Higher Ed 101: The Credential Cluster

Jeff Selingo:

Michael, we all know that students go to college these days, knowing that when they graduate, they'll get a degree. But did you know at the birth of many American colleges at the founding of the country that degrees were rarely even conferred?

Michael Horn:

I didn't know that Jeff, but it points to something shocking. How little colleges thought about credentialing in the very beginning, given how much we focus on it today, especially as a signal in the job market and how it gets wrapped up in the value of a college education. And that's why today on Future U we're returning to an episode format we did in the fall. Something we call higher ed 101, where we explore a topic in depth. Today, that topic is education credentials.

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Jeff Selingo:

I'm Jeff Selingo.

Michael Horn:

And I'm Michael Horn.

Jeff Selingo:

So as we mentioned at the top, today, we're going to follow the format of an episode last fall that was popular when we tried to explain OPMs or online program managers. And so you should definitely check that one out again. So the idea behind this format, what we're calling higher ed 101 is that when we interview guests or talk about higher ed issues, sometimes things might not be familiar to all listeners. And even for those listeners where the terms of art might be known, they might have assumptions that are sometimes wrong.

Michael Horn:

So this episode we'll follow a slightly different format from our traditional ones. Although we do have an interview, the purpose of our guest expert today is to really help explain the market of higher ed credentials, why we have what we have, the growth of new kinds of credentials, and where this is all going. We asked someone who wrote the book on the subject quite literally, Sean Gallagher is the author of The Future of University Credentials: New Developments at the Intersection of Higher Education and Hiring, which was published in 2016. And he is founder and executive director of Northeastern University’s Center for the Future of Higher Education and Talent Strategy, and an executive professor of educational policy at Northeastern. Sean, let's start with a bit of historical context. We use terms like degrees, diplomas, credentials, often interchangeably. When we use those terms, what are we really talking about and how do the legacy degrees we have today come to be?

Sean Gallagher:

So all of these terms refer to some sort of record of completion of a course or program and educational experience. And bachelor's degrees are really the core of the higher education market, about 40% of all the credentials that are awarded. It was really just in the late 1800s that that became to be standardized. And later the associate degree was a new invention in the early 1900s that came along with the birth of community colleges. Master's degrees were initially the terminal credential for college faculty and until late 1800s, that was the highest level that you could get at a US institution, which then began to import the research model of universities from Germany. And so it was around the 1870s that we saw the first PhDs awarded in the US. And what all of this added up to is at the start of the 1900s, there was a need for some standardization in figuring out how all of these credentials flowed into each other and fit together. But the system we have today is really a 125 plus years old.

Jeff Selingo:

So, Sean, here's another word for degree, sheepskin, right? Diplomas were once written on sheepskin. And that's where the phrase sheepskin effect came from, right? It was coined in a 1987 economics paper, which found that the number of years of study didn't matter, but the piece of paper did. So how did the college degree come to be a signal in the job market? Was it always that signal?

Sean Gallagher:

Well, we need to remember that it wasn't until the 1920s, that half of the US population even completed high school. Prior to that, people were more likely to be farming and not living in cities. And you just had this giant transition after the industrial revolution, and you had the beginnings of the growth of more managerial and professional positions that required some education beyond high school. Then after World War II, you had a real ramp-up of the knowledge and the service economy and the professionalization of a lot of fields. Work became more complicated and the idea of signaling is very important. You can really draw direct lines between the nature of work and what the world of work was demanding and the need for more and more years of education.

Michael Horn:

So let's dig deeper into the legacy degrees before we talk about the shifting credential market and where it's going, and let's start with the associate's degree. It was first awarded at the University of Chicago in 1900 as a credential to signify the end of the sophomore year of college. This is one credential that seems to send mixed signals between being a transfer degree to a bachelor's and one that gets you a job. Can you go deeper on this one, Sean?

