A new University is on the rise
With nearly twenty thousand centers in Europe by the end of the twelfth century, monasteries were the natural transmission of knowledge from the Middle Ages to the Modern Age. Since then, it had taken nearly four centuries before nascent universities equaled the spread of abbeys and convents. Since that time, it took at least another two hundred years before universities established their primacy in education.
The prestige and usefulness of the new centers of knowledge were unchallenged. To shape society through classes of engineers, physicians, and all manner of professionals is considered the power and privilege of those who teach at the highest levels. At least until recent years.
Centuries later, it seems that the scene is changing again, and (perhaps) a new passing of the scepter is upon us.
A spring of innovation
Today one in ten adults globally has a university grade. While South Korea and Singapore will reach 50% by 2050, the nations we consider most economically developed today do not seem destined to get more than a modest 15/20% in the next thirty years.
Data on university education are considered stable indicators of a country's development. In the last two decades, the Universities' have contributed to the transfer of technology, produced at least eighty thousand new patents, granted the license to use at least 70% of the innovations created to small and medium enterprises, often startups. In other words, results deriving from scientific and technological research pass from the universities to the market and society in general.
It's not just about innovation in the STEM area, although that's a field where we can measure their contribution at best. Universities don't just create applications; they also disseminate the associated skills and procedures, becoming an intrinsic part of the technological innovation process producing human capital.
The impact of this contribution is constantly measured. For the past two years, we could trace a clear relationship between the local increase in Universities and the increase in per capita income in the same area (+10% = +0.4%). The term to look at is the spillover effect. The flow of knowledge between those who innovate, those who produce, and those who consume create a "nesting" effect (Handbook of Commercial Policy, 2016) or, in other words, a structure that progressively expands and nurtures society. That's why more and more companies are investing in universities and why colleges remain at the center of public policy in every country.
If the benefits are clear, why aren't university enrollments accelerating significantly, and why are they even slowing in some nations?
2. Slowdown factors
Over time, various factors prevent universities from further accelerating their expansion. First, at least in the more developed countries, there is a demographic decline. At the same time, wages have risen, and jobs that allow for economic independence are significantly more accessible than in the past. The spillover effect is still at work. We are all richer on average, and for several families, it seems counterintuitive to invest another five years of study and shift a significant economic return to the next ten.
University education is predictive of higher income in the medium and long term. That's certainly the case for non-STEM curricula (the majority). Still, it is not necessarily the winning economic choice in the close reading of the present and the needs of families and individuals.
Other phenomena concur. The most prestigious universities have become brands. Their value is (also) associated with the level of desirability, which translates into the selection group in academic terms. The culture of support for study ("Help them out") gave room to an increasingly strict selection ("Wipe them out"). In other words, the competition is increasingly challenging for the most desirable positions, as is expected in any mature market.
Related to this maturity are the costs of entry. Tuition is part, indeed, of the problem. For four more years - in a pre-pandemic context - the average university cost incurred by each student in the United States was over $10,000 per year. The prices in the most prestigious European universities are comparable. It is sufficiently prodigious to project over 40 000 euros as the investment for each family in a five-year course of study. However one looks at the two markets, the scenario in which one decides to change state for one's education costs can reach 100 thousand dollars, approximately 88 thousand euros. Forecast on the actual ability to pay it back with a first job? Ten years at least.
(Also) for this reason, the level of PhDs, i.e., those who decide to stay in academia after graduation, do not represent more than 2% of the world's population. The few individuals that proceed are subject to strict selection (over 50%) and certainly face fewer challenges than their less-educated peers, including the difficulty of converting from the university mentality to the private competitive process later in life.
3. Growing Skepticism
To understand the fate of the universities, we need to look at how public opinion is orienting itself toward these institutions. On the one hand, skepticism has increased, even among the middle class. The reasons for this are pretty straightforward and relate to the two significant crises we have faced in the last decade: 2009 and 2020. Suppose a college degree stops predicting success ipso facto, the game changes, making the choices we suggest to our children. Does it seem too much to blame universities for the economic crises or the pandemic scenario? In part, yes, but the reaction of these institutions to macroscopic changes in our society is not always easy to defend. The elements of calculating brand value in the long term seem to be decidedly superior to the connection with the needs of families.
Perceived quality in education isn't just about the virtual transmission of knowledge but about how perceived value declines when workshops, meetings, group research, and seminars are abolished. We do not have evidence that this has diminished the intrinsic quality of the degree, but it has undoubtedly undermined the foundation of perceived quality. In these terms, the decision - almost unanimous - to maintain tuition even in the two years of the pandemic and zoom call made a difference.
Still, the tension between recruiting goals and education needs was already evident before the pandemic. Even in 2019, admissions officers in academic programs showed concern about meeting their goals (nearly 7 in 10 at public institutions and more than 50% at private institutions). Expectations too high, decentralization of knowledge, or decline in student quality? (IQ, declining globally, is a decisive factor in predicting retention in education.)
The slowdown of "traditional" universities may be the combined effect of all these elements. However, in our view, this is only part of the equation. Much of the weight comes from new opportunities.
4. New meaning, new geography.
A new sense (new meanings, new direction) seems to be emerging from the concept of "University." The "whole" (Universitas) to which the term refers is no longer necessarily contained in the traditional type of education. We mentioned that the spillover effect does not seem to radiate today from a single center.
Individuals expect a return on investment from their studies; companies look to the brightest minds solve their crises. Today they seem to be looking at the scenario from a broader perspective. We have put much emphasis on the relationship between study and economic well-being in these lines.
Let's break down this movement. At the individual level, the motivation to pursue higher education falters under increasingly heavy tuition fees, synonymous with a machine that needs to be streamlined. In the meantime, e-learning platforms now present themselves as a solid alternative, more accessible, more focused, less expensive, and progressively more rigorous in the accreditation process. The harmonized factors are a potential University-killer in the medium term. In this regard, look at the success of Coursera, Udemy, or LinkedIn Learning in providing skills comparable to academic ones. Apple itself has wholly entered the industry.
The software world has made great strides (Ispring, Docebo, Adobe Captivate Prime), but this is not the only reason for this growth. Attention should be equally focused on the rise of Professors as brands on social media. Real stars are emerging today, trained in traditional universities and in possession of a worldwide audience of potential students thanks to the network. Sometimes the best, sometimes the most controversial, almost always those able to enchant, for hours, millions of individuals online. In this case, education goes through digital not so much because of the pandemic context but because remote access is the only sustainable way to get in touch with the most excellent personalities of a given subject.
The phenomenon is supported by the possibility of expressing oneself at a low cost on platforms that now accept long forms and detailed expositions, not unlike a university lecture (Podcasting, Newsletters). What is really happening here? Have professors become independent from their college brand? Moreover: how they'll find a way to certify and accredit their followers.
The other direction - equally interesting - is given by the possibility of recognizing a degree directly through experience in a company. These are frontier policies, but they are already in place. Apprenticeships and Bootcamps made by companies in cooperation with training companies and online universities are creating, in fact, a new path of internship/study/work that does not overly postpone the expectations of economic return and presents solid skills. Finally, there is no shortage of companies creating their campuses and going through the certification steps to become full-fledged education players.
Academic recruiting power is the phenomenon that moves students towards a certain university (or directly out of the university horizon), facing a change that could have the same proportions as what we saw emerge centuries ago in Europe. Will these trends define the near future of education?
Some universities endure; others have already changed.
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Manet Homines is a consulting firm that helps companies make effective business decisions in a changing economic and cultural landscape. If you found this article interesting, you can follow all of our weekly publications here on Substack.
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