Tuesday, December 19, 2023 - Hosts Jeff Selingo and Michael Horn wrap up 2023 by discussing some headlines in higher ed, including the reaction on campuses to the Israel-Hamas War, the big changes afoot at 2U, and more college closures. The episode is sponsored by the Bill & Melinda Gates Foundation and Ascendium Education Group.
Hosts Jeff Selingo and Michael Horn wrap up 2023 by discussing some headlines in higher ed, including the reaction on campuses to the Israel-Hamas War, the big changes afoot at 2U, and more college closures. The episode is sponsored by the Bill & Melinda Gates Foundation and Ascendium Education Group.
(0:00) - Intro
(2:29) - College campuses and generational divides
(9:20) - Higher education challenges and solutions
(13:31) - The decline of 2U and the future of online education
(19:03) - Online education, university finances, and potential bankruptcy
(26:14) - College admissions and career outcomes
(32:54) - Nate Silver hiring preferences
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Hey, it's Michael here. The episode that you're about to listen to was recorded on December 1st before a lot of events took place impacting higher education. Still, the conversation that me and Jeff had, we think is quite relevant, not just for the events unfolding right now, but for what's to come in higher education. We hope you get something out of the episode.
It's the end of the fall semester on many college campuses, Jeff, so it seems like a good time for us to check in to see how this year is going.
Yeah. Sort of like our midterm report, Michael. And so on this episode, we'll tackle the big headlines in higher ed from this fall, and the topics that have really occupied college leaders. That's next on Future U.
This episode of Future U is sponsored by Ascendium Education Group, a nonprofit organization committed to helping learners from low-income backgrounds reach their education and career goals. For more information, visit ascendiumphilanthropy.org.
This episode is brought to you by the Bill & Melinda Gates Foundation, working to eliminate race, ethnicity and income as predictors of student success, through innovation, data and information, policy and institutional transformation.
I'm Jeff Selingo.
And I'm Michael Horn.
Michael, I don't work in higher ed, day-to-day at least, but I always wonder if the end of the fall semester seems to come more quickly than the spring. Or after a while, do they both seem the same? Because I don't know about you, but December this year just seemed to appear out of nowhere.
Definitely, Jeff. And my class, literally on the last class session as we were wrapping up, they were like, "No, this can't actually be our last class session." It just flew by. And then on top of that, as you know, given that I'm focused on finishing edits for my book, which we'll talk about briefly later, everything just feels like a complete whirlwind right now.
But there are a few headlines and issues in higher ed that I know we both did not want to pass us by over the winter break. And yes, we do take a winter break, just like everyone else. So with that as prelude, let's dive in. Where do you want to start?
Yeah, Michael, let's start with something that I know we've been going back and forth with on texts and on Slack, and that's the protests that have really swept college campuses since October and the Hamas attack on Israel. I think those of us from a certain generation, and that's me as a Gen Xer, were quite surprised by the reaction on college campuses. And I know this has hit home for you personally too.
Yeah. And I appreciate you asking it, Jeff. It has hit home. And I spoke, of course briefly, about this in the back half of our show with David Leonhardt. But as a faculty member, Jeff, at Harvard, with one Israeli student in my class who lost friends -- they died during Hamas's attack -- to see the reaction of many of the students and faculty, it's been jarring at best and frankly deeply upsetting at times.
And I think what's worse is, if I'm being totally honest, I'm not sure that I'm all that surprised by it, just having been on the campus the last few years. But there is a deep hurt. There's a feeling of hypocrisy on the campus, given events of the last few years. And I think it raises a set of big questions that not just me, but a lot of people are now asking, around what does free speech and academic freedom on a college campus really look like?
What is in bounds to talk about and what is out of bounds? When does free speech cross over to being the kind that is inciting violence, that is breaking campus rules, that is limiting others' ability to express themselves, and is making an environment not just toxic and unwelcoming but outright hostile? And I think that's frankly where I'll try to focus for the most part, for the purposes of our podcast on the future of higher ed, less on litigating some of the questions around the treatment of Israel and Palestine and Jews and Muslims, and more on what does it mean for the future of higher ed.
