An Educated Guest

Speaker 1:

You’re listening to An Educated Guest, a podcast that brings together great minds in higher ed to delve deeper into the innovations and trends guiding the future of education and careers, hosted by the executive vice president and GM of Wiley University services and talent development, Todd Zipper.

Todd Zipper:

Hello, I’m Todd Zipper, host of An Educated Guest. On today’s show, I speak with Richard Garrett, chief research officer at Eduventures, a higher education research and advisory firm and part of Encoura. Richard has nearly 25 years of experience in higher education consulting, policy, and research, and is also co-director of the CHLOE project, which stands for Changing Landscape of Online Education. This annual survey of online leaders in US college universities keeps a finger on the pulse of how online learning strategy, policy, and practice is evolving.

Todd Zipper:

The key takeaways from our discussion today. First, the history of inflation, cost of tuition, and how developments in alternative credentials and online learning at elite universities may shape the future of higher education. Second, the background of the gainful employment role and how it could evolve and impact nonprofit institutions and consumers in the future. Third, how we can expect the issue of student debt cancellation to play out. Fourth, how approaching peak bachelor’s degree may open the way for options that better serve learners. And fifth, how new state-led learning initiatives can localize the online learning experience.

Todd Zipper:

Hello Richard, and thank you for being here today on An Educated Guest.

Richard Garrett:

Thank you, Todd. Very pleased to be here.

Todd Zipper:

So as an experienced researcher on trends in higher education, you publish predictions at the start of every year. We are recording this towards the end of April, so let’s jump into the three important predictions you made back in January and talk about how each is playing out so far. So I wanted to start with your first prediction, which was about inflation and college reform. Conventional wisdom goes that college tuition increases more quickly than inflation and has done so for decades, but is this really true?

Todd Zipper:

So first, can you walk us through the historical relationship between inflation and the cost of tuition, and then tell us how this history informed your prediction about the coming college reforms for 2022?

Richard Garrett:

Sure. Well, I think what we have to remember is that for many of us, we don’t remember a high inflation world. The last time inflation was at the rates that we’re seeing today, around 8% annual growth, was back in the 1980s. And therefore many people in higher education have spent much or all of their careers in a low afflation world, where the concern was deflation, frankly, stagnation rather than the opposite.

Richard Garrett:

So yes, you’re right that over those ensuing decades, there’s been a narrative of colleges raising tuition year after year, way above inflation. Now some of that is because state support on the public side went down over that time. So to some extent, schools were raising tuition to make up for that. But I think that aside, colleges as inherently cost intensive, resource intensive enterprises, hard to squeeze productivity out in the ways that we’ve seen through automation and other industries, it definitely meant that that cost increase, that price increase seemed inexorable.

Richard Garrett:

So the challenge now is that after decades of low inflation, and therefore you could raise tuition by not that much, but still be ahead of inflation, colleges are really now in a different situation. If you’ve got inflation running it 8, 9% a year, at least for now, can colleges really raise tuition by 10%, 15%, 20% to compensate for that? That would be challenging from a perception point of view, if not anything else, at a time when everyone’s feeling the pinch, everyone’s conscious of other things rocketing in price, and in an environment where, after the pandemic, college enrollment demand is very uncertain, very sensitive, and many colleges are worried, “Well, the last thing we want to do is to increase our tuition by some eye watering amount, even if all we’re doing is covering our costs, because that’s only going to dampen enthusiasm from students who are perhaps on the fence.”

Richard Garrett:

So we’re really in a completely different world. We’re not sure how long this period of high inflation will go on. Is it just a short term legacy of the pandemic? Is it just supply chains that were snarled up in that period, ironing themselves out? How much of it is the war on Ukraine? No one knows for sure, but I think we are in a different economic era, and therefore the playbook that allowed schools to keep growing tuition without too much pushback, we’re really in a different setting, different set of assumptions, and a much more challenging set of circumstances.

Todd Zipper:

Yeah. And I think the narrative, at least that I’ve been following at some level, is that the college degree was pretty much the only game in town if you wanted to advance your career in a lot of these professional areas. And so they, in a sense, had a monopoly on a part of someone’s career. So you have a lot of disruptions happening right now, in that there’s more access to higher education in different forms and fashions, not just a college degree. And I think that’s what I want to jump into with you a little bit here, is that I’d love to hear you talk a little about the history of college reform and expanding access to higher education. You’ve talked about advances in enrollment, innovation around the who, the how, and the what. Maybe you can walk us through these developments, how we can expect these to develop in the future. Then we’re going to jump into alternative credentials after this.

Richard Garrett:

Sure. So if you look at higher education over the really long term, go back a century, go back a century and a half. And you look at the enrollment trend all the way through to 2010 with the odd little hiccup occasionally, enrollment just kept getting bigger and bigger and bigger. And this is combining undergrad and grand enrollment. Higher education went from being a very rarefied, elite pursuit that was unthinkable for the vast majority of Americans, to gradually becoming something more mainstream.

Richard Garrett:

And there was this sense that higher education would only ever get bigger, because just as high school went from being unusual to universal, the received wisdom was college would similarly go from being rarefied to common to being universal. And something unprecedented has happened since 2010. Every year since then, if you tot everything up, at least through the pandemic, enrollment has been going down.

Richard Garrett:

Now, it’s been going down primarily in community colleges, adult undergraduates. We had all the boom and bust around the for-profit schools. So there’s certainly some special factors going on here, but a combination of falling underlying population, educational attainment hitting a certain point, workforce participation rate going down, labor shortage, wages going up for people without a degree, long periods of economic growth, all the craziness around the pandemic that certainly gave people a reason to put off going to school. And they were worried if it was going to be entirely remote, entirely online, that it really wasn’t worth the cost in the minds of many.

