Across modern economies, innovators and entrepreneurs are marshaling the power of information technology to reorganize business processes and reimagine entire industries, thereby improving quality and lowering the costs of goods and services. But higher education has largely escaped such disruption, even as IT and the Internet have created new ways to research, learn, and impart knowledge. The reason is that colleges and universities hold a unique franchise: They are responsible for educating students and for granting them degrees. Schools thus lack incentive to help students learn outside the classroom, even if it would lower costs or be more effective, since it would cut into their revenue, and they lack incentive to raise standards for their degrees because it would drive away customers. Students meanwhile have little incentive to push themselves harder than necessary to earn their degrees, since degrees are opaque, deriving their value from institutional brands rather than clear measures of academic achievement. This paper argues that the federal government should spur reform by promoting alternatives to traditional college diplomas that allow individuals to more effectively demonstrate educational mastery to prospective employers. This would give students the freedom to pursue their own best options for learning, incentivize students to study harder and schools to teach better, and apply competitive pressure on colleges and universities to reduce the costs of education.
There are at least two major problems with allowing colleges and universities to control through granting of degrees the primary way learning outcomes are assessed. First, these institutions usually limit students from mixing and matching various, and usually cheaper, ways of learning, such as community college courses, massively open online courses (MOOCs), or self-study, if students want to receive the “sheepskin” showing mastery. So even though information technology should be making higher education more efficient, tuition costs are rising faster than inflation, making college less affordable. Second, since each college and university has its own grading practices and degree standards, students, parents, and employers have little ability to compare the quality of education that different schools provide for a particular degree. Instead, each school is evaluated mostly on reputation and other factors such as quality of its facilities, notoriety of its graduates, and SAT scores of entering students. This lack of transparency regarding outcomes diminishes the incentives schools have to compete on how well they actually educate students, and also the need for students to work hard, because many know this will have limited bearing on their future employment prospects, as long as they do enough to simply earn a diploma. This is one explanation of why the quality of higher education in the United States is uneven, and many college graduates enter the workforce underprepared.
If we want more educational innovation and lower costs, as well as higher-quality educational outcomes, then it is time to break the legacy connection between teaching students and certifying their academic achievements and move to a model where students have alternative ways of demonstrating their knowledge and skills. But this is in part a chicken-or-egg problem, with employers still relying on degrees and students not having access to alternative accreditation systems. The federal government should solve this by fostering the creation of a national network of certified organizations that assess the learning and skills of young people before they enter the workplace. Congress can move America’s higher education system in this direction by taking the following steps:
- Establish a process to accredit organizations that provide certifications;
- Encourage federal agencies to accept alternative certifications in lieu of degree requirements;
- Require the administration to encourage the private sector to recognize and rely on alternative certifications in their hiring decisions;
- Allow students to use federal aid for alternative learning options, such as MOOCs;
- Ensure graduate programs consider applicants with alternative certifications; and
- Require the administration to conduct a regular survey of employer needs.