Sean Gallagher:

So the initial concept of an associate degree, I think is very interesting and it comes from this thought that higher education would be much more segmented and that certain institutions like community colleges might handle the first two years and that universities would focus on the upper-division and higher levels of education and graduate education. But what happened of course is we got a very diversified higher education market and a lot of overlap, which even continues today with the trend toward community colleges awarding bachelor's degrees in most states, which just a few years back it wasn't even a majority of states where you had that possibility.

Sean Gallagher:

The other thing is, as a terminal credential, if you just complete an associate degree at a community college outside of a few fields, like an allied health or manufacturing and certain fields that really demand an associate degree as the key credential, it's not valued as much in the job market beyond something like a high school diploma or in the same way that a bachelor's degree is. And so much community college activity has the associate degree as a station on the way to the bachelor's as a transfer degree. So it's very unique in that it's serving those two purposes. The challenge is that the return on investment can sometimes be unclear.

Jeff Selingo:

So, Sean, we often hear complaints that it's the bachelor's degree that is the new high school diploma. Is it?

Sean Gallagher:

The bachelor's degree has really become the prominent and common credential that a majority of the population in middle-class work and knowledge work tends to be achieving. And that builds on the fact that high school diploma became much more common in the last century due to the growth of the knowledge and the service economy. And this really took off in the 1960s and 70s. So today, if you took a snapshot of all the job openings in the United States, which are, of course, at a record level, you'd see that the bachelor's degree is associated with about 50%, half of all the job openings, but only about 40% of the population has a bachelor's degree.

Sean Gallagher:

So there's a lot to unpack in there in terms of are these degrees really needed for certain positions. But the key is that the level of education that employers prefer in the workforce and that people tend to want to differentiate themselves and to signal to employers that they can persevere and that they have certain skills has risen. And it was only about 20 years ago. And I remember Jeff, some of your work at the Chronicle doing public opinion surveys on this, that career outcomes and job placement became much more central in why students and families pursued higher ed. I think if we looked at this question just 25 years back, we might have a little bit of a different discussion.

Michael Horn:

Let's turn to the master's degree now, because the number of people with one is now about equal to those that had a bachelor's degree in 1960. And indeed those with graduate degrees more broadly matched the percent of the population that had a bachelor's degree as recently as 1980. So what spurred the growth in master's degrees and where specifically have they grown?

Sean Gallagher:

Well, beyond a master's degree as a qualification for college faculty, maybe back in the 1800s and early 1900s, the master's degree up until probably the 1960s or 70s was more of a consolation prize enroute to a Ph.D. or something where people did a traditional liberal arts program at a grad school, they might complete a master's in writing or a discipline like that. But what changed about 40 years ago was you had the rise of the MBA, master's degrees in education, computer science. It began to be associated with professional education and part-time learning in a way that people would differentiate themselves in the workforce and also just acquire more skills through additional schooling. And it became much more part-time oriented and much more specialized.

Sean Gallagher:

And probably the best example of this trend, which is pretty current is analytics and data science. If you go back to just 2010, there were basically zero programs in analytics or data science in the US and probably worldwide as well. And today, there are more than 350 with 50,000 graduates. So can you get data science and analytics skills through a coding boot camp or on your own at work or through self-study? Absolutely. But I don't think most people would debate that a master's degree in analytics or data science wouldn't help you in some way in the job market. And that's just one example of the specialization that's happened, where that's growing much faster in business than is something like the MBA, which has really flattened out.

Jeff Selingo:

So, Sean, I received my master's degree in 2001 from the arts and sciences school at Johns Hopkins, and it was in person. It was all in person, right. But when I went back a few years ago to give the commencement address to the most recent graduates, I was told it was the first time that most students in these programs were on campus because most of them now were online students. So without online education, do you think master's degrees would have grown as much as they have?

Sean Gallagher:

No, I don't think it would've grown as much and it's really been central to expanding access. So prior to the pandemic, 40% of all master's-level education in the US was already online or high hybrid. And so that's probably a majority today. And if you look at the data for a field like business or cybersecurity, nursing, the majority of programs from US colleges and universities today offer those programs in those areas online. And so this has been a very strong market for universities. Again, largely because of working professionals who now don't have to stop out and drive to a class at night or go full time in an intensive way. They can do it while they're working.