Richard Garrett:

So all of that has only exacerbated this long term drift downwards that we’ve never seen before. And as you say, I thought about that long term trajectory in terms of what was driving that growth. And perhaps now, why are we not seeing further growth, and what might it take to bring that growth back?

Richard Garrett:

So I thought about it first in terms of who gets into higher education. If you go back to the beginning, early America, all kinds of inherited restrictions about who had social status and who could access certain institutions. Many institutions were defined by religious denominations. You had to have subscribe to a certain faith to get in. At that time, college was for men, not for women. Colleges were for white men rather than other men.

Richard Garrett:

But gradually over the decades, we have widened access to all these different groups at varying times and in varying ways. And one way we did that was by rethinking how higher education operated, and that led to the diversification of different types of institution, going from an originally an entirely private enterprise to the federal government and states starting to create public colleges, starting to fund those colleges in different ways through to post World War II, the GI bill provided public funding to support numerous veterans going back to school. Then in the 1960s, we saw the Higher Education Act of 1965 that created the federal financial aid system as we know it today. The growth of community colleges, that additional expansion of what it means to be a post-secondary education institution and who might engage in it, diversification of degrees types, online learning, other forms of distance learning, all kinds of ways to expand access.

Richard Garrett:

But what didn’t really change was the end point, the bachelor’s degree, 120 credits, four years or more. That essentially remained fixed, bound up in accreditation standards and other things. So the effort was let’s innovate all around that types of schools, types of programs, types of modalities, different price points, different business models, but all essentially aiming at that fixed goal.

Richard Garrett:

And my thesis is that fixed goal is now the challenge in front of us. If we don’t innovate around that, if we don’t rethink the variety of what post-secondary education is, if we don’t allow it to be therefore that much more flexible in time, and therefore that much more flexible in terms of cost and price, we are going to keep bumping up against this ceiling that is essentially consumers saying, however inarticulately, a bachelor’s degree for me is too expensive, too time-consuming, the payoff is too uncertain.

Richard Garrett:

And therefore, I think what really needs to happen is further diversification. In a sense, it’s the same trajectory, just pushing past what’s seen as a sacred cow that we can’t question. And I’m not saying the bachelor’s degree should go away. What I’m saying is that for a big chunk of undergraduate demand and supply, we should really be offering something more disaggregated, more options, more variety of institutions to really experiment with what are the experiences that certain people need, to grow as individuals, grow as citizens, become workers and entrepreneurs. And the idea that it has to be a bachelor’s degree with two years of general education, and then a conventional major with a pretty vague handoff to the labor market really doesn’t make sense at scale.

Richard Garrett:

It works for some, and it will continue to work for some, but it’s not optimal for a big proportion of current students, and it effectively excludes an even bigger group of non-consumers. So I think we need to focus on what I’m calling what innovation. What exactly is post-secondary education, what is the credential mix we need, and what are the experiences we want to engender? And then if we can rethink all of that, I think we can get very creative around some of these barriers that are holding us back in terms of further momentum.

Richard Garrett:

And in my view, the idea that higher education should somehow only be for the some and not everyone is a very dangerous idea, because I think it limits the transformatory power of learning throughout life. And I think we’re seeing the downsides of that in some of the political fractiousness that we see so acutely in the country right now.

Todd Zipper:

Thank you for framing that for us. So many questions coming out of this. One would think we really should be entering a golden era for post-secondary higher education. With the advent of online education, technology, machine learning, artificial intelligence, it should in theory, open access in new ways, create more affordability in the system, create more accountability and outcomes. And yet we’re still focused on the bachelor’s degree.

Todd Zipper:

Interestingly, just quick side note, I was reading an article today that the three-year bachelor degree, which I know is big over from where you’re from, your side of the pond, might be having a comeback here in the US as a way to really lower the cost of education and really cut right to the core of what people need.

Todd Zipper:

But before we jump into that, I think the what, like you said, there’s so many options for higher education and so many different types of providers. The one I was reading about was a brand new university. On one hand, they were talking about this new university called New U, and the other hand they were talking about a Delphi University in Long Island where I’m from offering a three-year bachelor’s. So it seems like the innovation can come from a lot of different angles.

Todd Zipper:

So why don’t we dive into alternative credentials and what that means to college reform? I know you’ve distinguished between three types of alternative credentials, which you seem to characterize by learner needs and degree level. Can you tell us about these types? What distinguishes them, and how should college universities approach each of these types?

Richard Garrett:

Sure. So in my view, the boom we’ve seen in recent years when it comes to alternative credentials is an indication of friction points in conventional higher ed. And I would distill it down to attempts to improve the belonging that someone gets from a post-secondary education experience. This might target groups that might feel marginalized or not appropriately represented in a conventional institution. And either this is a way of giving them an experience that then enables them to enter a conventional institution. It might be an alternative as well, but really trying to fix that identity piece for certain groups.

Richard Garrett:

A second idea would be that career connectedness, the critique that the average university… Yes, they have a career center. Yes, some students do internships, et cetera, but it’s not a universal standard part of the experience. It’s something individuals have to figure out on their own. It’s not often or always neatly integrated into the program that every student engages with. And therefore, there’s often this sense of trying to translate that learning on the college campus, however acquired into something that an employer understands, feels like is job ready somehow. And therefore it falls back into all kinds of concerns about cost and value.

Richard Garrett:

So some of these alternatives are essentially saying, we’re not accredited. We’re not trying to get federal student aid. Therefore, we’re not bound by those restrictions. We don’t have to offer anything called a bachelor’s degree or worry about 120 credits. We can try and create something that is fit for purpose. And these things take all shapes and forms, but they’re essentially defined by offering very hands on experiences that get to the heart of the matter, really, and allow people to practice the required skills and then either have relationships with employers looking to hire them, or in other cases, actually there are companies, and you know this well, Todd, companies that hire novices in effect, train them up, pay them as junior employees, and then have a network of companies looking to hire that talent.

