Will COVID-19 Permanently Change Instruction and Costs In Higher Ed?

This episode of Future YOU is brought to you by Nelnet Campus Commerce, delivering payment technology for a smarter campus, and by Entangled Solutions. This is Future youe with Jeff Salingo and Michael Horn.

Welcome to Future youe. I'm Michael Horne, coming to you today from my home in the Boston area. And I'm joined by my co host, Jeff Salingo.

Michael, it's great to be with you over Streamyard. I'm coming to you today from my home here in Washington, D.C. where of course, we continue to shelter in place.

And I confess I've been looking forward to this episode for some time as we're bringing together two of higher ed's biggest visionaries who are both not afraid to speak their minds. And we're going to have them talk about COVID 19, the recession, how higher education institutions ought to be acting as they move forward in the immediate and longer term, and what they are both doing to help. So with that, let me welcome Jon Katzman, first and foremost, the founder and CEO of Noodle Partners, which supports institutions in creating online programs. And of course, before Noodle founding the Noodle companies more Generally, John founded 2U and the Princeton Review. So, John, thanks for being with us today.

Thanks for having me, Michael. And hey, Jeff.

And welcome back as well to Ben Nelson. We can bring up to the stage. We had him on the show from GSV in 2019. And Ben is the founder and CEO, of course, of the Minerva Project, which, among other things, has stood up the Minerva Institute, the first elite liberal arts institution to launch in the last century in the US and the Minerva Project offers its active learning platform, pedagogy and curriculum to institutions globally to create robust active learning experiences. And welcome back to the show, Ben.

Great to be here.

And I'll just say the full disclosure before we get started that I'm on the board of Noodle Partners and the Minerva Institute. So that means Jeff will be asking the difficult questions today. But I'll get us started with a question for both of you, which is, as longtime observers of higher education, what's your assessment of how higher education as a sector has done in reacting to the pandemic, and what surprised you the most in their actions? John, why don't we go to you first on this.

Overall, I think higher ed did great. It moved quickly and aggressively to move kids off campus, which was smart and saved lives, and it moved things online with lightning speed. Now, the quality of that online experience has been terrible, but the fact that it has a pulse at all, the fact that Classes went on and learning went on, I think is great. It's a great start.

And Ben, on your end, I'm curious your take on the same question, how higher education as a sector is done and what surprised you most in their actions.

I think in general, John's assessment is correct. I do think that you saw expectedly a lot of bumps in the road, but you, I think in particular saw some exposure of some of the underbelly of the issues of higher education that you may not have realized before. So, for example, some universities initially thought about their modal student. In the case of elite institutions, the modal students are millionaires. And so it was pretty easy to say, okay, everybody go home. We're shutting everything down. And then there was a realization of, wait a second, we actually have some students that can't just drive home or afford to go home or may not have a home to go to. And so it also started exposing some of the things that universities have to think about beyond just let's finish the classes. Then there are other instances where individual professors were doing heroic things to get their students online. But then other professors just kind of gave up and they said, you know, we're just going to give you the grade that you had at the middle of the semester and we're just not going to teach you anymore because this is difficult. And so there were a bunch of things that were exposed that show that the university may not be acting in lockstep, which in situations like this is important.

So there's been a lot of speculation about what happens come fall, right? Do colleges open? Don't they open? Who will show up? Will higher education prove countercyclical as it has in Paris past recessions? But it's kind of clear that something different is going on this time, right? This is really different in some material aspects. So what do you expect the impact of the recession is going to be on higher education both in the short term and in the long term? And Ben, we're going to start with you on this one.

So recessions has traditionally been countercyclical, but this isn't just a recession.

Right.

The issue with COVID is that it brings to question a whole bunch of segments of students that would normally come to universities. So, for example, will student visas be issued? That's a decision that the government has to make. And if the government says, well, yes, we'll decide to issue them, but we'll open our embassies in August or July, then going to be some real implications about students being able to come what about students that are immune compromised? That's not a small number of individuals in the United States given the state of our, of our national health care. And so there are a number of these issues that even if you want to open campus, you may not be able to bring students in. And when you have 15, 20% of your student body that can't show up, that is a cataclysmic event for most universities, certainly the tuition dependent ones.

