Rise of the Robots: Technology and the Threat of a Jobless Future (22 page)

An especially promising path toward attaching academic credit to MOOCs may be to offer competency-based credentials. With this approach, students earn credit not by attending a class but by passing separate assessment tests demonstrating competence in specific areas. Competency-based education (CBE) was pioneered at Western Governor’s University (WGU), an online institution first proposed at a 1995 conference attended by the governors of nineteen western US states. WGU began operating in 1997 and by 2013 had over 40,000 students, many of whom are adults seeking to complete degree programs they started years earlier or to transition to new careers. The CBE approach received a major boost in September 2013, when the University of Wisconsin announced that it would introduce a competency-based program that will lead to degrees.

MOOCs and CBE may prove to be a natural fit because the combination essentially decouples the courses from the credential. Issues like student identification and cheating would have to be addressed only in the assessment tests. There may even be an opportunity for a venture-backed firm to step into the testing and credential issuing role while completely bypassing the messy and expensive business of offering classes. Self-motivated students would be free to use any available resources—including MOOCs, self-study, or more traditional classes—to achieve competency, and then could pass an assessment test administered by the firm for credit. Such tests might be quite rigorous, in effect creating a filter roughly comparable to the admissions processes at more selective colleges. If such a start-up company were able to build a solid reputation for granting credentials only to highly competent graduates, and if—perhaps most critically—it could build strong relationships with high-profile employers so that its graduates were sought after, it would have a clear potential to upend the higher-education industry.

An annual survey of top officials at nearly 3,000 US colleges and universities found that expectations regarding the future promise of MOOCs diminished significantly over the course of 2013. Nearly 40 percent of the survey’s respondents said massive online courses
were not a sustainable method of instruction; in the prior year’s survey, only a quarter of college administrators had expressed that view. The
Chronicle of Higher Education
likewise offered a relatively grim progress report, noting that “MOOCs made no significant inroads in the past year in the existing credentialing system in higher education, calling into question whether they will be as disruptive to the status quo as some observers first thought.”
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One of the paradoxes associated with MOOCs is that for all their practical problems as a mass education mechanism, they can be an enormously effective learning method for those students who have sufficient motivation and self-discipline. When Thrun and Norvig first began offering their artificial intelligence class online, they were surprised to see attendance at their Stanford lectures quickly begin to drop off, so that eventually only about 30 out of 200 on-campus students were showing up on a regular basis. Their students, it seemed, preferred to take the class online. They also found that the new MOOC format resulted in a significant boost in their on-campus students’ average performance on exams, as compared with students who took the same class in prior years.

I think it would be very premature to declare the MOOC phenomenon down for the count. We may, rather, simply be seeing the early-stage stumbles that are typical of new technologies. It’s worth remembering, for example, that Microsoft Windows did not mature into an industry-dominating force until Microsoft released version 3.0—at least five years after the product was first introduced. Indeed, pessimism regarding the future sustainability of MOOCs among college administrators is quite possibly tied in large measure to their fears about the economic impact these courses might potentially have on their institutions and the entire higher-education sector.

On the Brink of Disruption

If the MOOC disruption is yet to unfold, it will slam into an industry that brings in nearly half a trillion dollars in annual revenue and
employs over three and a half million people.
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In the years between 1985 and 2013, college costs soared by 538 percent, while the general consumer price index increased only 121 percent. Even medical costs lagged far behind higher education, increasing about 286 percent over the same period.
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Much of that cost is being funded with student loans, which now amount to at least $1.2 trillion in the United States. About 70 percent of US college students borrow, and the average debt at graduation is just under $30,000.
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Keep in mind that only about 60 percent of college students in bachelor’s degree programs graduate within six years, leaving the remainder to pay off any accumulated debt without the benefit of a degree.
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Remarkably, the cost of actual instruction at colleges and universities has made a relatively minor contribution to these surging costs. In his 2013 book
College Unbound,
Jeffrey J. Selingo cites data gathered by the Delta Cost Project, a small research organization that produces highly regarded analysis for the higher-education industry. Between 2000 and 2010, large public research universities increased spending on student services by 19 percent, administration by 15 percent, and operations and maintenance by 20 percent. Lagging well behind was the cost of teaching, which rose just 10 percent.
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At the University of California system, faculty employment actually fell by 2.3 percent between 2009 and 2011, even as student enrollment increased by 3.6 percent.
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To keep instructional costs down, colleges are relying ever more heavily on part-time, or adjunct, faculty who are paid on a per-course basis—in some cases as little as $2,500 for a semester-long class—and receive no employee benefits. Especially in the liberal arts, these adjunct positions have become dead-end jobs for huge numbers of PhD graduates who once hoped for tenure-track academic careers.

While instructional costs have been largely controlled, the amount spent on administration and facilities has soared. At many large campuses, the number of administrators now exceeds the number of instructors. During the same two-year period in which faculty employment fell by over 2 percent at the University of California, jobs
for managers increased by 4.2 percent. Spending on professionals offering personalized counseling and advice to students likewise soared, and positions of this type now constitute almost a third of professional jobs at major American universities.
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The higher-education industry has seemingly become a self-perpetuating jobs machine for the highly credentialed—unless, that is, you actually want a job teaching. The other major money pit has been extraordinarily zealous investment in luxurious student housing, recreation, and sports facilities. Selingo notes that “the most absurd frill is the Lazy River, essentially a theme park water ride where students float on rafts.”
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Administrators at Boston University, the University of Akron, the University of Alabama, and the University of Missouri all deem this an indispensable part of the college experience.