Richard Garrett:

And then once that person is with that company, past a probationary period, only then does the training provider, as it were, get paid. So it’s really saying for these entities, at least the ROI is that point of you are now in a secure job, at a certain salary level, you’ve proven yourself, the employer is happy. Then training provider, you get paid, as opposed to the conventional model, you get paid upfront based on the number of credits you attempt. What you then go and do out afterwards, whether you get a good job commensurate with your degree or not, has nothing to do with how the institution gets paid, directly at least. It can affect their brand and the down flow of demand, but it’s a really different approach to thinking about it.

Richard Garrett:

Other alternatives are really trying to squeeze more efficiency out of the conventional model, really saying, well, through technology, we can not only lower the cost and lower the price, but also balance that out with some pedagogical sophistication. Let’s really try and isolate, say, when can a student learn on their own interacting with adaptive content, which once built has pretty low variable cost, relative to, say, a small live seminar. But equally, are there some things where you need that small live seminar, that’s the best way to do it, but let’s really isolate where that’s essential, given how expensive it is, and let’s maximize where it’s not essential and where we can use other means.

Richard Garrett:

And some of these alternatives, again, freed from some of the constraints around accreditation and federal student aid are experimenting. I wouldn’t say anyone’s somehow arrived at a perfect model, but experimenting around how do you leverage the cost efficiencies inherent in online technology, but not to the point that you are undercutting quality, undercutting the student experience, just building up trouble down the road, which is a challenge of some prior online learning efforts, to some extent.

Richard Garrett:

So I think it’s those three things. It’s either about improving the belonging, the social glue around being part of post-secondary education, or it’s about that career handoff, that discrete career preparation as the be all and end all, or it’s about that efficiency, pedagogy balance in online learning that many institutions, given their nature, given their starting point, tend to struggle with.

Todd Zipper:

Yeah. And maybe some that can figure out all three will certainly be the winners [inaudible 00:18:26]

Richard Garrett:

Right. They’re not mutually exclusive. That’s true.

Todd Zipper:

Yeah. So I think you just hit on some of the online learning and hybrid learning that certainly has been around for nearly two decades now, but really came to the fore with COVID-19 when everybody was forced online. I think the Education Department National Center for Education Statistics recently found that online enrollments at the undergraduate level grew 367% between the fall of ’19 and ’20. I’m not sure what ’21 is. Obviously, it’s going to get back to normal, but I think folks got used to online as something that’s mainstream. It’s certainly mainstream in every aspect of their lives. How would you think this has changed, this experience that most every college student, every faculty member, every administrator went through, how do you think this is going to permanently change the mainstream for higher education?

Richard Garrett:

It’s a key question, and I think we’re still figuring it out. I don’t think there’s a clear answer yet. I think on the one hand, you definitely have a phenomenon of students, faculty members, and institutions that had not paid that much attention to online up to now, thought it really wasn’t consistent with who they were, suddenly dropped in the deep end. And I think for all its strengths and weaknesses, found that well, yes, there’s some certainly logistical advantages in having aspects of your program online. Everyone can better juggle their busy lives, and there may be some pedagogical benefits as well in terms of being able to perhaps draw more out of certain students who might have been quieter in a conventional classroom setting.

Richard Garrett:

At the same time, I think because of the emergency nature of that online adoption, how rushed it was, a lot of people felt like not only were they managing a pandemic, they were suddenly having to learn all these tools, and students similarly felt isolated or behind the curve, or… And obviously, like anything, online, in person, which is better, which is worse, it’s a nonsensical question. The better way to ask it is what’s the right fit for the right student, the right program. And I think institutions rarely go through that thought process. It’s either knee jerk, emotional, face to face is best or online is the future, without really caveating it to say well, for whom, why, when?

Richard Garrett:

And the pandemic again was a great crash course, and I think overall net positive, but it wouldn’t be ideally how you would’ve introduced lots of faculty to the positives of online learning. So I think the legacy is mixed and complicated and still emerging, but I do believe, on balance, it accelerated the progress of online. It proved it could handle academic continuity in a challenging circumstance, and I think woke more people up to the idea that it’s not so much the inherent capabilities or otherwise of a certain delivery mode or tool, it’s really how you use it.

Richard Garrett:

And good teaching is good teaching. And the idea that there is something about how you approach an instructional situation that really determines how successful or not it is, something that I still think many faculty members don’t pay enough attention to because they haven’t been trained to, it’s content before pedagogy. I think the pandemic certainly shook up, since it took away their standard apparatus, their physical classrooms, their standard technology, in that sense, they suddenly had to rethink. It made them separate the content from the process, and I think that’s a healthy distinction for higher ed as a whole. And that can only help everyone grapple with these questions coming out of the pandemic, avoid the temptation of campus nostalgia, somehow everything was great before the crisis and let’s just get back there, or the other extreme, which is forget that legacy. Let’s all stay remote and forget about bricks and mortar.

Richard Garrett:

I think the reality is bricks and mortar’s great for some things, online’s great for some things. Let’s really figure out creative combinations of the two. That’s what’s really missing, I think, is that everyone is leery of occupying that middle ground, worrying it’s going to be too inconvenient, or the campus is going to wither away if we let students spend too much time apart from it. And there’s obviously risks, but I think what I hope comes out of the pandemic, rather than the immediate legacy, I hope the longer term legacy is a willingness to mix and match and experiment and make more use of the creative middle between these campus, these extremes of campus and online that I think is key to helping us on so many fronts in terms of student experience, cost models, business models, affordability, accessibility, teaching and learning quality. We have to stop limiting ourselves in the ways that we tended to do pre-COVID.