John, what do you think in terms of is this going to be countercyclical like previous recessions, or do you feel like something will be different this time around? And again, how about let's think about the next six months, but also the next 12, 24 months, right?

I think those are very different answers. There's no reason to believe that this will be any different from the point of view of increased enrollment, especially graduate schools, students going back to school, if for no other reason than the opportunity cost is a lot lower to go back to school in a, in a recession than it is in a boom. And you've just, you've just effectively lowered the cost of higher ed by, you know, half for a lot of people. So it is a smart thing to do. People traditionally do it. And looking at our early enrollment numbers, it's happening already. So I'm not worried at all about the medium and long term on higher ed enrollment in this recession. In the short term, for this fall, everything Ben said is true and then some. So my conversations with schools, the following are under consideration. First, giving an increased financial aid to every student who shows up this fall. And everybody says, well, what if you don't have a huge endowment? The answer is take a one time hit in exactly the way the country is taking several trillion dollar hit versus have your enrollment be terrible and unknowable for the next four years. So just bite the bullet and make a sacrifice. At the same time, I see schools definitely toughening up their infrastructure, both the social component of their online tools. We're doing a ton of work with schools giving boot camps to professors getting their courses online. And I see that accelerating as the spring now is under control. Everybody in a mad dash to have everything ready. I'm seeing schools lose the option to defer. You don't have to show up, but we're going to give away your spot if we can. And we may or may not be able to take you back. You'll have to reapply. Schools talk about resilience. It's time that we practice resilience. And as a Community say this is going to be rocky and it's why we're giving you some financial aid. But the option if schools closed, a lot of things are closed. It's not like you can do this or travel the world. Hang in there. Let's stay on track. We'll get back to campus when we can. And finally, I see some schools pushing back the year to start in January, but I see other schools pushing up the year to start earlier so that they can finish by the end of, by Thanksgiving break and then take a long vacation. And everybody's trying to figure out when the next wave is, if there is another wave. So I think there's a lot of ideas in the hopper right now and everybody's kind of working through them.

Yeah, it's really interesting, John, in particular about the sort of pushing back on the gap year, saying that's your business, but don't expect a slot here if you take that option. And so to start going to some of the instructional changes though, that you're seeing in higher education, because you started to allude to that in terms of some of the social supports online, you're starting to beef up and so forth. And obviously this is an area you both think a lot about. In our last episode on Future youe, our guest talked about there being essentially three waves in response to the current moment. Sort of a triaging at first, then preparing for the fall and then putting longer term changes in place that actually might move higher education forward. Turning to the latter two waves and leave aside the, the idea of partnering with you both for the moment because obviously this is going to be a big piece of, I suspect how both of you are thinking about it. What are the key actions that you would be putting in place as a university? And what do you actually expect to see happening on the ground and sort of, you know, certain institutions may do things different ways. John, why don't you jump in first?

Well, I'll give one. Maybe we can just go back and forth. There have been schools experimenting with the end of lectures for the last several years. MIT has considered actually getting rid of their lecture halls except for one, and moving those to a flipped model. I think it's time that that happens now. And I think you'll see the last thing we want to do is get several hundred people all in a room together and we don't have to. And we can actually give a much better experience. The sciences lectures don't work. And worse than that, people think they do work. Like students report that they learned a lot Even though they learned nothing, it's time to just end that and move to a flip model. Ben.

So I had a conversation with a dean of a rather well known business school boy five, six years ago. He told me, he said, you know, Ben, I cannot guarantee you that 100% of the graduates of my business school understand what sunk costs are. And that was kind of a striking moment for me because business schools actually have required curricula. You actually have to have every student go through a particular set of courses. Yet still there's a divorce between what is intended to happen in educational environments and, and what student outcomes are. And I think that universities that embrace student outcomes as their guiding star, both through this crisis and reform around that area, are gonna be the ones that are gonna thrive in the long run.