I think it's a very good question, Michael, because there's so much to read on this. And Jewish friends of mine, from college in particular, they're constantly sending me articles around what's happening in higher ed because they're kind of shocked at how much they think campuses and students have changed since we were in school. And many of them are now of an age where their own kids are about to go to college, and they want to know what do they do, where do they send them?
One article that a friend sent me was an essay in the Wall Street Journal that was co-authored by Melissa Korn, who we've had on this podcast before. And the lead is about a student who was arrested during a protest at UMass Amherst who grew up not far from you in a Catholic family near Boston. And she tells Melissa that her activism is rooted in seeing the world between the oppressed and the oppressors. And I think that's a lot about what this generation sees.
And again, for this Gen Xer, there really seems to be a surprising finding for me in this Harvard/Harris poll where about half of Americans 18 to 24 think that Hamas's attack was justified by grievances of the Palestinians, compared to just 9% of those 65 and older. And I think that's why we're really seeing this divide between what's happening in the rest of the world as opposed to college campuses.
And so I think that campuses as places where multiple generations come together to teach and shape, as faculty, staff and administrators, we're now seeing this divide between those generations and Gen Z really playing out in heavily-debated statements or delays in putting out statements from administrators, from colleges in the immediate aftermath of the attack. And since then, of course, in all of these protests. And I just think this is in some ways just a microcosm of what's probably happening in other parts of society around a generational divide on something that we probably didn't think we would see in our lifetime.
Yeah. The generational divide has been really striking; for me, scary. And I've seen articles to the effect that Jewish students in high school are now rethinking whether they even want to apply to the Ivy League. But again, I guess, to keep it to what does it mean for higher ed more broadly, what's interesting I think on this generational divide piece is that in the STEM fields, what you're seeing is exactly what you just described, a real divide between the faculty there and the student base. But interestingly enough, there seems, at least, if you look at signatories to the different letters and so forth, a real overlap, actually, in sentiment between faculty members in the humanities and the student base. That in many ways the generational divide seems less present for faculty members in the humanities.
Now, this is interesting to me because for faculty members who I would've thought should believe in broad tolerance and human rights and non-discrimination and academic freedom, I've personally found many of their statements not just shocking and hypocritical, but frankly really sad. But again, to zoom out, I guess, I think there's a need for a real reset on college campuses at the leadership level. I think universities should really return to the ways of the Kalven Report, a document that a faculty committee from the University of Chicago prepared in 1967, as you know, which is a time of even much deeper unrest on American college campuses, about issues, by the way, that actually directly impacted far more young Americans at the time, on the university's role in political and social action.
And one of the big conclusions from that report was that it would be inappropriate for administrators to issue statements on these sorts of issues. Instead, their job should really be about creating an environment in which students can debate and discuss these difficult issues without a thumb on the scale from administrators suggesting that there's a right way to see the issue. And I think universities have really gotten away from that the past years, certainly starting with the murder of George Floyd. But I think now they should start thinking about how do they get back to it.
Now, to be clear, Jeff, the time to get back to it I think is not in the middle of a controversy and decide to all of a sudden become silent again. It's probably a few months from now, through some introspection, faculty involvement. And then say, "Look, this is how we're going to now treat these events. And this is when we will and we won't issue statements and why. When it impacts the safety of our students, for example, we will weigh in. When it doesn't, that's not the role of university leadership," for example.
Yeah, Michael, it's interesting because I was just talking to a university president last night about this issue. And he said, "Higher ed, these are supposed to be places where we educate students. And it's really hard to educate students on this because the dialogue and the discussion is so simplistic in some ways." Any thoughts on that?
Yeah, I agree. I've just been so struck by how limited the dialogue has been on campus, how narrow the viewpoints, how ahistorical some of the teachings have been, how simple-minded the narrative of oppressors versus oppressed is, and the lack of an ability for the different viewpoints to converse with each other.
And let's state it up front. Palestinian civilians have real, honest grievances. And yet at the same time, I don't know in what universe a population that had 6 million people killed less than a century ago, literally exterminated, and has been under waves of assault since, is somehow just labeled as an oppressor. Both of those statements that I'm making can be true, and we can and should also be putting these big labels, I think, in deeper context. Go beyond the Twitter statements and the casually throwing around words like apartheid that can apply to many countries.