Todd Zipper:

So as we wrap up this first prediction, one of the areas I want to jump into is around accessibility and reforms there. And over the last decade or so, we talked a bit about alternative credentials and how really the elite universities have jumped into that area. If you even just think about the MOOCs and how they’ve lent their brands, their faculty to design these courses, that in theory, somebody from a different part of the world, for no cost, could take a course that someone else is probably paying thousands of dollars for one particular course. And I’m wondering, are we at a moment now where the elite universities can be more accessible, or is this just a way for them to build their brand, to keep creating their elite image, so that they can keep charging the huge tuitions for undergraduate and graduate?

Todd Zipper:

I’d like your thoughts around this because they’re playing at both ends of the extreme. They’re marketing these free courses at one level. They’re actually doing a lot of short course credentials as well. It’s another area that they’ve gotten into, and because they have incredible brands, they market quite well to consumers, both that are professionals and working, get tuition paid for, but also just people paying out of their own pocket. So what are your thoughts around this topic?

Richard Garrett:

Yeah, I think it’s a fascinating trend. Until relatively recently, much higher education innovation in a sense was because the elite schools were elite. You needed all these other schools because very few people could get into the Harvards of the world. They were, by definition, very exclusive. And very true with online learning as well. 10 years ago, there was a clear correlation into the more elite the institution, generally speaking, the less they were paying attention to online learning, because it just seemed so alien from how they saw themselves. But because of the MOOCs and just the steady familiarity of online starting to pervade higher education as a whole, we started to see that shift, and we’ve started to see almost the opposite. And it’s certainly true on the non-degree side, as you say. The institutions that were co-founders of those MOOC platforms, edX, Coursera, online degree, many of the early institutions that got involved were the most elite institutions.

Richard Garrett:

And I think that finally broke a barrier, certainly internationally, where online used to be seen as second best, second rate, institutions that no one had ever heard of across borders would show up and want to offer online degrees. And the institutions everyone had heard of were turning up their nose.

Richard Garrett:

So we are in this very interesting situation now, where certainly at master’s level and these non-degree programs that are primarily aimed at people with bachelor’s degrees, I think, we are seeing most of the leading institutions in the US and elsewhere in the world start to roll out evermore, fully online masters programs, and this array of alternatives. And they’re priced from in some cases very expensive through to very, very inexpensive, few hundred dollars to take a few courses from a top university in the world online.

Richard Garrett:

And what does this mean? So as you say, is it that these institutions are feeling pressure to be seen as more inclusive? We know there’s a lot of stress around how they admit students, who they admit, legacy admissions, these claims that if you take… There’s the same number of people from the top 1% wealthiest Americans at Harvard, as there are from the 60% least wealthiest. I’m paraphrasing, but that kind of statistic is on target. So are these institutions saying, “Well, through online learning, we can reach a wider audience. We can offset some of these criticisms.” Or is it really, “We need revenue, we’re needing to subsidize and have a bigger proportion of our traditional student bodies to try and make sure that we’re as equitable as possible. And therefore we need to keep feeding those endowments. They may not always perform as well as they have done in recent years.” And therefore, this is a marginal, peripheral cash cow. It’s quality stuff, but it’s not changing fundamentally who we are.

Richard Garrett:

And I think the institutions themselves haven’t really figured this out either. They don’t quite know how big are these opportunities, how big can some of their online masters programs become before they have to, say, relax admission standards or attrition rates go up, and that would threaten the integrity of the initiative.

Richard Garrett:

So I think what’s interesting is, is online learning exposing in a sense how artificially low access to these elite institutions has been, when it was restricted to a physical campus with only so big a footprint and it was only so much capacity. But did that capacity really not speak to the number of people capable of benefiting from, wanting to take part in these kinds of institutions? And if that’s the case, then it really does change the dynamic of US higher education. Because as I said, so many institutions in effect exist because elite institutions are elite. So insofar as elite institutions start to become somewhat less elite, at least in some aspects of what they do, does it threaten these other institutions?

Richard Garrett:

So for example, we’ve done a lot of research at Eduventures, looking at the share of online master’s degrees and enrollments going to leading R1 universities. And it’s been growing very, very strongly. And the gap between the market share, graduate market share held by these schools in general and their share of the online market at graduate level is still quite a big gap, but it’s closing. And in the absence of elite schools offering online masters programs 10 years ago, 15 years ago, other institutions, less elite, more regional brands, did very well online because they would say, “Well, we’re not so elite. We’re in the business of reaching a wider audience. Online enables us to do that.” And they probably felt pretty confident that the elite institutions were never really going to get into this game, but that’s all changed.

Richard Garrett:

So are the elite schools with their online master’s degrees and then non-degree programs, are they widening the pie? Are they reaching people who would’ve never gone online if it wasn’t from a top branded institution? Or are they cannibalizing students who settled for regional university of X because no better brand was available, and now it is, they’re going to vote with their fee.

Richard Garrett:

And again, I’m sure it’s a bit of both, but I definitely see evidence of the cannibalization thesis. Some of those online pioneers from less prestigious schools have been struggling to grow online, struggling to maintain their online total. Some of them have been starting to shrink because they don’t have the edge anymore. Just being online is no longer sufficient. If you’ve got elite brand plus online, not to mention often strong course design and low price point, that’s a pretty powerful combination. We’ve never had that before. So I think it’s game changing.

Todd Zipper:

Yeah. And not many have followed the lead. I interviewed the founder of the online masters at Georgia Tech for computer science, and that obviously has become the largest, I think, in the world, representing a high quality R1 brand, seemingly producing great outcomes at scale. Not many people are following that lead. It’s interesting.

Richard Garrett:

Right. I’d say it’s true. And it’s surprising because clearly, it’s been a financial success as well as-

Todd Zipper:

Right. That’s it.