I also see universities, people talk about trying to lower the concentration, lower the density at universities, and that's just a moronic idea. I mean, the whole beauty of a university is these random collisions between people who are studying different, researching different things. And I don't think you'll see that. So what you will see in place of that is a whole lot of testing all the time. Things like, well, in the shorter term, hopefully antibody tests and so forth, but in the longer term, just taking people's temperature when they walk around campus.

So, Ben, I want to direct this next question to you. So as this moment hit, you all at Minerva have seen kind of an uptake of your platform, you know, increase really a lot, it seems, in the last couple of months. And you've offered to serve learners with more affordable online programs until their institutions kind of get back on their, on their feet. As a way to help out existing colleges and universities. Can you describe a little bit more about what you're doing and why and how it's played out?

Sure. So core to the Minerva model of education is to identify a set of broadly applicable cognitive tools, pieces of practical knowledge that students can use towards anything that they do in life. And we introduce all of them and begin the process of mastery for our students in their first year. And so that first year winds up resulting in some really powerful outcomes for our students, both in, in summer internships and now we know, postgraduate employment to a level that really even the very best and most elective universities have not been able to attain until this point. And so what we're trying to do is enable other institutions to bring their curricular approaches into this model to define what are the kinds of learning objectives they want to see from their students and, and enable them to do that either by actually testing out, bringing some group of their students, whether it be the immune compromised students or those that can't get visas, et cetera, and actually saying, hey Minerva, could you just educate them for a year? We will continue the relationship with them so they have an affinity and a direct relationship with our university so they can begin in the second year if they, when they can come to campus, or to enable other institutions to take that model and implement it with their own curriculum, with their own professors, to their own students, whether they're on campus or not.

So. And by the way, I'm sort of surprised we haven't seen more such partnerships come out of higher ed so far in terms of these partners with online native universities, if you will. Although I suspect part of that is people holding off as long as they can to try to see if they can get deposits in or get some confirmation that maybe they can open in the fall. But I guess, John, there's another side of it that you've talked a lot about for a long time, which is frankly, the need for institutions not only to have robust online programs that serve remote learners, but also online programs that serve their core learners to create hybrid experiences. And you've talked a lot about sort of agile learning and things of that nature. But I'm also curious, given the partnership trends, how that would play into things like consolidation of institutions and so forth. And so I'm curious on the one hand how you're supporting institutions in the rapid move in the here and now, but more frankly in the longer picture, you know, bigger term picture that you've talked about of this agile or hybrid learning and so forth. And then also the consolidation question that looms out there for higher education writ large.

Well, first, I think like any small entrepreneurial thing, the most successful schools cordoned off online and made it a little silo. So you have two technology efforts, two instructional design efforts, two admissions processes, marketing placement. Just about everything was just side by side. And when I talk about agile, it's just how do we have an efficient university that there's just one, there's one student body, one faculty, one technology platform, one marketing effort, and so forth. And how do we get the real efficiencies of technology in education? And I think this is going to be a huge accelerant of that trend. We're not just going to look at like those online guys over there. We're going to look at what do we do. And not just in the classroom. Remember, only 20% of the cost of higher ed Is the teaching right? It's everything around that. It's instructional support and counseling and administration, it's physical plant, it's research. And the places where technology can really be most helpful without screwing up higher ed is support faculty better and lower the cost of the other 80%. And one of the ways to do that is capacity. So if you have a strong infrastructure and you're doing online right, you almost immediately can double the size of your, of whatever program you, you pick and do so without diluting the brand of the school, do so without diluting the quality of education. Well, there are only a fixed number of students who are capable and ready and interested in any one higher ed program. That increase in capacity in universities that do it right, and the decreasing costs at the university that do it right is going to come at the expense of the schools that don't increase capacity, don't lower costs. And I think Covid and technology are finally going to result in some consolidation of higher ed, which people have talked about for a while, but I think it's here.