And I see a real failing of our schools in that dialogue. And what I think I want to go to more here is something that we've talked on the show in the past year, which is I think this is an opportunity for them to create real resilience in students. The ability to have safe spaces, not to be free from difficult ideas, but to be able to debate and grapple with complexity. And for students to have a lot more humility in what they do and don't know. Those are life skills that I think would serve them and society better. And if higher ed really has a public purpose, Jeff, I'd love to see them step up to the plate on this and be part of the solution that brings us together, not pulls us apart into factions based on identities and what divides us.
Yeah, Michael, I know from talking to college presidents that this is an issue that is perhaps the most difficult one that they have faced in their careers, probably more so, believe it or not, than COVID or Black Lives Matter or financial sustainability. They're really trying to walk a line between their students, their faculty, their alumni, of course, donors as we've seen, as well as protecting both their Jewish and Arab students as well.
I'm sure we're going to be returning to this topic, and I'm sure, by the way, we're probably also going to be hearing from our listeners on this one in particular. We don't hear from our listeners enough, but I know on this topic we probably will. So obviously we're probably going to return to this topic in the new year as a result. But for now, let's take a break here and we'll be right back on Future U.
This episode of Future U is sponsored by Ascendium Education Group, a nonprofit organization committed to helping learners from low-income backgrounds reach their education and career goals. Ascendium believes that system-level change and a student-centric approach are important for our nation's efforts to boost post-secondary education and workforce training opportunities. That's why their philanthropy aims to remove systemic barriers faced by these learners, specifically first-generation students, incarcerated adults, veterans, students of color, adult learners, and rural community members. For more information, visit ascendiumphilanthropy.org.
This episode is being brought to you by the Bill & Melinda Gates Foundation. Today's college students are more than just students. They're workers, parents and caregivers and neighbors. And colleges and universities need to change to meet their changing needs. Learn more about the Foundation's efforts to transform institutions to be more student-centered at usprogram.gatesfoundation.org.
Welcome back to Future U where Jeff and I are catching up on some of the big topics from this fall. And the headline in the world of EdTech right now, so we're going to EdTech, Jeff, was, I think it's fair to say 2U. Not only has its market cap dropped below $100 million -- and to put that into context, two years ago it paid $800 million for edX, which is of course the MOOC provider that Harvard and MIT started. And then back in 2019, they paid $750 million for Trilogy, the bootcamp provider for higher ed institutions.
But not only all that, not only was it trading for under a dollar on the stock market, but the face of 2U, Chip Paucek, who we've had on the show twice, stepped down as CEO. He's been running that show, Jeff, for a long time. And he stepped down as CEO and from the board in November. So let's start with you, Jeff. What's your takeaway from all these events?
So first, Michael, I think we probably all saw this coming at some point. The stock price has been depressed. It's something I've been watching for a while, that it was really only a matter of time before some activist investor or the board just said, "We have to make a change." I think for years, probably thanks to the Huffington Post first and then the Wall Street Journal in recent years, 2U has really been the poster child for the OPM industry. And in some ways it defined it in ways that I don't think was always entirely fair, given, for example, what we talked about recently on this show with the CEOs of Coursera and Academic Partnerships, which are both thinking about their ROI, and the future of online ed, and what does online ed, education 2.0 look like? And in some ways I thought 2U was kind of online ed 1.0, and that just kept getting repeated in these stories about it.
And I think really, despite 2U trying to reposition itself after the acquisition of edX, as you mentioned, they were always going to be defined in the world out there as high-priced, elite online graduate programs. Now, what was interesting is that one of those elite programs, University of Southern California, which was one of its first partners, it was announced a few weeks before Chip stepped down that the two parties would mutually agree to conclude their relationship.
And this was significant for two reasons, Michael. One is the USC programs always seemed to make the headlines about OPM. So in some ways it was probably good that they were divorcing because at least 2U wouldn't have to be a headline anymore. But second, it really showed that 2U was trying to get cash. Because the way these programs work is that 2U spends most of the money upfront, in designing the programs and marketing the programs, but tuition comes in over time and that's when they get their share.
