Degrees vs. Alternatives? How Will Your Institution Fare?

This week’s SXSWEdu conference in Austin was notable for the relevant panels highlighting traditional versus alternative education. In fact, on the last day of the conference I overheard one traditional university president comment, “this is more about workforce development than it is higher ed.” Silently, I thought “and that’s why your enrollments are shrinking.”

With a somewhat misleading title of an article discussing one of the panels, Inside Higher Ed’s Susan D’Agostino wrote about IBM’s decade-old hiring shortfalls that triggered their switch from degree-hiring to skill-hiring. To bring about their switch, IBM educated managers to erase their biases toward requiring degrees for open positions. Next, IBM assessed job candidates for their existing skills as well as their ability to learn new skills, regardless of whether they held a degree or not. Lastly, IBM developed an online employee education learning platform driven by artificial intelligence to upskill and reskill employees as required. As a result, IBM lowered their percentage of jobs requiring a college degree to 50 percent from 97 percent. IBM’s vice president of global workforce policy, panelist David Barnes, stated that IBM is now better positioned to maintain its global lead in quantum computing because it emphasized skills over degrees.

The panel was titled “Online Backlash: Bad Policy Holds Students Back.” Based on the discussions that I read, its more descriptive title might have been “Degree Backlash: Bad Policy Holds Students Back.” Online was the mode of education but not the root cause. The panelists “discussed the ways in which colleges, policy makers and employers might work together to help more Americans find or advance in viable employment, while also addressing the workforce skills gap. Ms. D’Agostino wrote that there were two “bad” policies and attitudes about online learning that “undermine efforts for employers and colleges to work together, expand access, and deliver outcomes to motivated and capable learners.”

The first bad policy noted was “higher education separates education and training” according to Ms. Jane Oates, president of Working Nation and the panel’s moderator. Ms. D’Agostino observed that some higher ed institutions embrace the notion that educational experiences have market value. In particular Western Governors University offers stackable, workplace-relevant credentials. Panelist and WGU president Scott Pulsipher said, “we kind of live by this mantra that a credential with no market value is just a scam.” I would hope that all college presidents live by that mantra, but those that care about the outcomes for their students surely do. Mr. Pulsipher added “At the end of the day, it’s still ‘what capability do you have, and how well does that capability align with what’s needed in the workplace and in a particular role?’” While I don’t believe that every degree must have stackable credentials, stackable credentials make it easier for a working adult student who stops-out of his/her studies to earn a better living when they receive a marketable credential or two before earning the degree.

The second bad policy noted was that “some policy makers continue to view online education as a stepchild in the higher ed ecosystem,” according to Ms. Oates. She further added that given improvements in developing online best practices and experiences during the pandemic, that viewpoint is unwarranted. Mr. Pulsipher dealt with the issue more bluntly. “It’s a red herring if you focus on mode, method, or model of instruction. Good policy would actually advance and incentivize delivery against outcomes, not inputs.” He further elaborated that some federal policies governing online learning rely on inputs to determine quality. He recommended that policy makers ask questions about students’ mastery in a subject, the percentage of students that complete credentials, and post-completion jobs outcomes. I agree with him wholeheartedly.

Panelist Barnes added that “online learning is the only way to get learning to scale. We could not keep our employees contemporary in any other way.” He stated that the half-life of his employees’ technical skills is three years. IBM spends approximately $300 million per year on online learning. IBM also offers apprenticeships in cybersecurity, cloud computing, artificial intelligence, and digital design. IBM has committed to investing $250 million in its apprenticeship programs through 2025. Since IBM is one of the largest companies in the world, it can afford to spend hundreds of millions of dollars a year re-skilling and upskilling their employees. In fact, its size is an advantage and a weakness. While IBM may spend much of its education funding internally, there are opportunities for colleges and other providers to offer marketable certificates and credentials to companies that are not as well-resourced as IBM.

Mr. Pulsipher stated “in the federal student aid model, you’re financing the consumption of credit rather than the delivery of value.” Mr. Barnes added that more higher education leaders should think less about inputs and more about the outputs that students and employers want.

Panelist Michael Hansen, CEO of Cengage, mentioned that Engage offers education courses that lead to certificates and certifications. Their typical student is a 40-something woman with an income of $45,000 looking to re-enter the workforce or upskill their career. Cengage enrolls 250,000 people each year by focusing on meeting the needs of employers and their employees. Mr. Hansen stated that this business is 10 percent of Cengage’s revenues, and it will increase to 30 percent in a few years. Hansen added that many people say the U.S. higher ed system is broken. He said it is not broken; it helps people earn degrees which is what it was designed to do. The challenge is recognizing that there need to be alternatives to degrees.

There will be those who read Ms. D’Agostino’s article (some policy makers and some leaders of traditional institutions) who scoff at some of the statements made by the panelists. Unless you are fortunate to be the leader of an elite institution with a large endowment, I suggest that you find ways to offer alternative credentials with value in the marketplace at an affordable price for students and employers in addition to the degrees currently offered. With employers in some fields reexamining the need for degrees and recognizing marketable short-term credentials for new hires, that creates additional pressures for degree enrollments. Not everyone can afford the time or the money to earn a degree. Trying to meet the skilling needs of the 50 percent of all Americans who are opting out of college might be a way to keep your institution financially viable.

After the conference, I spoke with a friend of mine who owns a professional services business in Austin with approximately 100 employees (not quite IBM size). I sent him a copy of Ms. D’Agostino’s article to read before our conversation. He replied that many current college graduates are “ill-prepared and we’re having to pick up the slack. We’re investing very heavily in our own training and development – we’ve taken matters into our own hands.” Then he added:

“Things we value more than ever:
Intellectual ability: a student who learned how to learn.
Rhetorical skills: a student who can form and defend an opinion.
Great communications: a student who can speak and write clearly.
Strong collaboration: a student who plays well on a team.
Hungry attitude: a student who wants to work hard, apprentice, has something to prove.
Iterative mindset: a student who is not a perfectionist, leads early with ideas and prototypes.
Professionalism: sad to say but most candidates are more casual and sloppier than ever.

The hard skills we can give them or help get them pretty easily. Pedigree and credentials matter almost not at all.”

With learning content available free to everyone thanks to the internet, perhaps the secret for colleges and universities to meet the needs of more students and stem their declining traditional enrollments is to meet two of the above standards: have a hungry attitude and an iterative mindset. Otherwise, more employers will “take matters into [their] own hands.” Degree backlash is thriving.

Subjects of Interest


Higher Education

Independent Schools


Student Persistence