I have read three articles in the last three days about alternatives to earning a college degree, primarily through certification of one kind or another.

The first article, from The Chronicle of Higher Education, discusses the concept of “badges” that are awarded by various websites, training companies, individuals, etc. The concept is that the badge is relatively easy to earn (to keep the learner motivated and engaged) and indicates that they have achieved a certain skill level or learning competency.  At the Khan Academy, students receive a “Great Listener” badge for sitting through 30 minutes of video lectures and can earn an “Awesome Listener” badge after completing a full hour of video lectures.  In addition, visitors and users of that site can earn badges indicating “Master of Algebra” or “Challenge Patches.”  Similarly, MITx is a newly announced venture by Massachusetts Institute of Technology (MIT), slotted to be released in an experimental prototype version in the spring of 2012 and designed to recognize people who complete MIT’s online courses and successfully pass the tests and quizzes.  MIT has an arrangement with OpenStudy to offer badges to students who are helpful in course discussions.  The John D. and Catherine T. MacArthur Foundation has a $2 million grant to test the badge platform in education.  With the Foundation’s support, The Mozilla Foundation (best known for the Firefox browser) is “building an Open Badge Infrastructure to enable the interoperability and collection of badges” which will “support badges from any issuer across the Internet.” 

Both The Chronicle of Higher Education and Inside Higher Education wrote about the tenured Stanford professor who has left to form a startup, Know Labs.  Sebastian Thrun and a colleague taught an artificial intelligence MOOC (Massively Open Online Course) this summer to more than 160,000 students and he plans to commercialize that type of course through the Udacity portal owned by his startup, Know Labs. Thrun’s venture will not only offer courses developed and taught by him but also by others.  One of the first courses that Udacity will offer is “Building a Search Engine” which will be seven weeks in length and which will be taught by David Evans, Associate Professor of Computer Science at the University of Virginia.  Thrun is betting that the word (grades/recommendation) of a highly regarded professor will win over prospective employers or current employers of students taking courses.

Richard Vedder, an economist at Ohio University, wrote an article for the Chronicle’s Innovations blog entitled “Beware: Alternative Certification is Coming.”  Most of the article talks about Straighterline’s lower priced college course offerings and the announcement last week that Straighterline is offering students the opportunity to take the Educational Testing Service (ETS) iSkills test and the Council on Aid to Education’s (CAE) Collegiate Learning Assessment (CLA) test (the one made famous by New York University Professor of Sociology and Education, Richard Arum and University of Virginia Assistant Professor of Sociology, Josipa Roksa in their book, Academically Adrift: Limited Learning on College Campuses).  Vedder also discusses the Khan Academy and MIT certification offerings.  My favorite paragraph from his article relates to his discussion of the first week of beginning economics courses when professors explain the point that:  “If the price of something rises a lot, people look for substitutes.  Resources are scarce and they [people] maximize their utility by shifting away from high priced goods or services to the lower priced good or service.”

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In the past several years, online higher education has come under increased scrutiny by the federal government and policymakers.  As a relatively new trend, online education has been closely examined by some, not so closely examined by others, and has a number of critics.  In a recent report called “Odd Man Out: How Government Supports Private-Sector Innovation, Except in Education,” published by the American Enterprise Institute, author John Bailey notes that an acute lack of support and engagement from government agencies to the private sector in education is not only out of sync with other public-private enterprises, it is counterproductive in attempting to reform higher education. 

Bailey points out that the public sector has frequently employed the expertise of private industry in various attempts to solve the nation’s problems.  For example, in March 2010, President Obama reached out to private-sector businesses, agreeing to provide some $150 billion in support of those businesses developing an alternative to foreign oil.  He said to the CEOs in attendance, “’Your country needs you to mount a historic effort to end, once and for all, our dependence on foreign oil…And in this difficult endeavor, in this pursuit on which I believe our future depends, our country will support you.’” 

In another example, Bailey points out that the Review of US Human Spaceflight Plans Committee established by the White House Office of Space and Technology Policy recommended that NASA seek private sector assistance in developing commercial spacecraft.  “The review argued that this would free NASA to focus its attention and investment on developing more advanced capabilities, particularly in deep-space exploration.”  In each of these examples, a significant problem or dilemma has been acknowledged and government has rightly recognized that private sector innovation has the business agility and market understanding to propose and execute a meaningful solution.

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The October 2011 issue of American Enterprise Institute for Public Policy Research’s (AEI) Education Outlook included an interesting analysis of the total cost of a bachelor’s degree titled, “Cheap for Whom?:   How Much Higher Education Costs Taxpayers.”  The authors, Mark Schneider and Jorge Klor de Alva, go beyond a surface analysis of tuition rates, student fees, and books.  Their analysis delves deeper into the overall financial cost model to consider and analyze taxpayer subsidies as part of the cost of a bachelor’s degree. 

