The coming unbundling of higher education

There is a lot going on in US higher education right now. Harvard and a slate of other universities just announced that this fall, all undergraduate classes will be online only. Parents are now widely starting to negotiate college tuition discounts the same way they would haggle over the price of a car. More broadly, I suspect we are about to finally see the great unbundling of the US higher education market. 

More innovation in US higher ed would be a good thing. Under the existing model, going to college is a bundled package that includes quite a distinct set of component goods:

  1. Signaling for employers and the world more broadly, both on being smart enough to get in and smart/diligent enough to graduate
  2. Credentials for employers in fields where that matters (especially if they are regulated like law or medicine)
  3. Acquisition of professionally valuable knowledge and skills (both hard skills like programming and soft skills like getting along with other people)
  4. Opportunity to build a strong professional network
  5. A vaguely defined chance to become a more rounded person and citizen
  6. A socially-approved party circuit

For a long time, breaking up the bundle and the monopoly of colleges on providing these goods has been challenging. There is a lot of inertia in how society operates, and for higher education to change, a broad variety of stakeholders generally need to become open to some alternative and do so roughly at the same time: the parents, the students, employers, colleges, and the government (which both provides funding and in some cases enforces credentials).

The system was on an unsustainable path well before Covid-19 – tuition inflation was off the charts while many students received education with at best dubious impact on their lifetime earnings potential. However, Covid-19 just probably accelerated the change by a decade. Suddenly, a lot of people are really asking - is it truly worth it to pay $50,000 for a year of sitting at home taking Zoom classes? Or maybe $150,000 if you got accepted into an MBA program? Or would you rather unbundle some of these components and get them on better terms?

Maybe you pay $30,000 for a one-year Lambda School degree, go get a job, work for 2 years, pay off any debt, and then take a one year sabbatical of travel, reading, partying, and/or finding yourself, which you otherwise may have done over the course of a 3-4 year program? Except that at the end of the 4 years, you are left with a high-paying job and some savings rather than $200,000 of student debt and unclear job prospects?

Or maybe you go take a gap year, work on a side project, take an apprenticeship of some kind, or pursue some other path first, and wait to see how the system shakes out. I don't know yet how many viable alternative paths we will discover over the coming years, but it feels like the beginning of a Cambrian explosion in this space.