Reauthorization of Higher Education Act

With the government shutdown that just concluded, there had been a respite in discussion regarding Congress’ impending reauthorization of the Higher Education Act (HEA). Reauthorization, however, has the potential to further the monumental change we are just beginning to see in higher education. Policymakers on both sides of the political spectrum are demanding big changes. The appetite for substantial reform could very well unify Congress in ways that keeping the government functioning and raising the debt ceiling could not.

There is little question that federal regulation of higher education will continue to expand – continuing a long-term trend of the federal government usurping certain powers that in the American system have typically been considered to be part of a university’s institutional autonomy and/or left to the century old practice of self-regulation (accreditation). This is occurring as Europe and most of the world that had strong central government control of higher education via education ministries have moved towards more autonomy and the principles of accreditation/self-regulation.

A perfect storm of circumstances exists that almost ensure expanded federal regulatory intervention in higher education via the HEA. First, during 2013-14, the federal government doled out nearly $ 180 billion in funding tuition via student loan disbursements, grants, and tax benefits. Next, our system of accreditation is still paying for past and perceived “sins” as brought to light in the 2006 Spellings’ Commission report. Further, we are reminded almost daily of the relatively poor (overall system) outcomes of higher education. Last but not least, pricing continues to outpace a consumer’s (students, families, and government) propensity to pay.

What does expanded regulatory intervention look like?

  • Linking funding or components of it to outcomes.
  • Quasi price controls. While the federal government cannot institute direct price controls theoretically, it can establish de facto pricing controls via setting new eligibility criteria for federal funds (Title IV student aid programs). The federal government has employed this practice quite successfully as it related to compelling states to raise their drinking ages in the 1980s or risk losing highway funds or requiring hospital emergency rooms to treat and stabilize indigent patients or lose Medicare funds.
  • More federal “direction” on programs that schools “should” offer, percentage of a school’s expenditures that MUST be allocated to educational delivery, length of programs, and possibly curriculum influence. This essentially gives the federal government significant power on issues that are currently at the discretion of the institution. An excellent example of this type of policymaking is found in the Affordable Care Act, which requires insurers to spend high percentages on patient care versus administrative overhead, tells insurers what benefits they must offer at a minimum, etc. Again, all this is achieved by tying compliance with eligibility to receive federal grants and student aid funds.
  • In line with more federal “direction” on higher education, it is not too difficult to foresee uniform academic and curriculum standards for higher education similar to the Common Core standards that have been adopted and implemented by the vast majority of states for K-12 education. While there is no technical federal mandate for Common Core and participation is voluntary, the financial incentives for states to participate in Common Core were so strong that not participating made little political or practical sense for most states. National curriculum standards were almost unthinkable until recently. Governmental involvement in core academic issues, which many would argue are at the heart of institutional autonomy, may seem far-fetched now but are arguably much closer to reality than many may realize.
  • Allowance for other actors (think Apple, Amazon, Rosetta Stone, National Geographic, Google) to enter the education market either as a full alternative to accredited colleges or to offer competency-based courses that colleges receiving federal funds must accept. This essentially causes the so-called “monopoly” of post secondary education to be thrown open to viable and market-based competition – competitors that can and will offer products that will be of minimal cost or no cost to consumers. These competitors will NOT need federal support and therefore will not be part of the federal regulatory structure. This also essentially eliminates the need or at least influence of accreditation bodies.
  • Full embracement of a more refined MOOC model. Education, content, and instruction are well on their ways to becoming “open-source” commodities. This is already happening. Federal policy could encourage this trend. Coupled with even slight policymaking inducement, emerging content practices and artificial intelligence based instructional technologies that will “teach” courses and provide instruction in a consistent way customized for each student’s learning needs – could be emboldened. In such a scenario, facilitation becomes the need, not professorship. The value will become the certification of competency and degree conferment versus what schools do now.

As we know from history whether it be with the deregulation of the airlines or telecommunications as well as the increased regulation of banking most recently; federal policymaking typically has goals. In this case, I believe the goals are significantly reducing cost of higher education, improvements of outcomes, and innovation. The deregulation of telecommunications is what eventually brought us the smartphones that I write this on as well as the Internet that is how I can freely distribute on. Imagine what innovations can be brought to the space with these types of actions detailed above. Essentially, it forces colleges to act fast, fully embrace technology, reinvent themselves, gut their overhead, and compete for their lives – change or die a quick and painful death.

BOTH sides of the political aisle are behind these types of changes and I believe will act and do so soon. Both sides gain from acting. These changes ultimately enhance our economy and our global competitiveness. The political right wants to control the growth of federal spending and stewardship of that funding. They also want more competition and realize that the “for-profit” education industry” alone with notable exemptions is largely not able to do that. They want competition. And they are not fans of the majority of universities that they view as bastions of liberal thought. On the other hand, the left wants to make schooling a lot more affordable, thereby, increasing access to individuals with lower socioeconomic status. They embrace technology and social media. They are concerned about poor outcomes that disproportionally impact lower income students as well as students of color. Large donors to liberal causes are behind a lot of the reform efforts. All this is winning the battle over traditional Democratic constituencies that might have had a reason to fight for the status quo- teacher unions, faculty associations, etc.

I believe that over 50% of our post-secondary schools will not exist by 2020 for a number of reasons. Besides the elites or so-called top 200, the only schools that will survive are those that radically change and become early adopters of what I a few years ago coined as “Education 2.0.” This “radical change” and a school’s ability to sustain will be based on the following:

1) Significant and “real” differentiators – not the fairly common ones that most schools use now.

2) Traditional Online and I am calling online “traditional” is dead. How much do you frequent a post office these days or send a telegragh? That is the future of today’s online. It does not matter if a school was an early adopter or not. Online is old news and just as saddling as the classroom was 15 years ago. True mobile learning (“mLearning”) is what successful universities of the future will early adopt now. The goals are engagement, social learning, interaction, “addictive,” anytime/anywhere, and blended learning experiences (goes way beyond the hybrid online/classroom model. This is also a lot more than an LMS mobile application, which is just putting the same bland online stuff on a smaller mobile device. It accomplishes nothing.

3) Truly immersive “Nordstrom” student lifecycle management. This means using tools, technologies and tactics that we used to build our initial contact center management business – a business that has generated over $ 1.6 billion in revenue, tuition, and donations for our customers over the past 15 years.  It is about new powerful inquiry generation efforts, 24/7 availability data analytics, and proactive student support. Finally, it is about converging student life cycle management with the students academic experience day-to-day.

4) A student experience in the “classroom” that is next to amazing – one that achieves mastery, is practical, and keeps a student coming back all the time (engagement) like Words With Friends does for many of us.

5) Next generation programming and instructional practices as well as content.

6) Recognition that the student life cycle does NOT end at graduation. It begins, evolves, and should be enduring. By providing real and actual career paths, placement (not services), and lifelong learning enhancements/opportunities, schools can create a captive customer relationship for development and to serve further. With our society innovating in months at levels that took a decade just years ago, students need primers to maintain relevancy. They need a lifelong learning partner and support organization that keeps them engaged and giving – not getting an annual fund letter or a fundraising call from a student call center. Schools can benefit from the data after graduation, as they will need to continue to substantiate their value and ROI as it relates to their competition and less expensive non-school actors.

So, what does all this mean? It means that we have amazing opportunities in higher education – available for the taking. There is an opportunity to innovate like never before, address the challenges of higher education, and double down on the leadership our nation has offered the world as it relates to higher education. Institutions must act and they need to act at the speeds of the market, policymakers, and technology – not themselves. The market is about to be thrown wide open. This is the time to act!