Richard Garrett:

And other reasons. So it’s not as if it’s been some big subsidized effort or something. Now we’ve seen some examples. University of Illinois Business School has rolled out somewhat similarly priced MBA and other programs and have done well, not quite as well, but also doing well. Again, I think in the absence of much top branded competition, which tells you there’s a lot of pent up demand. And then we’re beginning to see, not as radically inexpensive, but a number of the platforms have elite masters degrees for, 12, 15, $18,000. I know less about how they’re doing, but I still think you’re right. They’re tentative. I think institutions still see price as some signal of quality and just feel unnerved by the idea of combining top brand, highly selective admissions in a sense, but also very large enrollment and very low price point.

Richard Garrett:

So I still think it is something of a harbinger of the future, but I suppose the irony is that the elite institutions are least pressurized to innovate. So therefore they can be more cautious. They can afford to be more cautious. They can still do well without making these radical moves. So that may be the Achilles heel of the model, is that you’re relying on the most comfortable institutions to do the most radical innovation.

Todd Zipper:

All right. Let’s switch gears to your second prediction about gainful employment returning. So I was at the ASU GSV conference, and Paul LeBlanc, the president of SNHU also former guest on An Educated Guest, commented on the topic, saying that during the Obama administration, there was a dual emphasis on consumer protection and on innovation, but in the Biden administration, the full emphasis is on consumer protection. We know that the Obama administration first enacted gainful employment rule to rein in the for profits. Then later Betsy DeVos and the Trump admin gutted it. And now the Biden administration is considering reinstating it again. So before we get into the prediction and how it’s played out this year, first can you explain what is gainful employment? Give us more details in its history and tell us whether it worked to rein in the for profits, lowering student debt, and aligning outcomes. Help us out here.

Richard Garrett:

So this phrase, gainful employment, goes back to some language in the 1972 reauthorization of the Higher Education Act of 1965. And it was in 1972 that for-profit institutions were formally admitted to the federal student aid system, but they were admitted under special circumstances, and it was tied to this notion of gainful employment. So the arrangement at that time was that for a for-profit institution to qualify for federal student aid, they had to prepare students for gainful employment. So it was this idea that these are not conventional academic institutions, they’re career schools by whatever name, and we judge their success and their suitability for public subsidy by their ability to fulfill that promise to essentially put people into decent jobs.

Richard Garrett:

Now, the problem was is that that word, that phrase gainful employment was not accompanied by any detailed oversight as to exactly what was gainful employment and were certain schools and programs meeting it. So what happened in the early days of their first Obama administration is that officials went back to that rule, knowing that at that time, the for profits were at their peak, they’d grown dramatically, not least through online learning, but there was also considerable evidence of high dropout rates, misrepresentation, misleading practices, outright fraud in some cases. And there was a sense of the federal government needs to act here. So rather than have to rely on Congress to reauthorize the Higher Education Act, which has become harder and harder over the years, the officials were able to use the existing statutory language around gainful employment to say, “Well, is this word gainful employment specific to for-profits, let’s come up with a regulatory system that would allow us to test whether particular schools, particular programs were really meeting that gainful employment standard.”

Richard Garrett:

So that was the origin of it. And then the Obama administration officials came up with this arrangement to say, “Let’s define gainful employment as when a student graduates, how much are they earning relative to some benchmark, and how much federal student debt do they have relative to their income.” And a system was devised to say, well, using a combination of various federal data, including from the IRS about people’s earnings, to be able to track program by program, school by school, to say this program passes a threshold. They seem to be fulfilling the gainful employment requirement. These ones are borderline. These ones are failing. And the idea was that if a program failed for a certain period of time, it would lose access to federal aid.

Richard Garrett:

So the idea was this is going to be a way to regulate out of the system the weak for profits that are short-changing students. And the idea was, I think, the market… Students weren’t aware who was who, the payoff was so vague and long term, no one could really judge was it going to work out or not. So this was a way of using actual outcomes to try and steer the market away from its worst excesses.

Todd Zipper:

Did it work?

Richard Garrett:

Well, yes and no. So it didn’t work insofar as the rule was challenged by for profit advocacy groups and others, saying we didn’t have the right data or this metric wasn’t clear, all kinds of technical pushback that delayed implementation for a number of years into Obama’s second term. And then under Trump, once we moved from Democrat to Republican and a very different ideology and much more pro for profit interest in education generally, there was a sense of, well, the rule’s been watered down, it’s been delayed so horribly. The for-profit sector had already shrunk for more market based reasons, frankly. So in a sense, the job had been done, not entirely, but most… Some big collapses, and the sector was a shadow of its former self. So I think a combination of ideological differences, the market had already done its work. And the rule was much diluted from its original version. There was a sense of, well, this just doesn’t feel right anymore. But as you say, we’re potentially back to square one.

Todd Zipper:

So you’re predicting that you see it coming back, and I’ve even read that maybe even expanding to not for profits, which would make sense to me because they often are offering the same type of program, getting the same debt to their students. Can you shed some light on this prediction?

Richard Garrett:

Sure. So I do think the attempt will be made to bring it back. But the question of the nonprofits I think is key. So as I said at the beginning, the reason for profits were targeted in the first instance of gainful employment was because their access to federal student aid was particular to them. And it was revolved around this phrase, gainful employment. Non-profit institutions access, at least on the degree side, because I should clarify that non-degree programs from non-profit institutions that leveraged federal student aid were subject to the original rule and were given access to aid along the same lines in terms of gainful employment. But degree programs from nonprofit institutions were not framed in that way.

Richard Garrett:

And that’s the challenge, I think, for the department now. It would take an act of Congress. It would take a revision of the Higher Education Act to include non-profits around this gainful employment language.

