Peter Thiel, billionaire investor of Facebook, founder and former CEO of PayPal, famously declared that we are in a higher education bubble in the United States. He said, "Education is a bubble in a classic sense. To call something a bubble, it must be overpriced and there must be an intense belief in it." According to his view, America has been moving from bubble to bubble: the IPO bubble at the end of the 90's fed into a housing bubble, which has since fed into an education bubble. He may have a point: for the first time in history, student debt has surpassed credit card debt.
The University of Phoenix is a technology pioneer, and for that we owe it a massive debt, if you'll allow the pun. They graduated 355,000 people last year, twice as many graduates as the 20 largest campus universities combined. But the school graduates only 16% of its class: the national average is 55%. In 2009, the Department of Education reported that 350,000 UOPX students paid $5 billion in loans, with a 44% repayment rate, far worse than the average.
The demand for higher education has skyrocketed, and our system has proven insufficient to meet that demand productively -- hundreds of thousands of young people have heard the news that a Bachelor's degree is the ticket, and well-marketed capitalism has taken advantage of it, to our collective peril. Meanwhile, online education has exploded in recent years, and with a broadband connection and a few hours a day, one can learn highly marketable skills in technology, design, and entrepreneurship. So what to do?
My point of view about health care applies to education, as well: the ambitious and accelerated elite face a set of challenges largely incomparable to the marginalized, underemployed, and chronically unemployed. Detractors of new education wisely point out that current approaches may only reach the recreational fringe of education, or the highly connected and motivated self-starters, most of whom are not the high-risk target audience for which online education is a serious and necessary option. That credential, which current new education platforms lack, is the very reason many enroll at University of Phoenix rather than pursuing other means of vocational enrichment.
A successful educator will prepare his students not only for the employment market that follows, but develop in them the techniques such that they can build character and be self-sufficient in a dynamic economy. Accreditation and appropriate credentials demonstrate that the student has successfully met those qualifications. Before the renaissance in online education becomes a reality at scale, there must be a system of legitimizing new online education programs, of holding them publicly accountable, and of measuring the outcomes as they prepare students for employment.
The platforms take advantage of LinkedIn, Facebook, and Twitter, but they must take it much further, and the burden falls to all of us to encourage this trend. Trust and reputation tools have taken a foothold with the rise of collaborative consumption, but need to be aggressively expanded to new education platforms. We -- all of us -- should create a way to support education outside of the traditional university and vocational models, as we have begun to outgrow them.
A handful of traditional universities are adapting, if reluctantly, to these market demands, and I imagine a future where Stanford (my alma mater) and others have a value proposition that extends their pedagogical resources much more broadly and intentionally than they currently do. But whether or not they do, the movement continues inexorably forward, so university administrators would be wise to take note. Modern employers stand to benefit hugely from a trend towards legitimizing next-generation education platforms: they will be hiring candidates whose skillsets better match their needs, and will be doing so with confidence in the new institutions that trained them. So let us focus on supporting the innovative platforms that have so fabulously responded to the challenge of education in the era of high technology.