And in winding down the partnership, USC will pay 2U essentially tuition money that has yet to be realized by enrolled students. That might help with their next quarter results, and also by the way, provide a roadmap, maybe, for other institutions to get out of their contracts with 2U. I mean, inevitably here, 2U seems either destined to sell, to take it private again with private equity firms who maybe see the value in marketing to the list of learners. Perhaps it goes to another OPM, for example, given that Academic Partnerships just bought Wiley. I'm just not quite sure who would buy them among the remaining OPMs. Maybe a university could buy them that wants to expand their own online presence and develop the muscle of being their own OPM.
And I guess just one other final thought here is on Chip, because I think he really defined an era of EdTech CEOs that seems to be in many ways kind of last decade. Now, in the interest of full disclosure, I think to both me and you, he's a friend. He's with me on Facebook, on my personal Facebook page. I know from that he's a huge Miami Dolphins fan, and so that's at least working out for him this year. But he was also everywhere, Michael, as we know. And he had reporters on speed dial, I know. And it reminds me of how many of us also knew somebody like Jake Schwartz, for example, from General Assembly. And there were these, what I would call relational CEOs who are really critical in building companies.
But we're now in an era where EdTech investments are really shrinking. According to HolonIQ, venture investment in EdTech declined from a peak of 21 billion in 2021 to 11 billion in 2022. It's on track to again fall to just north of 3 billion in 2023. So it's just, at some point you need a different type of CEO, and I think that Chip is just not... Great guy, but just not that type of CEO. So kind of curious on your thoughts. What's Chip's legacy and where does the company go from here and what does it mean for the future of OPMs in general?
Yeah, I agree with much of what you've said, Jeff. And I see a lot of the same dynamics at play, so I don't want to repeat too much. I also think Chip's been an incredible voice for the importance of private investment in education and the good it can do. Maybe a few things that I would, I don't know disagree but amend a little bit is maybe you'd call them online ed 1.5. Because I think they loved defining themselves as not University of Phoenix. They were supposedly the group that made online education not suck, is I think how they often talked about it.
I also personally think that EdTech investment will rebound. What we're seeing right now in my mind is more of a product of a correction to the sky-high valuations from COVID that in my mind never made any sense. Plus the current macro uncertainty of the economy given inflation and so forth. But I think you're right. 2U, rightly or wrongly, will be much of the poster child for the past 15 years. And, look, we know that they've privately been super frustrated for a long time that USC would not lower online prices, that USC like many traditional colleges and universities have instead used online learning as a cash cow to prop up what I think are unsustainable brick and mortar campus operations.
But I think what it more signals, and this is what may interest you, Jeff, is that I think we're firmly entering the world of price competition in online learning. It's not necessarily a new thought, but I will tell you, in The Innovator's Dilemma, Clay Christensen's very first book, he has this chart where he says competition essentially goes through waves in an industry. It starts with functionality and reliability. The next wave of disruption is around convenience and access. And then the last one, only the last one, is around price.
And I think that's right. The initial online disruption was really about convenience and access. We're now firmly in the world, as you've written, of price competition. Things are different and I think that will have some big impacts now on traditional colleges and universities and how they show up in the world of online learning. And,, look, I think 2U was trying to go there. I think they were trying to move in that direction through their acquisition of Trilogy, through their acquisition of GetSmarter through their acquisition of edX, and moving into a platform business. But the reality is, with the amount of debt that they've taken out and the fact that they've never been profitable -- they've never been profitable, Jeff -- that catches up to you. And look, Clay, Christensen always taught that smart money should focus on profit before growth. "Be patient for growth," he said, "but impatient for profit."
And I just think 2U and far too many EdTech companies have ignored that. It's not just EdTech, right? This has been true in a lot of industries, that for a long time growth was sort of the king. And then as interest rates have come back up and money hasn't been free, people are all of a sudden rediscovering the merits of profit. And then, look, I think there's a high likelihood that... I don't know who would take on 2U because that debt is going to be a real albatross around any... They have to have a lot of cash to be able to make it work, or do a really good job of refinancing it with the debtors. And I suspect we may see a bankruptcy now, which Phil Hill has done a good job of making the argument for, Jeff.
Yeah, I mean, Phil has done a terrific job at reporting on this. And when you say that word, bankruptcy, it's just, wow, Michael. For a company that... I'll never forget, at one of its parties at ASU+GSV years ago and talking about, by the way, their relationship with USC, had the USC band, or at least a portion of the band. I don't think it was the entire band. They came in, and Chip followed them in the doorway. I think that might have been 10 years ago, right? That's that. That's that scene from 10 years ago, to not only a divorce with USC, but now this bankruptcy. That's just unbelievable. So how about a lightning round with some other topics before we end?