Sean Gallagher:

And the return on investment is there, even though there have been some negative headlines about graduate school debt and those types of dynamics. The other thing that's important to note here, and that is still very early, is because of MOOCs and other new business models and delivery models. You now have these low-cost master's degrees where many institutions, and there were just a few who were doing this five or ten years back are offering a master's degree at maybe one-third of the total cost. And they're enrolling thousands of students at scale, versus it being something that is traditionally going to take you two years and 50 to $75,000 to complete.

Michael Horn:

After the master's degrees, there are the PhDs and other professional degrees, and of course, the certificate, but let's stay with the master's and other professional degrees first. Let's start with MBAs, JDs, MDs, what's growing and what's not?

Sean Gallagher:

The MBA is still a solid market, but it's probably peaked in many ways. It's one of the most popular credentials and areas of enrollment. But as we discussed, the business market has been trending towards specialized degrees in areas like analytics, finance, supply chain, marketing. The JD and the MD and those types of professional doctoral degrees are just a few percentage points of the total US population and even just the higher ed market. They tend to be very specialized. They're very expensive. Of course, they're very needed to qualify people in fields where you need those credentials to practice.

Sean Gallagher:

And if we go back 15 years, 55%, a majority of all masters enrollment in the country was either in just business or education. And the shift since then, that's really when it peaked has trended toward areas like biotech, health, engineering, computer science, cyber security. So these are all critical professional areas that are more about the skills that are needed in the workforce to qualify for some of these new types of jobs and growing areas often influenced by technology rather than just the idea that people are going to accumulate another degree because they want to.

Michael Horn:

That tells quite a story in and of itself. But let's shift to the certificate and its close cousin from a verbal perspective anyway, certifications. Can you help us parse these terms and explain the rise of certificates?

Sean Gallagher:

Certificates are not new of course, they've been around for many decades and I'd say they're central to growth right now, but it's a little bit complicated. Sub-baccalaureate certificates, so something that you earn a certificate, but it's not a bachelor's degree. It's not an associate degree. There was a big policy push for those a number of years back, but the returns on those credentials are relatively low and often people are better off getting a degree. But because they're less expensive, there's been a lot of momentum from policymakers and others appropriately to think about these shorter and less expensive credentials. And can we have people get quality jobs through those less expensive credentials rather than a full degree? So there's a lot of potential there, but there are also some big questions. Post-baccalaureate certificates or things that you get beyond the bachelor's degree. Those are absolutely booming.

Sean Gallagher:

And they were trending up before the pandemic and they're growing at a very significant double-digit rate in the pandemic. And these are the things that are often offered online for professional development purposes or for executive education, or just out of people's personal interest in developing their skills. The thing about certificates is, a certificate can really stand for anything, a very wide range of experiences, whether we're talking today or whether we look historically. You can get a certificate from an accredited college or university for a weekend experience, for a collection of three or four courses that are non-credit, for courses that are for credit, for an online program that's about half of a degree, and everything in between. Maybe just a training experience, you get a certificate of completion of some sort. And because of that, it's been very hard historically for an employer or for a hiring manager to sort out if someone has a certificate, what does that entail? Unless of course, they're familiar with that particular certificate?

Michael Horn:

So, Sean, then what about certifications?

Sean Gallagher:

I'm glad you asked because these terms are confused and conflated all the time, whether it's in higher ed or among employers and in the general public. And it's a really important issue as all of this credentialing expands and grows. A certificate documents the completion of a course or a program or an experience. Certifications are based on an assessment and the organization awarding the certification can be an industry association, a business, a higher ed institution. That organization is asserting that an individual is proven that they've met a standard to perform a specific job or occupation. So you can earn a certification purely based on experience or self-study. If you wanted to become a certified network engineer or a CFA in finance, you could take a course or a higher ed program to prep for that, but you could also do it on your own and sit for the exam and get a certification.

