MIT faculty.

Online learners who demonstrate mastery of subjects will earn a certificate of completion of MIT coursework. As with MIT OpenCourseWare (OCW), the teaching materials on MITx will be available for free, as will be the teaching on the platform. Those who have the ability and motivation to demonstrate mastery of content can receive a credential for a modest fee. MIT is in the process of determining a fee structure for both individual and groups of courses.

The credential would not be issued under the name MIT, but rather a body within the institute. MIT plans to create a not-for-profit body that will offer certification for online learners of MIT coursework. That body will carry a distinct name to avoid confusion.

MIT will also make the open-source software infrastructure on which MITx is based freely available to educational institutions. Through an online interactive learning platform, this infrastructure will establish ways for other universities, as well as interested individuals, to join MIT in improving and adding features to the technology.

Disruptive or creative destruction

The open-educational-resources movement began around a decade ago. A term applied to free and open digital publication of educational resources—such as course materials created by universities—these resources are accessible to anyone, anytime via the Internet. Open-source offerings do not carry college credits per se nor can they be used toward earning a degree.

Now in its 10th year, MIT’s OCW includes nearly 2,100 MIT courses and has been used by more than 100 million people.

MIT is not the only university to understand the value of OCW. Stanford, Yale, Johns Hopkins, Notre Dame, the University of Michigan, the University of California Berkeley and numerous other distinguished higher education institutions have joined in the movement.

Hundreds of English-speaking open courseware initiatives now exist across the U.S. as well as in England, Canada and Australia. A big boost for the idea of "open access" to the world's knowledge is a recent announcement to let the public view, for free, some of the trove of information available through JSTOR, a service that helps scholars, researchers and students discover, use and build upon a wide range of content in a trusted digital archive of more than 1,000 academic journals and other scholarly content.

But this new iteration, MITx, represents a wider disruption—and perhaps even a creative destruction. It begs the question: Is this the catalyst that will change how we think about traditional higher education?

Reading the signs

At a time when higher education is essential for succeeding in a global economy, we have reached a crossroads with a vast university system that has difficulty accommodating demand because the cost is prohibitive. Access is becoming increasingly out of reach.

Consider the confluence of forces driving us to reconsider how we look at traditional higher education. Those forces include disruptive technologies (Internet, open courseware movement, etc.), but also tuition tipping points, the changing labor market, the economy and changing demographics.

The annual price tag for a college credential has risen about three times as fast as inflation, and there is no sign that it’s slowing down. Debt burdens—$110-billion in student loans borrowed this last year—point to questions about the value of a degree and the nature of credentials.

This suggests to some that going to college at any price may no longer be worth it. Indeed, approximately half of Americans think the higher education system is doing a poor or fair job in providing value for the money spent, according to a survey last spring by the Pew Research Center.

Higher education game-changer?

Revolutions come as a result of a response to dominant power. Self-directed learning (SDL) may be that tool for some who lack access because of time, place or circumstances. Different from traditional higher education, it can be a viable means of access to knowledge acquisition with a value-added element. Learners avail themselves of the relevant knowledge when and where they wish.

While a similar argument was made about the “distance learning” revolution 20 years ago, it’s different this time with MIT (through MITx) offering not only free content and sophisticated online pedagogy, but most significantly, a credential from a world-renowned university for a very modest fee.

Are we about to see the kind of paradigm shift in higher education that was seen in the health care industry when funding formulas changed dramatically? It could be an earthquake for the majority of colleges, which depend on tuition income rather than big endowments and research grants.

The era of high-level SDL promises free access, rapidly increasing quality and advanced educational content. With access to relevant knowledge to their career and a credential of mastery from an MIT or for that matter Stanford (which is embarking on a similar endeavor to that of MITx), what would stop individuals from making an informed choice? Credentialing from world-class institutions, at anytime and anyplace, and at a highly affordable price could be a very attractive option.

When combined with the free online textbooks at sites like Textbook Revolution and TextBooksFree, plus other course books from Google Books, World Public Library and Project Guttenberg, MITx will provide students wtih access to a high-level collegiate learning experience totally online for a nominal fee. It's easy to imagine that these students will form their own virtual study groups, affiliations and various other aspects of traditional student life. The only thing missing from a face-to-face MIT or Stanford education may, in fact, be the “live” campus experience.

What remains to be seen is whether employers desperate for high-level talent will start to bring the drawbridge down and relax their education screens to include nontraditional “self learners," especially if these learners have received certificates of completion or mastery from distinguished world-class institutions such as MIT or Stanford. As these "graduates" demonstrate value to their employers, it might open the door to many more nontraditional self-learners.

A threat to higher education or a wake-up call?

The wider significance of MITx to higher education may not be so much the strategic tension between tyranny of the degree versus the transformation of learning into a simple commodity that cheapens the challenge of mastering subject matter. Rather, it may be that MITx threatens traditional higher education in general. For some who see universities as credit-producing machines—students as input and revenue dollars as output—it may seem so. Private higher institutions are already tuition-driven entities and public higher institutions are becoming increasingly so.

This shift advances a question many have asked before and one that is particularly relevant today. What commitment does higher education have in creating learning opportunities that break barriers to education?

Is higher learning more than taking a class? Is it more than subject content and testing for knowledge acquisition? Is it membership within a community of learners?

If the latter is the case, then access to higher learning—lifelong learning—must be seen as higher education's primary role and as an asset for all members of the community.

MITx and other similar programs coming out of “high-end” universities are realizing that public higher education has had it right all along. It's a question of access—precisely what public higher education has embraced since its inception as the core of its mission. Aligned with this core mission of access comes both affordability and student success in the forms of retention, persistence, graduation and preparation for the job market.

With funding support of public higher education dwindling, providing access becomes even more challenging. The rise of new forms of self-directed learning and nontraditional credentialing will increasingly be a part of our higher education fabric and fill gaps by recognizing learning areas that employers may value but traditional grades and diplomas often miss, such as certain computer technology skills, critical thinking know-how and interpersonal proficiencies.

Consider the fact that the marketplace has overtaken the government as the dominant force shaping and reshaping American higher education. MITx is addressing the market by lowering the existing barriers between residential campuses and the millions of learners around the world by making MIT educational content accessible and providing those learners with an opportunity to earn an MIT-related credential.

Whether MITx will directly threaten the operating margins of universities (especially for-profit universities) remains to be seen, but higher education continues to be disrupted.

In a global economy, the real question for traditional higher education now becomes whether we continue to offer higher learning to those who can afford the high prices and let the market address the issue of access.

Philip DiSalvio is dean of University College at University of Massachusetts Boston.