Richard Garrett:

And therefore, what I’m seeing coming out of the department now, and they’re going through the negotiated rule making, is that they want to reinstate gainful employment essentially as was for for profit schools, degree programs, and non-degree programs for non-profits. But for nonprofit schools, they cannot, on my understanding, make the same requirement. But what they’re suggesting is that they require all institutions to disclose this information, disclose what proportion of their graduates earn X after a certain number of years by program, how much federal debt they have as a proportion of income, and make that available to prospective students thinking about this program versus that program. And you could imagine the rankings that would emerge and so on.

Richard Garrett:

So I think it’s short of we will impose this on you and we will kick you off federal aid if you don’t pass certain thresholds on the nonprofit side. I don’t think they see that as within their right based on current law, but they’re going to try and get as close as they possibly can to introducing this market correction, as they would see it, to say consumers just don’t have enough information about the true value add of taking a particular program. And the closest we can get to that is to track salary data, debt payment data, school by school, program by program over time. And that should mean smarter consumers and more responsive institutions who better understand the full circle, if you like, of from enrollment through graduation, through alumni, through employment.

Richard Garrett:

And I think that’s healthy. The reason I’m skeptical that it will actually all play out that way is because I think the advocacy in higher ed on the nonprofit side, as well as the for-profit side is formidable. And I think there’s a lot of concern that if this did come about, it would be very challenging for institutions to not necessarily collect the data, I think the government would take care of that, but really be on top of this issue and stand behind these numbers. It would be healthy, I think, in some respects, but my guess is that there’s going to be sufficient lobbying in such a tight political environment where there’s such partisanship, and one vote one way can change things. I don’t know that there’s enough concern and urgency in the public mind, in the mind of lawmakers, to really go to the mat with the most prestigious institutions and lobbyists on the higher education front in the country.

Richard Garrett:

And I think the compromise will be that tools like College Scorecard that are already providing this information by program, by school. And it’ll only get better as the years go by, trying to really make that a consumer facing tool that consumers use and rely upon. Then institutions will adapt to it, will respond to it. But I think that’s a much more realistic approach than some big, top down, government regulatory scheme that is just going to be, again, watered down, litigated, people will evade it, game the system. It’ll just end up being a really weak version of its original intention. I would say, let market forces do their work with the addition of this data, but without all the penalties and oversight.

Todd Zipper:

Yeah. I think the spirit of it, I think that’s what you’re saying, makes a lot of sense. It’s trying to shed light on the outcomes of these programs. And like you said, the College Scorecard is trying to be a consumer reports for how these different programs are playing out, in terms of salaries, in terms of debt load. Has it actually… I’m struggling with that those market signals are getting their way towards parents and students who decide, yeah, this program is actually doing what it says it’s supposed to do on its advertising site where it’s actually the data plays out. But I guess we will see. And I think it’s interesting to see, you mentioned it during the… It took so long to get gainful done that the for profits already started to correct itself by the time… It almost didn’t even really matter at that point.

Todd Zipper:

But I want to connect this to student debt before we get into your third prediction, because this is a really fascinating story playing out right in front of our eyes. And I think it is related to why the gainful employment came around. We now, I remember we were at 1.2 or 1.3 trillion of debt. Now I think we’re up to 1.7 trillion of debt. We know the Biden administration was picking at the debt loads in… I think they’ve already gotten rid of about $15 billion of student loans for borrowers. And it seems like this issue is very confounding to me, because COVID threw it all upside down. You have something that was supposed to be a month or two months of don’t pay back your interest, it won’t accrue because everyone’s struggling right now, to now we’ve had seven times the extension for student loan freeze, which I assume there’s been zero interest on these loans over this period of time, which is now over two years. You’ve gotten, I think it’s about $120 billion of student loan interest that’s essentially been forgiven at this point.

Todd Zipper:

This is pretty powerful. The idea that they could just turn on the engines of students starting to pay back, we’re talking about former students, tens of millions of students, I believe. This seems like the Biden administration’s in a really tricky spot. And I don’t know how to think about this, because you hear people throwing stones from both sides, that this is getting rid of student debt, which is there’s a big contingency around that. But then people are saying that’s actually for the elite students, because most of the debt is around graduate students. But then there’s the other side of the coin that a lot of the underserved populations are saddled with debt that they can’t pay back.

Todd Zipper:

So what do you think’s going to happen? Do you have a prediction around, are we going to cancel student debt? Are we going to partially cancel student debt? Any predictions here?

Richard Garrett:

I don’t think it’s likely that there’ll be a big across the board cancellation. I think because, one hand, the government is already through COVID, et cetera, and the various stimulus packages, it’s been spend, spend, spend, spend. So I think to just roll more on top of that is going to be challenging, not least because everything is on a knife edge in terms of the balance of power in Congress. And I think there’s an ideological objection to cancellation on the Republican side and some Democrats, that I think is just going to mean that it’s just not going to happen.

Richard Garrett:

And I think as you say, because it’s such a complicated nuanced issue, a sweeping solution is unlikely to be a very good solution. So I think it’s trying to separate out where is the return on investment just fine, paying off the debt is ultimately no problem, and leave it to do its thing. You can question the logic, but it works well enough. Versus those that really should never have borrowed that money in the first place, should have gone for much less expensive, net free alternatives and trying to find ways to cancel, shorten, forgive, whatever it is.

Richard Garrett:

So I think rather than looking it as some big number, I think accept that there’s multiple stories here, and it connects back to what we were talking about, the whole degree alternatives, et cetera. I think many of those do get to the affordability problem much better than the average, at least four-year institution, is able to do. And it should mean through various other aid because many of these alternative providers cannot at least yet get federal student aid, but I think that’s made them more creative around price points and ways of delaying the payment, essentially contingent on some job or salary down the road.