Sean Gallagher:

Certifications are also typically time-limited. You might need to re-certify and they can even be revoked by the issuing body. So they can expire. And the future and the threat and opportunity for higher ed is we're moving toward a world where there's much more certification and assessment rather than just awarding a credential that reflects that I sat in a seat and I completed a program. And I guess we could bring a lot of this discussion together if we think about the examples of nursing or teaching, which most people are familiar with. If you want to practice as a nurse or an educator, you're going to need to complete an accredited college program. You'll likely get a degree for that. You might get a certificate of some sort, that instruction will prepare you to sit for an exam that if you pass, it will qualify you for a job.

Sean Gallagher:

And that might be a certification. It might be tied to a license. And then to maintain that license you're going to need continuing education and re-certification. And the way that works is of course different for just about every occupation. If you want to be a software engineer, that's where the classic model starts to fall apart a bit because you can teach yourself to code, you can get a certification from Microsoft, you could complete a boot camp, you could do a master's degree and all of those things would be pathways to that particular high demand occupation.

Jeff Selingo:

Sean, thank you for that explanation. And when we come back after this short break on Future U, we're going to be talking about the explosion of new credentials, like micro-credentials, and why recently Pearson acquired a digital credential company. We're going to be right back.

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Jeff Selingo:

And welcome back to this episode, higher ed 101 around credentials. So, Sean, degrees are supposed to signify learning. Do they? Will they ever?

Sean Gallagher:

I think they do generally. They don't always, they really should. They're an artifact of a college experience and college experiences vary. But the idea of a degree just as a binary thing is very, very blunt. The three of us all have degrees. So if you think about, well, what does that tell us about differences between our backgrounds and skills and capabilities? It really just doesn't make a whole lot of sense, but what's happening with degrees is they're becoming more outcomes-oriented and more granular. And we're getting through some of the innovations in credentialing better documentation, whether it's through assessments or micro-credentials that come with the degree, potentially in the future that begin to give us more nuance beyond just the single blunt instrument of degree or no degree.

Michael Horn:

So, Sean, it seems like every few years right now there's been a new credential announced to new name, making it difficult for all of us to keep these things straight. We have nanodegrees and micromasters for example, what are those?

Sean Gallagher:

This has been a really interesting area, years ago was a bit of an explosion of new terminologies and constructs. And in fact, the two examples you referenced, Michael are trademark terms. Nanodegree, micromasters, another company has trademarked the term microdegree and organizations were coming out with their own names for these new sorts of credentials. And as we discussed earlier, certificate really just the old certificate tends to have the momentum today to describe probably a hundred different things. And so this is happening on the supply side where it's higher ed and also non-institutional providers who are out in the professional space, who might be unaccredited, are creating and awarding new credentials.

Sean Gallagher:

But it's still very early. We do a lot of surveying and interviewing of employers. And they're generally aware of these new sorts of credentials, but awareness, while rising is still pretty low. And the higher ed and workforce field and other countries have really come together around the term micro-credentials as a blanket category to describe certificates, badges, all these certifications, nanodegrees, and so on. And so I think we will continue to see some new credential semantics, but just like the 1900s, I think there's probably a need for some standardization in the years ahead, as we have more bachelors level micro-credentials and a growing number of graduate and lifelong learning credentials.

Jeff Selingo:

So, Sean, you used a word there, badges. And every time I think about this, which has of course been the big hype in higher ed, I just think of my youngest daughters in Girl Scouts who gets these badges and we put them on our vest. What are badges?

Sean Gallagher:

Well, badges are promising. They're an exciting area, but there is a need to separate some of the hype, especially from a few years back from the reality. And what badges are doing is they're signifying learning or skill in a very micro way. They tend to be digital, digital badges is a particular standard in term and that makes them verifiable through a standard. It makes them more shareable on social media. So this is a way that you can present your accomplishment and your learning to an employer, to an educational organization, or whoever might be interested. That's much more digital and shorter than a degree.