Yeah, that's a great idea, Jeff. What do you have on tap?
Well, there's the College of Saint Rose in Albany, New York. I remember speaking there 10 years ago. New York State, of course, has probably the second most number of private colleges next to your home state in Massachusetts. And what was interesting to me is how the board basically decided to close them down after the State of New York said that they weren't going to help bail them out.
And it's interesting that there's these private colleges, because we saw this down in Alabama with Birmingham Southern, we saw this in Iowa. We see these private colleges now coming to the state asking for a bailout. So that was kind of interesting to me because I'm wondering how much more of this we're going to see. And by the way, is that a precursor to closing? Because these tend to get into the news when they go to the state to ask for a bailout. So that might give you some indication of what's happening if they end up going to the state.
But I'm also kind of curious, because you were just talking about growth, and 2U, for example. And in higher ed, we tend to think small is better, at least in terms of quality. But I'm starting to wonder, how small is too small? Because in some ways, the College of Saint Rose wasn't as tiny as some of these other colleges that we've seen go out of business in the last couple of years.
That's a really good question. I guess I have a couple of thoughts. One, I've been persuaded, and you sort of first made this argument to me years ago, that scale is really critical to be able to play in the online world of the future. That scale produces a lot of benefits in terms of acquisition of students, in terms of being able to invest in technology and learning design and things of that nature. And so I think in online it is important. But I think when growth gets ahead of profit and you're always chasing more money to get the next program, in the case of 2U, that clearly doesn't work. And I think it's probably a similar dynamic for College of Saint Rose, that yes, they were bigger than a lot of these colleges we see, with fewer than 1,000 students. But still, Jeff, enrollment fell from I think over 4,500 students a decade ago to 2,800 students right now.
And with the fixed costs that they have in place, I suspect that just simply becomes unsustainable, where, like 2U, you're just not profitable. And nonprofits, they need to be sustainable. They need to have cash flow that outpaces expenditures at some point. I will note, Jeff, just to be... I don't know if this is a bragging loop or something, but this is the paragraph from the Inside Higher Ed article about the closure, which is that they said, "Multiple institutions have already announced closures this year, including Magdalene College, Lincoln Christian University, Alderson Broaddus University, Alliance University, Cabrini University, Cardinal Stritch, Finlandia, Hodges, Holy Names, Iowa Wesleyan, Medaille University, Presentation College, and various for-profits." So there's a lot of closures happening, Jeff, post, I guess, federal dollars and COVID.
I think we're going to have a Future U game. If any of our listeners could name where all those colleges are located.
Ooh, that's a good one. All right. So let's do one more hot take. There's new research out from a National Bureau of Economic Research paper. The headline is No Revenge for Nerds: Evaluating the Careers of Ivy League Athletes. It's by a series of authors, which we'll put in the show notes. I'm not going to go through all of them right now. But basically what it found is that athletes at Ivy League schools do better in many cases than non-athletes in terms of the labor market.
And secondly, it found that they're more likely to go into finance and business and get MBAs. Less likely to go into STEM fields. I will be honest, Jeff, I cannot say I'm actually that surprised when I step back and think about it despite all the disparaging comments I heard about athletes while I was at Yale. Because frankly, they have great networks that they walk into. There's amazing social capital. If you're the captain of the football team, that sets you up for life at an Ivy League college. And I'll also never forget former Dartmouth president Jim Kim saying that whenever he looks to hire someone, he looks for a former athlete. Not just because of the social capital, but because they have great work ethics, Jeff. What'd you make of this one?
Well, first of all, I think after this, there's no way that the Ivy League is going to drop their athletic preferences, that David Deming and others and Raj Chetty have written about in one of their more recent papers. I also think that this extends to other colleges too. I remember in writing There Is Life After College and talking to the recruiters at Enterprise, for example, Enterprise Rent-A-Car, which hires more college graduates than any other company in America every year. They also favor college athletes for the same reason. They show up on time. They know how to lose because they've lost as well as won. They're able to figure things out, problem solve a little bit better than other students.
