Symposium Entry

3 alternative pathways primed to disrupt Higher Education

By Alana Dunagan
Higher education researcher, Clayton Christensen Institute

March 28th, 2016

These pathways will bolster higher education, but incumbent institutions will have a tough time adapting them due to stagnant business models that aren’t set up for support.

Driven by technology and globalization, the pace of economic transformation is more rapid than ever. As competition for jobs increases globally, the premium for education has never been higher. Adult learners are flocking back to higher education in droves and seeking new skills to approach an ever-changing job market. These learners now make up a majority of post-secondary students, and their needs are different than the traditional four-year residential experience pursued by many students just out of high school. The swelling ranks of non-traditional students—in addition to $1.2 billion in recent EdTech investment—are stimulating the development of new approaches in higher education, in ways that may change education—even the traditional variety—forever.

Adult learners are eager for pathways to higher earnings and find value in competency-based programs that send clear signals to potential employers about their skills and capabilities. These programs range from online bachelor’s degrees to coding bootcamps, but many of them are struggling to fit into the existing regulatory and financial aid systems. Critically, however, they are finding acceptance with potential employers and changing the way the labor market thinks about credentials.

Three main alternatives are finding traction: badging, bootcamps, and competency-based programs.

In Its Infancy: Skills in a Granular, Transparent Format

Badging is the most nascent, but it fills an important need for showcasing information as job seekers look to communicate their skills to employers, and as employers look to evaluate candidates.  In a traditional bachelor’s degree program, students take a variety of courses from an institution and are granted a degree upon successful completion of a sufficient number of credit hours. This degree is intended to indicate a student’s academic accomplishments and workforce-readiness—but employers are increasingly finding these credentials to be poor indicators of a worker’s capabilities. Even searching through a candidate’s transcript tells employers little about the skills a potential hire might bring to the table.

Badges, on the other hand, are designed to communicate skills and accomplishments in a granular and transparent fashion.  Ultimately, badges could allow students to unbundle a bachelor’s degree and seek credentials for specific skills, and employers could match candidates with open positions based on their ability to get the job done. Badging is not yet widespread, but with interest from a number of higher education institutions, we would expect to see a pick-up in skill-based credentialing over the next five years.

Skilling-Up Quickly in Niche Tech: Only if You Make it Through

In the world of high tech, coding bootcamps have stormed onto the scene over the past several years and promised to turn novices into skilled coders through programs that range from 10 to 20 weeks. Course Report’s 2015 study of bootcamps found an 89 percent job placement rate and an $18,000 salary increase for graduates—not a bad return on tuition, which tends to run between $11,000 and $14,000. Bootcamps advertise on the basis of their job placement rates—forcing them to develop both relationships with potential employers, as well as tight alignment between curriculum design and the needs of the workplace.

Enrolling in a coding bootcamp, however, is not a golden ticket to a tech job. To graduate, students have to meet the standards of their programs, which tend to be competency-based. Some bootcamps offer students the opportunity to recycle through the program at no additional cost if they can’t master the coursework on their first round.

These programs are growing rapidly, but the concept has yet to broaden out of software design and into other industries.

CBE Degrees for Skill Showcasing: Employers Still Hazy

Competency-based degrees, enabled by online access and courseware technologies, have also seen tremendous growth. These programs, in many cases offered by traditional institutions, seek to award credentials based on learning and mastery rather than credit hours. This allows students to progress at their own pace, which could be faster or slower than that provided by a standardized learning environment. It also allows employers to have more granular information on students’ capabilities and skills.

Although enrollments in these programs are climbing, employers are still getting up to speed on competency-based education and what it means.

Are These More Than Trends?

These trends are exciting, but what do they mean for traditional degree programs and higher education overall?

Until recently, higher education has been slow to evolve. Accreditors have focused on making sure that higher education institutions follow established processes and procedures, which means that institutions are rewarded for being similar rather than different. Federal financial aid dollars for traditional programs that focus on credit hours and in-person learning have been limited, although this is starting to change.

Interestingly, the market is also beginning to solve the financial issues posed by non-traditional degrees that may not be accessible to financial aid; for example, many coding bootcamps have preferred “financing partners”: external, private lenders that provide loans to students.

Traditional learning models have been protected not only by regulation, but also by the mystique of the four-year degree. With limited ability to assess competencies and skills, employers have used the bachelor’s degree—and the prestige of the institution that granted it—as a proxy for the information in which they were really interested. So far, bootcamps have provided the clearest evidence that this won’t always be the case, and as badging and competency-based programs become more standardized and accepted by employers, traditional students may begin to see value in them as well.

Will traditional institutions begin to incorporate these new trends into their programming?

So far, there are limited examples of established institutions adopting alternative credentialing. A few institutions are exploring badging, and many are offering online courses, but most traditional institutions are proceeding with business as usual. In fact, what has been notable so far is the lack of success in implementing innovative pathways, even where institutions have made impressive efforts to do so.

Examples include ASU’s Global Freshman Year, which saw plenty of uptake in terms of MOOC registrants, but resulted in few completions and a de minimis percentage of students who were actually eligible for credit—plus it remains to be seen how many will follow through with application and pay for credits. And there was also the University of California’s UC Online that spent millions on marketing—and three years later had one student sign up.

It’s Part of Disruption

Although these outcomes may seem surprising, the results are right in line with the theory of disruptive innovation, which posits that incumbent institutions will have a tough time adapting disruptive innovations for the simple reason that their business models aren’t set up to support them. Institutions may believe that there is no compelling reason to change, but even those that do try to innovate may find that new initiatives are smothered by the inertia of the larger organization, as Michelle R. Weise and Clayton M.  Christensen write in their report on competency based education, Hire Education.

Many schools have launched MOOCs through Coursera and edX and offered them for free. Yet, we have yet to see many traditional institutions willing to offer diplomas for online coursework at prices significantly less than the tuition paid for the brick-and-mortar experience.

Instead, we expect to see new entrants and innovative partnerships with employers lead the way in alternative pathways to credentialing. Observing the path of disruptive innovations in many other industries leads us to suspect that these alternative credentials, initially targeted at non-traditional students, will find their way into mainstream higher education programs. Employers will place value on the transparency of knowing the precise skill sets of potential hires and come to favor this approach over the mystique of a four-year degree from a prestigious institution.

As competency-based credentialing becomes more prevalent, even traditional students may come to favor programs that give them mastery in particular skills, which they can then bring into a competitive labor market. In this way, alternative credentials aren’t likely to remain “alternative” for long.