So I want to build on that because I think that's exactly right. Though I do think that there's a few more nuances that universities have to get a moment of honesty with themselves before they can, they can really take advantage of the situation and serve more students in a more effective way. The question you asked as to why is it that universities aren't turning to online only institutions is that the reality is that much of online instruction has been bad. There are some pretty terrible outcomes from many online only institutions, very low retention rates, questionable learning outcomes, etc. And so a lot of the models that universities look at out there, they say, well, you know, I don't really want to shift to that because I don't have confidence that this is actually going to be a good experience for our students. At the same time, what Covid has exposed is that it's not just that only 20% of the cost of an institution goes towards education, it's also probably 20% of the mindshare. And so when you're in a university environment, campus environment, and let's just say the odd chance that your professor is not a good teacher, you could just not go to class, right? You've got the campus, you got the climbing wall, you've got, you know, the density of fellow students, it's kind of fun, right? And if you don't need to go to class, you could just take the exam at the end of the semester. Thumbs up, right? This is fun, this is Great. I don't really care. When you're paying $70,000 and the only thing your university gives you is a class on zoom with a professor that may not be that motivated to, to provide excellent instruction that starts to grate.

So, Ben, isn't that why then traditional colleges, universities have to be back on campus in some form in the fall or else that entire structure just collapses, Right? Maybe for the elites it doesn't, but it seems like for everybody else it does, doesn't it?

Or they could do something really revolutionary, get better. Because that concept.

And, and when you say. Wait, when you say get better, what do you mean by that in terms of teaching? In terms of what?

Right, so John has a statement that a mentor of mine taught me 20 years ago, which is, you don't have to be bad to get better.

Right?

And the reality is that even for professors that are fine, there is an opportunity to not just be fine. In an educational practice that was originated, pick your timeframe 1,000 to 2,000 years ago, you can actually deliver a better educational experience, more engaging to students with better outcomes that students actually grow from tremendously. Much more so than being recipients of information. But actually participating in deep learning and technology can enable that. So an institution and a set of professors that have a growth mindset themselves that say, you know what? I was able to get away with a number of things that, you know, in a free market I would have a hard time getting away with and realize that now there is such a free market because students are going to be voting with their feet and this is where those deferrals are gonna start coming in. And again, you're right. The elites would say, hey, you know what? If 15% of Harvard's incoming class will say, you know, I'm gonna spend a year on daddy's yacht instead of going to school, that's okay, because Harvard is gonna go into their wait list and take that 15% of students from my alma mater, from Columbia, and they'll say, hey, you know, come give us $70,000 and you'll get a Harvard degree.

And they'll say, I'm glad you acknowledged Ben.

Keep going.

That's unfortunate, but true. Right, but at some point, Jeff, to your point, universities won't be able to do that. I'm not sure if Tulane can go to Louisiana State students and say, hey, you know, the 30% of my students that aren't showing up, you should give up Louisiana State, pay more and, you know, get a questionable experience in your first year, but you'll get a two lane degree. I'm not sure that'll work.

And with that, we're going to take a brief break on Future youe and we'll be right back with your questions.

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Okay, so we're getting a ton of great questions on LinkedIn live right now and I want to drive to some of them or move to some of them. And John, one of the things that keeps coming up is the reluctance of higher education institutions to partner not only with each other, but definitely with outside entities. And it seems like this idea that you were talking about earlier and that many people have been talking about for years, that higher education can't really go at it alone is probably going to of kind be become even more apparent in the next six months to the next 12 months. So how can we help institutions kind of get over that hurdle? Or is it just going to be kind of this crisis where it's either partner or go out of business? Is that really the, the, the option they're going to be left with or what else can we do to get institutions to either partner with each other or more important to partner with outside entities.