Sean Gallagher:

In 2018, there were 24 million badges that had been awarded. In 2020, and this has certainly grown since it's just not a new number available, 43 million badges. So very significant growth. A lot of professional development activities and courses can be badged. I believe if you get a certification, you complete a program from a company like Microsoft or Novell, or Cisco, you get a badge along with that or a badge from a project management organization. So all kinds of activities can be badged. And that is happening in the education ecosystem and the professional world at a very high rate. It's just that they're not standing in as an alternative for degrees, which is what some of the initial hype was around.

Michael Horn:

So, Sean, assuming that the 43 million badges doesn't include Jeff's daughter's badges from Girl Scouts, let's start to put all these things together. We hear a lot of talk about stackable credentials these days, what are stackable credentials? What's the potential for them and are there risks?

Sean Gallagher:

Stackability is the idea that these credentials can build toward each other. You take the smaller pieces and they build up to a larger credential. So traditionally in most cases you enroll in a degree program and you either get a degree or you don't, but now there's often more options to earn smaller credentials as you go along through your process. And that's becoming more and more common, or you might get a digital badge or some kind of certification as part of maybe your community college program. The graduate education world, master's degrees that's probably an area where we're seeing the most stackability.

Sean Gallagher:

You might not know that you want to pursue the full master's degree, but as you earn a certificate, you've already moved maybe a quarter of the way to the master's and it becomes an option. So it creates a lot more optionality and the sense that you can try before you buy and that also, if you don't complete a program and you've invested time and money in it, you do come away with something, you do come away with a credential that signals something rather than just a degree or nothing. And so that's what makes stackability a big emphasis from the policy and the funding perspective.

Jeff Selingo:

And Sean, then there's blockchain, right? And I feel like we're entering the domain of NFTs here where I really get lost. So can you help explain how blockchain technology might or might not hold promise in the area of credentials?

Sean Gallagher:

So when blockchain comes together with credentialing trends, I think this is an example of a technology where there's this attempt, this interest, to apply it to the education business. And as you know, sometimes that's hard to do. And if you were to do a quick Google search, you'd see all kinds of the claims that blockchain is going to revolutionize every area of the economy over the last few years, and that's happened in education as well. And we're probably about five to ten years into the idea that blockchain is going to have some kind of a major impact. And unfortunately, I haven't seen very much yet. I'm very skeptical about this because all of my research, there's not much employer demand or interest from educational institutions or interest from consumers for blockchain. It's not at all to say that it can't have some kind of helpful impact.

Sean Gallagher:

My sense of blockchain is it's about trust and transactions. And the usual claim is that degree verification and credential fraud is a multi-billion dollar business problem. It isn't typically in terms of how employers have dealt with that practically and historically. And I think employers are often putting their trust in the college or university brand as the credential issuer, and that's the signal of quality and accomplishment. And that entity needs to be certified in some way. And with higher ed institutions that tends to be through accreditation.

Sean Gallagher:

So I think we'll see blockchain as a utility, a feature for recording credentials and that's great. And in fact, the important thing to point out here is that the major credentialing platforms already have a blockchain capability and I've asked them, and they've said a tiny, tiny share of their institutional clients have ever decided to turn on that technology, but it's something that you can already do today. I think there probably will be some novel business models that emerge related to blockchain in terms of some kind of marketplace and connections to NFTs, but it's probably not something for the core higher education system that's going to really change how things are done. And of course, I'd be happy to be proven wrong there.

Jeff Selingo:

So many people are talking about this idea of lifelong education. We hear it so often where learning is always on, but how do you credential something that technically never ends?

