Harbingers of Change

Starbucks is underwriting college degrees. The for-profit giant Corinthian Colleges is going under. Dan Yankelovich explores: are these signals that higher education is poised to undergo massive change? Is it ready?

Two recent news items may be harbingers of a massive change in our society. If so, it will be a mostly positive change that reduces inequality and restores greater social mobility. But it may also create upheaval in our institutions of higher education.

One of the news items describes a college-support program for Starbucks employees. Starbucks and Arizona State University have agreed to a partnership whereby Starbucks will pay a big part of the tuition for employees taking online courses for credit toward a college degree.

The other news item concerns Corinthian Colleges, one of the nation’s largest for-profit colleges. Regulators are investigating whether Corinthian’s colleges have been pushing their students into high-cost loans, saddling them with debt while not delivering on their promise of well-paying jobs. Student enrollment is declining sharply and Corinthian, facing bankruptcy, agreed to sell off and shutter its campuses.

Why are these two events harbingers of change?

Many employer tuition assistance programs now exist. Indeed, in the 2011-12 school year they provided more than ten billion dollars of student aid! But the Starbucks program is one of very first partnerships between an employer and a public university offering online courses for credit toward a college B.A.

The new partnership targets a very different segment of the population than the dominant form of online college courses, known as MOOCs. Harvard, M.I.T., and other elite universities developed MOOCs essentially for the leisure pursuit of people like their own graduates and post-graduates.

This massive change in our society will be a mostly positive one, but it may also create upheaval in our institutions of higher education.

Their MOOCs have a very high dropout rate – as high as 90-95 percent. This has created an unrealistic complacency among some college administrators. It has led them to conclude that online courses will always be a marginal part of higher education, supportive of face-to-face residential college courses, but not a substitute for them.

This inference may be valid for the privileged, highly educated elites who enroll in a MOOC wholly for their own self-satisfaction. But at the opposite end of the income scale, among low-income high school graduates and college dropouts, the motivation for taking online courses is starkly practical. Its one and only purpose is to improve the enrollee’s life chances for a good job and middle class income.

Many of these young people have family obligations and hold jobs (such as working at Starbucks). It is not practical for them to attend full-time residential colleges. Online courses, specifically designed for job-training purposes, fit their needs and circumstances far better than traditional residential college courses. (Of course, it will take time to learn how much additional assistance online learners may require.)

This radical shift in the target constituency for online courses is at its very earliest stages. I expect it to pick up momentum rapidly. The employer-college partnership is, I believe, an ideal format. It is intolerable that at a time when millions of Americans are suffering long-term unemployment, a million jobs or more go unfilled because of the lack of candidates with the required skills.

Large companies used to do more job training for their employees than they do in today’s cost-conscious economy. The fact that they no longer do so is simply a brutal fact of life. But there is no reason why our society has to accept a massive skills vacuum that exacerbates unemployment. Employer-college partnerships are a potential win-win for low-income students seeking college credentials, for the colleges offering the online courses and for employers seeking workers with appropriate skills.

The Corinthian bankruptcy presents a darker side of the story. The almost desperate intensity of today’s search for higher education credentials has several causes. One is the disappearance of high-paid low-skill jobs from the American economy, millions of them exported to low-wage countries. Stagnant wages for the lower two-thirds of the income scale, a pattern that has persisted from the 1970s, is the major cause. Upward mobility for low-income people has stalled badly.

There is almost universal agreement that higher education credentials are the key to good jobs at living wages, hence the groundswell of applicants to colleges.

This frantic rush of our nation’s young people to obtain higher education credentials has led to some serious dysfunctions. The vast supply of applicants has made colleges almost indifferent to the inexorable rise of tuition as well as to the huge buildup of student debt. Both trends are unsustainable and both show signs of having reached a tipping point.

If the Starbucks model proves a good fit between the needs of low-income students and employers, the colleges who seek out these sorts of partnerships will improve their stability and popularity. The thousands of colleges that fail to participate, however, may find themselves confronted with sharply declining student enrollment and the threat of insolvency.

For-profit colleges that exploit students are particularly at risk. The era of government encouraging unsustainable student loans is almost over. Those for-profit colleges that deliver full value in career training may survive. But those who feed off the student loan program without giving good value for the money will soon find themselves among the walking dead.

Most of the more than 5,000 colleges in the United States are ill prepared for the upheaval to come.

Rebooting Democracy is a blog authored by Public Agenda co-founder Dan Yankelovich. While the views that Dan shares in his blog should not be interpreted as representing official Public Agenda positions, the purpose behind the blog and the spirit in which it is presented resonate powerfully with our values and the work that we do. To receive Rebooting Democracy in your inbox, subscribe here.


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