So I think this is a trust based space and we've in four years started deep relationships with several dozen of the best public and private universities in the country. I think getting over the hump building that trust takes an awfully long time and then it becomes easier. And this is a moment where partnerships are getting deeper very quickly. But when you look at trust, I come back to a question that I've asked both of you, all three of you before, for which is at the root of it is how much money should for profits make on kids tuition? Is this, you know, is this a public good? Is it a private good? Generally? You know I have this thought experiment of you invent a helmet that can replace A masters. It'll give you all the skills and content and contacts and everything else that you would have gotten for $40,000 and, and a full year of your time. And what do you charge for a zap of your helmet if it costs you a dollar of electricity? And when I ask that question, my investors and the investors I talk to say, well, you charge over $100,000 because you're saving everybody this great opportunity cost. And when I talk to nonprofits, including universities, they say, well, you charge a dollar and what, what industry is there where your customers and your board are giving you answers that are six orders of magnitude different? So I think the transparency of the for profit sector and the willingness to do good, we just have to get better. I think it's not solely in the hands of schools.

So Ben, one of the other questions that's coming in is around paying for higher education, particularly in a recession.

Depression.

Depression, right. We know financial needs going to go up. We're not quite sure, by the way, whether the federal government's going to kind of come in and help the states and state institutions. We saw the latest report out today from Shio, the state higher education officers on state spending on higher education, which really didn't even recover from the last recession in 2008, 2009. How do you see the role of outside entities, of students, of states, of the federal government? I mean, we still have the cost of higher education, whether we're in a recession or not. Who's going to pay? And more important, how are we going to pay?

So when we explain financial aid at our own institution to students, we talk about the four responsible parties that are involved in the affordability of higher education. And the ones that everybody is aware of are the philanthropist or the government that subsidizes the student, the family. Right. For the family contribution. So those three are straightforward. But people actually forget the single most important party in keeping cost of higher education down. And that's the university. Right. It is a problem that you are charging for a good where five times the amount of money that you spend on that good has nothing to do with that good itself. Right. Which is the education. And so I have long argued that universities are actually charging the right amount, the private universities, but in the wrong buckets. So a private university should not be charging $55,000 in tuition and fees and $15,000 for room and board. They should be charging $15,000 for tuition and fees and $55,000 for room and board. Because that's actually the cost. Right? The cost Is the tuition, it doesn't cost more than 10, $15,000.

Right.

And when that happens, everybody's mind will get clarified, right?

The government about what you're actually paying

for, what are you paying for? And all of a sudden public policy, philanthropy, all of these other types of folks will say, what is happening here? Why are we subsidizing with taxpayer money? Because even with the philanthropist puts in cash, right, the taxpayer is paying for 40% of it.

So it's a slightly different model, but one of the questions we got is, will we see other schools adapting the 10,000 year residential campus model that Southern New Hampshire just announced that they're going to start to adopt, Kind of blending the online and blended learning environments? Is that the direction we're going to start to see more institutions adopt? John, I'll start with you.

There are very different answers for different audiences. You know, and Ben's numbers are of course hyperbolic. The actual room and board that schools are, the real spend from schools is pretty modest on dorms. These dorms that are like palaces, maybe they just got air conditioning a decade ago. Right. Like, you know, you. But for adult learners, 35% now study online. That number is going up dramatically. Of course, right now it's at 100%. I bet you it never goes under 50% again. So I'm there for an 18 year old. I just don't buy it. Like being on campus, which is not that expensive, is a real benefit to students, for disadvantaged students, it's how they really join the middle class. It's not what happens in the classroom, it's what happens on campus. And, and for a lot of other kids, it's getting out of the home and developing their own personality and their own Persona.

So it's all bundling all these other services together, the clubs, the sports and everything which they bundle in tuition. Right. Because they believe it's part of the learning experience.

Exactly. And whereas we charge $15,000 roughly for tuition and fees, and we charge $15,000 for room and board because we don't do the campus.

Right.