Sean Gallagher:

You do more credentialing and you do continuous credentialing. So this doesn't mean that everyone needs a master's degree or that everyone needs to have a bachelor's degree, but whatever your level of education you're going to start to get more formal credentials and assessment results, perhaps for the completion of different work experiences and educational experiences. Employers have told us this very consistently in surveys that they're expecting a world. And I think we're seeing it with the job market data that people will just be pursuing more lifelong learning and more continuing education. There's a lot of fresh data from the experience of the pandemic with people studying up and earning more credentials online in this last two years. This is already happening at a really micro level. But the question is, how might it tie to degrees? We have stackable credentials, we have micro-credentials. The whole idea in this new marketplace is that we're going to have more way stations and smaller bites of education that might be on the way to a degree, or it might be an alternative to a degree.

Michael Horn:

I want to shift gears just a little bit to the commercial side of this. Pearson which years ago was snapping up ed-tech companies left and right, and then took a bit of a break from that, made headlines recently for buying a certification company. In this case, Credly in a deal valued at $200 million. Can you tell us about Credly and what they do and why would Pearson want them?

Sean Gallagher:

Yeah, this acquisition seems to make a lot of sense. Credly is one of the leading credentialing infrastructure platforms. So they help universities and professional groups issue and record the credentials. And it's a place where the consumer can basically go to, to get their credential. It's where it's stored, if you will, among other things. And interestingly Pearson was already an investor in Credly, and they had something called their Acclaim platform that few years ago they spun out to Credly to really incubate it at a startup. Now they're sort of bringing it back in house in a way. And Pearson of course is probably the world's largest education business, if not one of the largest education businesses in the world. And so it makes sense to have that capability, if this is really the future of education, that whether they're working in the professional education space or with colleges and universities, that you'll be issuing more and more micro-credentials.

Sean Gallagher:

There's other platforms as well. It depends on what we think of as the definition of a platform that records competencies and skills and credentials. LinkedIn is an example of that in some way. And the big question for the future is who owns that space where we record our educational and professional achievements because it's very fluid right now. And maybe brings us back to blockchain and the idea that people want to see the individual or the consumer being able to own their educational records and have them move with them freely over the course of a career, rather than having to request transcripts and have things that exist only in paper or have things that are digital, but then go away if a business goes out of business.

Jeff Selingo:

It always comes back to blockchain. So let's wrap up with this kind of big question. We've been talking a lot about the value of higher ed on this podcast. So much of what colleges charge, what students are willing to pay, and what the government and private sector are willing to subsidize is tied up in the degree. Sean, is there a better way to measure the value of a college education than this piece of paper we all hang on our walls somewhere, or maybe some people never take out of a box? Will we always measure value and completion with earning that credential?

Sean Gallagher:

So I think degrees aren't going away, but I'm very confident that the alternatives will be growing. And why is it we haven't had a new degree level in a hundred years? And I'm not suggesting we need six or seven different degree levels, but that's in a way what seems to be percolating right now, as everything we've talked about points to there're going to be more smaller and faster and cheaper experiences and courses that could lead to a degree, but that are also being unbundled. And if we think about the meaning and significance of a credential. What is a credential? It's a package, it's a demarcation that's about some intentionality and a learning experience or a professional experience, rather than just some miscellaneous accumulation of a set of experiences, right? There's a curriculum there, there's something that's been structured. And so a credential, whether it's large or small signals that a person has completed something and that they've been through an educational process.

Sean Gallagher:

If that credential is a degree, we know that's an expensive heavy lift, but there's an explosion of smaller credentials. And they're also increasingly, not always, but increasingly competency oriented or assessment based or in partnership with industry in some way, if we're talking about professionally-oriented credentials. And I think that's one of the exciting things is whatever the type of credential, an individual is going to be proud to have earned one, an employer's going to appreciate what that credential stands for. And if it has nothing to do with spending four years on campus, there's still a benefit there. But there's a lot of work still to be done in this whole ecosystem to get to that place.

Michael Horn:

Well, this has been exactly the conversation we were hoping we would have because we talk about credentials so often on this program. And Sean, thank you so much for clarifying all of this, working through all the jargon in the direction of credentials, and joining us. And for those listening, please give us some feedback if you want more of these higher ed 101 episodes and tell us what you're curious about and want to be featured. As always, thank you for listening to Future U and we'll see you next time.