So I have a feeling that the findings from this paper also extend probably to other colleges as well. But Michael, before we head out, how about a quick update on our work and the whereabouts for our listeners? I know you've been working through edits on your next book because it's something you seem a little stressed about. So can you tell us a little bit about that?
Stressed is the right word, Jeff. But we had the title conversation with the publisher, and I think we've settled that. But I'm not going to say it quite yet in case it does one more change. But the salespeople at HarperCollins seem to like where we've landed, so that's exciting. The draft is due sometime in January. So we are taking a winter break, but as you know, I'm going to be on the slopes in the morning and I'm going to be editing in the afternoons.
But look, this book is really for people who are... They've switched jobs repeatedly and not found the right job. They feel stuck. They're trying to get away. They're trying to reengage with work or get control over their lives. And there's a lot of anxiety right now around finding the right next step for them. And we estimate in the book, a billion people, Jeff, globally, look for a job every single year. And only a few of those million feel like they're really satisfied at the end of that process. And so we've built an eight-step process that we think is a pretty good way to help people get on track. But that's my book. You also announced a few months ago that despite all of your experience and lessons learned about the perils of writing a book, had jumped back in as well. So how is your research going?
Well, Michael, I'm about probably a year, year and a quarter behind you, so this will be me next year. But finally, I think I have a roadmap for this book. The first part will lay out how the college landscape has shifted just in the last six years since I wrote the last book on admissions. And I'm going to try to tell that through a few high schools. I've identified some, but if you're a high school counselor out there listening who has seen the college list for your students shift in the last 10 years, be sure to reach out. And that's going to be kind of the reality check of the book, to say, "Here's how the landscape is shifting." And it's not to have parents and students settle for a "lesser college," but to really widen their lens on the colleges that are out there.
And then once you do that, once you widen that lens, what are you really looking for? And I'm really going to focus on areas such as how do you find places where your kids are going to get mentors and where they're going to have networks with other students? How do you look at outcomes, and not just for salaries, but how well do they prepare students for a job? What are not only the financial resources they have for students, but given we were just talking about the College of Saint Rose, for example, how do you know you're not going to send your kid to a college that probably is not likely to close down, but might close your major? How do you know that? And then how do you just find places that are going to challenge and give your kids a chance to grow?
And I'm going to bring both a quantitative and a qualitative approach to that. A lot of people recommend Colleges That Change Lives as a book, but I'm going to probably expand on that and look at a broader set of colleges. So I'm always looking for student and family stories. So if you have a kid who wanted to go to a top school and they ended up going somewhere else for really good reasons and they're really happy now. Or maybe they've even graduated, and you are willing to tell your story -- I'm not going to be using full names -- but you're willing to tell your story about how it ended up being good in the end, as you know, readers really resonate with stories. And so the more stories I have, the better. So please reach out.
And then the other piece of this book that was a part of There Is Life After College as well, but I feel like I have to approach it yet again is, does it really matter in the end where you go? I did a Next Office Hour recently with the author Jennifer Wallace, and in the chat, kind of a debate broke out, saying, "HR people still care about top colleges." And we have a lot of anecdotal evidence. And I want to dive a little deeper into that. Because at the end of the day, that's, I think, what really pushes a lot of parents to make sure their kids go to selective colleges because they think that really does matter to the HR offices.
Yeah. Well, it's funny. Nate Silver, I think, tweeted, literally this morning or the day before, that he would hire a high-achieving state school student over an undifferentiated Ivy League student. "Not a remotely close call." His line, not mine. So I will be curious what you find.
And as we wrap up here, Jeff, we are certainly not going to be settling when we get to read your book. I'm very excited for this. And for all of you listening, just a reminder. We're going to be taking a short winter break at Future U so we can do exactly what we've talked about here. But recharge for a series of great episodes in the new year.
And in the meantime, you can reach out to me and Jeff over social media. He's @JSelingo on the channels. I'm @MichaelBHorn. You can check out Jeff's website, jeffselingo.com, subscribe to his next newsletter. You can get mine at Substack, The Future of Education. And of course, go to Future U podcast, drop us a line with all your positive and negative thoughts about today's show. We look forward to hearing from you, and we'll look forward to talking to you in the new year next time on Future U.