Richard Garrett:

And I think that’ll only help unravel this ballooning debt. Because I think the number of students actually taking out debt afresh has been going down, the amount they’ve been taking out has been going down, but the accumulated amount and all that interest building up over time, that’s a legacy problem, not exactly from another era, but I think it was worse when the for profits were at their height, targeting the most vulnerable students in some cases, and burdening them with debt that really made no sense at all.

Richard Garrett:

So ideally, you need to rethink the whole thing. The free community college idea I thought was a smarter one, in that it would really underscore the idea of public commitment to the value of postsecondary education at scale and giving a boost to what were already very affordable institutions. But equally, community colleges are suffering despite being very inexpensive. So it’s clearly not as simple as just somehow make it free and all our problems are solved.

Todd Zipper:

Yeah, well said. And I think you highlighted an important point, that student debt may actually effectively be going down here, but because of interest and other reasons, the number is headline… The headline number is scary, but maybe with all these alternatives coming in, prices coming down in some places where actually the market is starting to work, that would be an interesting story that no one’s really talking about.

Todd Zipper:

Before we jump in, actually, you just piqued another question for me around peak degree. I didn’t ask you this before, but I’m really interested because I’ve been living this myself, as you, for a decade or so in the business of growth. And we’ve generally seen overall less degrees each year for the last 10 years. And with the COVID blip, it’s still down. Have we seen the highest point of degrees? And in some ways, that’s a scary proposition because we know that people with degrees are better off on the whole. So this is the contradiction in my mind, is I think we want to get more people degrees. Post-secondary education leads to better jobs, so on and so forth. At least, that’s the way the tale goes. Help us unpack this here.

Richard Garrett:

Sure. So I think the instinct is right to say, we need more people with post-secondary education, but that doesn’t necessarily mean we need more people with degrees. I think degrees are, for many people, a poor fit and do not get them the necessary transformation, personal, professional, that we associate with degrees. And therefore it’s not as if the degree is performing very optimally now. So I do think we are probably at peak degree. And by that, I mean peak bachelor’s degree. I think masters will keep growing for a bit longer, but we may not be too far from that peak either.

Richard Garrett:

But I think the good news, though, I think is that it’s not that we’re at peak post-secondary education. I think we’re a long way from that. And I think what we’re going to see is the continued growth of these alternative kinds of post-secondary education that are a better fit for a big proportion of people who are either in degree in a marginal way or opting not to go into a degree, but perhaps might benefit from something.

Richard Garrett:

So I think it’s a healthy moment, but it’s breaking through a very formidable norm of the degree as the gold standard. And that disestablishes our sense of how the world works, but I think it’s essential for us to avoid spinning in these circles of higher prices, higher debt, a higher dropout rate, and all we can do is say bachelor’s degree, bachelor’s degree, 120 credits. It’s a solution from another era that still definitely has its place if you are sufficiently well prepared, if you can devote many years of your life to it without having to do a lot of work on the side, if you have good family support structures, good networks in terms of handing it off to some strong career path, then it can work great. It can be transformatory. But I think if you don’t have those things, it can just become burdensome and labyrinthine and a road to nowhere. So I think it’s a good thing that we’re probably close to peak degree, but we’re nowhere near peak post-secondary.

Todd Zipper:

That’s great. So onto the third prediction, this is a little bit more, I guess, inside baseball for online education and higher ed and certainly something close to me because it’s in my realm of the industry we serve at Wiley online program management. You are predicting that following the lead of North Carolina that announced what they’re calling, I guess, an internal OPM or online program manager, where they’ll have a centralized repository to help all of the different universities’ part of the system to help build and grow, market, enroll, et cetera, online programs, that we would see at least two more of these. And I know we’ve already seen one more announcement with CUNY in my home state. I think it’s CUNY or SUNY-

Richard Garrett:

CUNY. Yeah.

Todd Zipper:

CUNY announcing their own version of this. And so I’d love, maybe you could frame this issue of why it’s important. Obviously, you heard from North Carolina, using both of them specifically. I know North Carolina talked about using federal dollars, which I thought was interesting, to produce a $100 million investment, roughly maybe it was 90 something, in this platform, and then CUNY announced something significantly lower. So it seems like, is this a big investment? Is it not? Help us unpack this and why this is important to the higher education system.

Richard Garrett:

Right. I think what’s most important is that this is an attempt to reinvigorate the idea of a higher education system at state level. So every state around the country has some public higher education system, flagships, regional providers. And the idea is that they somehow hang together as an integral whole. You have different specializations, different ways of transferring from a community college to a regional provider, to an elite school. And it was all built at a time when college meant turning up at a physical campus. Online learning comes along and essentially throws geography out the window and says, “Doesn’t matter where you are, where a student… Doesn’t matter where you are, institutional faculty member. You can theoretically enroll at the best program for you, even if you are on the other side of the country.” So it undermined the logic of state systems that somehow made sense based on co-location of students and institution.

Richard Garrett:

And in the early days of online, state systems were among the first to say, well, online is a significant force. We need to get on board. We don’t want to be overrun by for-profits or other institutions getting ahead of us. So they often created various state online alliances and networks, and often big ambitions early on, but often it watered down to essentially just a single online website that would showcase all the online programs across the system. But as soon as you picked a particular program, you were in that school’s universe, and you couldn’t guarantee whether everything looked the same, cost the same, whether the experience would be the same.

Richard Garrett:

So what happened over the last 20 years, I think, is that online learning largely was driven by the initiative of individual institutions, and even departments within institutions that were entrepreneurial saw an opportunity, and whether or not they were a part of a system really had little to do with it, in most cases.

Richard Garrett:

So systems were becoming less and less relevant in this more and more online centric world. But the concern was that more and more residents of states were enrolling in these out of state providers. They’re enrolling in Southern New Hampshire, Western Governors, Grand Canyon. And the state schools and the state systems were saying, “Well, wait a minute. We’re the state schools, these are our state residents. Shouldn’t they be privileging us? Shouldn’t they want to attend our online programs? But either we don’t have them, they don’t know about them, whatever.”