Schneider and de Alva note that consumers are largely oblivious to the cost of an item, focusing almost solely on the price instead.  As long as the price seems reasonable (or, at least comparable to other similar products), the consumer is not likely to consider what the actual cost of the product is.  As the authors point out, nowhere can this be seen more clearly than in higher education.  Since the downturn of the economy in 2008, a deluge of articles have been published exploring the price of a college education (see the “Impact of the Economy on Higher Education” section of this blog) but little has been written for the American public about the true cost of a degree (that data is typically buried in academic policy and research reports that typically do not receive broad media coverage).  Schneider and de Alva have undertaken the daunting task of publishing the total cost of a bachelor’s degree for the American taxpayer.  Their findings are notable, assuming that those in a position to influence public policy and a broader national discussion read their paper.

The authors divided their sample into the following categories: public, private not-for-profit, and private for-profit institutions.  Beyond that,  they used a variation of the well-known rankings reported in Barron’s Profiles in American Colleges which provides six categories for schools ranging from “noncompetitive” (open admissions schools) to “most competitive” (highly selective, elite institutions).  Interestingly, American taxpayers subsidize the least competitive schools far less than they do the most competitive.  The irony is that the largest and fastest growing sector of the college population includes low-income and non-traditional students who are attending the lesser competitive schools.  These schools tend to offer greater flexibility for part-time students, working adults, and other “nontraditional” student populations.  To provide perspective on the dramatic differences in taxpayer subsidies, consider that “among not-for-profit institutions, the amount of taxpayer subsidies hovers between $1,000 and $2,000 per student per year…”  Among the most selective institutions in the nation, “the taxpayer subsidy jumps substantially to more than $13,000 per student per year.”

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I read an article in the October 15, 2011 issue of The Economist entitled “Trouble in the Middle.”  The article begins by stating that interest in MBA programs at American business schools peaked in 2009 and applications have fallen since then.  The author states that some business schools are worried that the trend is related to more than just a slow recovering economy, but in fact a greater change.

The Economist presents data that may back the case that it’s not just the economy.  In examining data accumulated in their annual ranking of the top 100 MBA programs, they note that in 2010, the average cost of an MBA for the 85 schools outside of the top 15 was $81,911 while the average starting salary for the graduates of those schools was $81,178.  Five years earlier, the two year cost for the same 85 schools was $60,247 while the starting salary average was $78,442.  The attached graph shows that the disparity was greater ten years ago when the average starting salary was over $80,000 and the average cost was slightly less than $50,000.  The comparison could hardly be more dramatic; increasing costs of tuition have cut the noticeable advantage of attending a residential MBA program outside of the top 15. 

Elite schools like Harvard still have an advantage according to The Economist’s survey data.  Additionally, the article mentions a recent event at Harvard hosted by a large consulting firm where a member of that firm’s senior management noted while speaking to the faculty that the most valuable player on the Harvard Business School team was the Director of Admissions, a not so subtle reference to the elite students recruited to the school and subsequently recruited by that consulting firm.

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Last month the Delta Cost Project released its annual report on college spending, Trends in College Spending 1999-2009: Where Does the Money Come From?  Where Does It Go?  What Does It Buy?  Examining the decade between 1999 and 2009 the report paints a bleak picture of the current state of higher education spending with very small but notable improvements in specific areas. 

In general, the report finds that revenues are down and spending (overall and per student) reflects that decline.  Recession-related state budget cuts meant deep cuts to educational appropriations.  As a result, schools in every sector of the industry raised tuitions (in some cases significantly) in an attempt to make up that difference.  American Recovery and Reinvestment Act (ARRA) funds may alleviate some pressure in the future but because most institutions did not begin receiving those funds until the last part of 2009, the impact of that funding source is not fully captured in the report. 

Some of the most striking statistics are related to community colleges.  In 2009 alone, community colleges were educating more than 6.5 million students, accounting for approximately one-third of all the nation’s college students.  Though shouldering a large portion of the burden of educating the nation’s college students, community colleges also saw the largest funding declines during the decade.   

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The No Child Left Behind (NCLB) Act, which received bipartisan support for its passage in 2001, requires that states implement a variety of assessment mechanisms for students and teachers in order to qualify for federal education funding.  This federal act does not establish criteria to which all states must adhere; the means of assessment are left to each state to implement as it sees fit.  In January 2001, President George W. Bush said of NCLB, “’These reforms express my deep belief in our public schools and their mission to build the mind and character of every child, from every background, in every part of America.’” Calling it the “cornerstone” of his Administration, President Bush touted the various components of NCLB.

NCLB, at the time of its passage, was intended to provide “increased accountability for States, school districts, and schools; greater choice for parents and students, particularly those attending low-performing schools; more flexibility for States and local educational agencies (LEAs) in the use of Federal education dollars; and a stronger emphasis on reading…” The Act ties federal education dollars to performance on standardized testing.  In large part, this stipulation has been the foundation for continued criticisms of the program. 

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