Because fundamentally our experience is a social experience for our students, but it's an urban experience to take advantage of the city. I ask myself often, why does NYU or Columbia have a campus? They're in the greatest city in the world. All they need is a residence hall and a way to deliver instruction. Imagine if NYU could actually bring their cost of education to all their students down by half and actually provide them a better education and a better experience. And I think you can do that. In many of these environments, the real

cost of the physical plant outside of room and board, which is, let's say 14, 15,000 bucks a year, the real cost is under $10,000 a year for the rest of the physical plant. And that is assuming that they've paid cash and not gotten any donations and so forth that they actually paid out of their own pocket. It's just not that different. And the cost of higher ed has been flat to inflation for 20 years. Like on a per kid basis. We, you know, and people cite stated tuition and of course stated tuition is nonsense. We can cut 25% out from, let's say, the 20, $25,000 per year per student that right now we're spending. We can do that and we can do that without impacting education. You're totally right, but we don't necessarily have to do it by having everybody off campus.

So part of what you're both getting into, obviously is the fact that when you have a bundled institution that has historically offered these services as a bundle, separating out is, is, is painful. Internally the politics are difficult and externally it's opaque. John, obviously you've done a ton of work, Noodle, and with Delta Cost Project and the like to try to pull these parts, you know, out, but it is still fundamentally very opaque to outside lookers who are, who are sort of staring at it. Right. And I think you're both pointing to the notion of trying to make that more transparent. I guess final question for me before we wrap is do you expect, you know, we see a lot of students, families right now asking for greater transparency both into the decision making in the fall, around pricing, around financial aid, around what are they getting? They're looking to services that they never otherwise, you know, in the past would have looked to, to try to get some sort of guidance. Do you expect greater transparency in higher education a year, two years from now when we come back, or do you think it will fall back into old patterns as we get past this moment and we see some of the consolidation that John, you've talked about. So Ben, why don't you go first and then, John, take us home.

I think both from a transparency perspective, from a quality of education, quality of offering. You're going to see the vast majority of universities buy their time and then go back to business as usual, but you're going to see a minority of institutions, and by the way, some of which will shock you, ones that don't need to do it, that have the very best brand names and have, you know, have no shortage of students that want to go to those institutions that will say, no, we're going to do this better. And all of a sudden the education will be differentiated. All of a sudden, studying physics at one university won't be identical to studying physics at any other university because there will be a recommitment to general education, will be a focus on students. And what will happen is that the universities that will go back to normal will all of a sudden find themselves a competitive environment that isn't normal. And I'm not sure if that'll take five years, 10 years, 15 years to play out. But at some point, those institutions that are focused on delivering value and a great education for their students, not just business as usual, are going to gain in market share at every level of higher education, from the very elite to the open access institutions. And that is going to be a cataclysmic event for those that just cling to tradition.

John, final word.

It's a rare moment that I agree with Ben Nelson, but I'm there and I'll just double down on something that a lot of the innovation in education has been about making it cheap. The ROI on higher ed is really, really good. And the gap between college educated non is growing, not shrinking. People when they talk about disruption from AI and robotics, the right solution is a liberal arts education that you want to be agile as you walk into the workforce. The solution, the winners in education are not going to be the schools that suck a couple extra dollars out and make it a worse experience, but a little cheaper. They will be the schools that, as Ben says, just give a better education, that students are better equipped for the workforce, better equipped both upfront and long term for the rest of the world. And that's what's going to be really interesting. It plays out over time. It's hard to measure and you've got to look longitudinally so this happens a little bit more slowly. But quality is going to out.

And we'll wrap it up with that with those thoughts on value for the student. And thanks so much for joining us on this episode of Future you. And of course, a thank you to Ben and John for joining us. We'll be back soon with more episodes uncovering the different dimensions of this crisis and its impact on the future of higher education. Until then, be safe and stay strong. Hey folks, Michael Horn here. Hope you enjoyed the latest episode of Future youe. And just a reminder to please subscribe to us on your favorite podcast platform. And if you like the podcast, rate us so that others can find us and find out about the good conversations that we're having here. As always, thanks so much for listening.