Richard Garrett:

So I think we’ve now reached a point where some of these states are saying, “Okay, we really need to get our app together here. We’re going to become increasingly irrelevant in this more and more online version of higher ed. And that just seems to contradict who we are, our mission.”

Richard Garrett:

So I think the pandemic and the sudden federal largess meant that some of these states suddenly had a lot of money available they didn’t expect. And as they did in North Carolina, could decide, well, we’re going to put it towards this big grand initiative to essentially fight back and say that let’s stand behind this idea of public state higher education within a system framework, say that that has timeless value. It doesn’t matter what the delivery mode is. There’s something about co-location, even if the student and the institution don’t physically connect, there’s something about say the state system having a better grasp of local employer needs, or more sympathy and empathy around underrepresented populations that an out-of-state provider might not be aware of.

Richard Garrett:

And again, these are all aspirational right now, but I think it’s, to me, it’s a fundamental pushback on the idea that online learning means location doesn’t matter. Co-location doesn’t matter. Physical presence doesn’t matter from an experience point of view, from a pedagogical point of view.

Richard Garrett:

And I think this is a tussle we’re going to go forward with now, is are the big brands, the big online institutions going to win because they have the best technology, best staffing, best tools, biggest marketing budgets, and the consumer will fall into line? Or will they actually run out of room because the consumer realizes, wait a minute. Online’s great, but I want something more than that. I want some physical connection. I want to have some social interaction with faculty or other students. I want to feel like this program speaks to where I live, not just some abstract field of study.

Richard Garrett:

So we will see, but I think it’s a healthy development. It’s a recognition of what can state institutions, state systems do that some of these big national providers maybe can’t do.

Todd Zipper:

Right. Localize in some way the experience online, which is fascinating. Really curious to see how this plays out. And people love their colleges, and they love wearing the tee shirts and the putting their stickers, decals on their cars. So we’ll see how that goes.

Todd Zipper:

So before we wrap up, just any innovations that we haven’t covered that you’re paying attention to right now at Eduventures that you think our audience should hear about?

Richard Garrett:

Well, I think one thing we haven’t talked about is some of the, what I would call teaching and learning tools platforms. So I’m thinking of things like Class or Engageli or Yellowdig. I think of them as attempts to really get more sophisticated about how online learning can happen and really mix and match, as I was saying earlier, between asynchronous and synchronous, self pace versus cohort. And try and build in some of that pedagogical menu into the tool in a way that makes it easier for faculty to leverage rather than, as in some of the old LMS’s, it was more of an administrative tool really. And then the faculty kept doing whatever they were doing in terms of teaching and learning, well or badly, almost regardless of the LMS.

Richard Garrett:

And I think it’s early days, because again, you’ve got all these competing tools, and do we need one tool to rule them all somehow for it to really scale up, or can we let 1000 flowers bloom and somehow all boats will be lifted. I don’t know. So there’s a lot of uncharted territory ahead, but I think it’s great that these tools are… you’re getting this nice sweet spot between enough automation in the system to make it seamless and easy, but enough choice and pedagogical sophistication to transcend conventional threaded discussion asynchronous online, that I think has been strikingly unable to evolve very much, despite its challenges. And I think if online is to… Particularly fully online. If fully online is to really keep taking market share, I think it has to address these pedagogical weaknesses. Because otherwise, I do think forms of localization, hybrid, whatever you want to call it, will start to bite because they will provide that missing experiential piece, that vanilla fully online has really struggled to get to. And maybe these tools are part of the answer.

Todd Zipper:

Yeah, I think that’s a great… I think you’re really highlighting something important. I think similarly playing out in the workforce, as people have gone online and living in a virtual work, how do we create better community culture communication, versus just using Zoom to communicate or email. And I think you mentioned a bunch of these tools, and you started to go down this direction, but are we heading towards the monolithic Google or Apple or one of those that just blocks out the sun, and it’s a monolithic technology that everyone uses, or… And I think you’re right because I was just at the ASU GSE conference. There’s dozens and dozens of these tools. And really, they’re products, they’re features, and they’re exciting. And they’re challenging the status quo, the ones that are attracting me are the ones that were bringing in careers and applied learning to the fore, which is, like you said, not really getting done in the more administrative heavy LMS tools.

Todd Zipper:

So with that, we’re going to bring this to a close. And my last question, I ask this of all my guests. Part of what we love about education is that we all have learning champions. Who has been a learning champion for you, and how has that person helped you in your life?

Richard Garrett:

Interesting question. So I would mention a gentleman called Peter Stokes who was at Eduventures when I first came over from the UK, actually helped me, believed in me enough to go through the hassle of getting me an H-1B visa and all that stress, and then sponsored me for a green card. And now, eventually I’m now American citizen. And I would cite him because he wasn’t a seasoned higher ed administrator. He’d worked briefly, I think, in one institution, but had a remarkable combination of perceptiveness and levelheadedness and deep knowledge of many fields, and was able to distill that wisdom both on the page, but also in the moment, with a client grappling with a particular problem. Through smart Q&A, essentially, trying to draw out what the real problem was and debate what real solutions were.

Richard Garrett:

And it really modeled for me, because I came from the non-profit side of higher education back in the UK. I worked at universities, I worked at non-profit associations. I’d never worked in a commercial higher education setting before. And he showed me that it was possible to be very serious and sophisticated, but also very business savvy and conscious of the business model of Eduventures, but also all the nuances and histories and complexities of higher education, for whom often the profit motive was the last thing on their mind. So I benefited from being his number two for a number of years, and now I have his job. So something worked out.

Todd Zipper:

Well, Richard, thank you so much for taking the time to speak with me today. Until next time, this has been An Educated Guest.

Speaker 1:

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