The most important factor, of course, has simply been the willingness of students and their families to pay ever-higher prices for an essential—if not sufficient—ticket into the middle class. Small wonder, then, that many observers have expressed the view that higher education has become a “bubble,” or at least a bloated house of cards that is ripe for the same kind of digital decimation that has already transformed the newspaper and magazine industries. MOOCs offered by elite institutions are viewed as the mechanism mostly likely to impose the winner-take-all scenario that invariably takes hold once an industry goes digital.

The United States has over 2,000 four-year colleges and universities. If you include institutions that grant two-year degrees, the number grows to over 4,000. Of these, perhaps 200–300 might be characterized as selective. The number of schools with national reputations, or that might be considered truly elite, is, of course, far smaller. Imagine a future where college students can attend free online courses taught by Harvard or Stanford professors and subsequently receive a credential that would be acceptable to employers or graduate schools. Who, then, would be willing to go into debt in order to pay the tuition at a third- or fourth-tier institution?

Clayton Christensen, a professor at Harvard Business School and an expert in disruptive innovation within industries, has predicted that the answer to that question will result in a grim future for thousands of institutions. In a 2013 interview, Christensen said that “15 years from now, half of US universities may be in bankruptcy.”
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Even if most institutions remain solvent, it is easy to imagine dramatically declining enrollments and revenues coupled with massive layoffs of both administrators and faculty.

Many people assume that the disruption will come from the very top, as students flock to courses offered by Ivy League institutions. Yet, this assumes that “education” is the primary product that will be digitized. The very fact that schools like Harvard and Stanford are willing to give that education away for free is evidence that these institutions are primarily in the business of conveying credentials rather than knowledge. Elite credentials do not scale in the same way as, say, a digital music file; they are more like limited-edition art prints or paper money created by a central bank. Give away too many and their value falls. For this reason, I suspect that truly top-tier colleges will remain quite wary of providing meaningful credentials.

The disruption may be more likely to come from the next tier, especially major public universities that have strong academic reputations and huge numbers of alumni—as well as brands anchored by high-profile football and basketball programs—and are increasingly desperate for revenue in the wake of state funding cuts. Georgia Tech’s partnership with Udacity to offer a MOOC-based computer science degree and the University of Wisconsin’s experiment with competency-based credentials may offer previews of what is soon to arrive on a far more massive scale. As I suggested previously, there might also be opportunities for one or more private firms to claim a large slice of the market by offering vocationally oriented credentials based purely on assessment tests.

Even if MOOCs don’t soon evolve into a direct path to a degree or other marketable credential, they could still undermine the
business models of many colleges on a class-by-class basis. Large introductory lectures in courses like economics and psychology are vital cash cows for colleges because they require relatively few resources to teach hundreds of students—most of whom are paying full freight. If students at some point have the option of substituting a free or low-cost MOOC taught by a celebrity professor at an elite institution, that alone could be a major blow to the financial stability of many lower-ranked schools.

As MOOCs continue to evolve, their huge enrollments will themselves be an important driver of innovation. A vast volume of data is being collected about the students who participate and the ways in which they succeed or fail as they proceed through the courses. As we’ve seen, big data techniques are sure to result in important insights that will lead to improved outcomes over time. New educational technologies are also emerging and will increasingly be incorporated into MOOCs. Adaptive learning systems, for example, provide what amounts to a robotic tutor. These systems closely follow the progress of individual students and offer personalized instruction and assistance. They can also adjust the pace of learning to match student capabilities. Such systems are already proving to be successful. One randomized study looked at introductory statistics courses at six public universities. The students in one group took the course in a traditional format, while those in the other received primarily robotic instruction combined with limited classroom time. The study found that both groups of students performed at the same levels “in terms of pass rates, final exam scores, and performance on a standardized assessment of statistical literacy.”
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If the higher-education industry ultimately succumbs to the digital onslaught, the transformation will very likely be a dual-edged sword. A college credential may well become less expensive and more accessible to many students, but at the same time, technology could devastate an industry that is itself a major nexus of employment for highly educated workers. And as we’ve already seen, in an entire
range of other industries, advancing automation software will continue to impact many of the higher-skill jobs these new graduates are likely to seek. Even as essay-grading algorithms and robotic tutors help teach students to write, algorithms like those developed by Narrative Science might have already automated much of the routine, entry-level writing in many areas.

There may also prove to be a natural synergy between the rise of MOOCs and the practice of offshoring knowledge-based jobs. If massive online courses eventually lead to college degrees, it seems inevitable that a great many of the people—and a high percentage of the top-performing candidates—awarded these new credentials will be located in the developing world. As employers become accustomed to hiring workers educated via this new paradigm, they may also be inclined to take an increasingly global approach to recruiting.

H
IGHER EDUCATION
is one of two major US industries that has, so far, been relatively immune to the impact of accelerating digital technology. Nonetheless, innovations like MOOCs, automated grading algorithms, and adaptive learning systems offer a relatively promising path toward eventual disruption. As we’ll see next, the other major holdout—health care—represents an even greater challenge for the robots.