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Higher education needs new business model

Last month, the consulting firm Deloitte published an interesting series on trends in higher education. One trend they cited was the transformation of the business model that most higher education institutions use. Raising tuition has always been the go-to solution for higher education. Unfortunately, this has led to an unsustainable cost model, which created the situation higher ed now finds itself in.

One of the primary principles of economics is economic value. A good or service is worth only what someone is willing to pay for it. Moreover, economic value has limits, and those limits are expressed in terms of the buyer’s maximum price. For many buyers, a college degree has hit (or exceeded) its economic value. The cost of a degree is so high, would-be students are willing to try another path to make their way in the world.

I have often said that a community college degree does not provide enough return on investment to make it worthwhile to most students. The trend of making community college “free” to attend for certain students is pointing to a sad truth: giving away something of little value does not somehow magically increase its value.

College degrees typically have value, but in the community college’s case, the data don’t support the long-term value of a two-year degree or non-degree certificate. Here’s why.

Most community college degrees are skill-based. Skills like nursing and those needed for allied health careers have a long lifespan. Nurses and other healthcare workers are integral to healthcare provision. They’re not likely to be replaced by robots, although the use of medical robots is on the rise. They’re also likely to upgrade their skills on-the job or as part of continuing education requirements.

Higher education has to offer sustained value

Other skill-based community college degrees will not have a long lifespan. Technological improvements over a relatively short period of time may make the skills a student learned in school obsolete. Some students in occupational education programs learn skills in their programs that are already obsolete. Students in certificate programs likely acquire an incomplete skill set, and find themselves farther behind the curve in a much shorter timeframe.

In other words, community college degrees have a shelf-life. Unfortunately, certain community college administrators believe this is a golden opportunity to get those students with “expiring” skills back into the classroom. That’s not likely to happen. As students age, they acquire responsibilities that prevent them from returning to school. Raising children, providing care for aging parents, and the demands of work all consume a person’s time. If returning to school (outside of a desperate emergency or the desire to change careers) were a viable strategy, more students would do it.

And there’s the issue of cost. When the cost of education rises well beyond the rate of inflation, it chips away at a degree’s economic value. Further, the older an employee gets, the less value s/he can extract out of a new degree.

To make the value proposition for a community college degree work, the college must build in elements that sustain the degree’s value over time. Like self-teaching. Students need to learn how to identify the need to learn new skills, as well as the means to learn them. Likewise, they need to learn to recognize how advances in technology can create major shifts in their profession.

Building resilience into community college degrees will help increase the long-term value of an associate degree and make them more attractive to prospective students.

Photo Credit: Earl, via Flickr