To Improve Quality and Reduce Costs of Higher Education, ITIF Calls for Policies to Separate Education from Credentialing, Applying Competitive Pressure on Colleges and Universities

August 1, 2016

WASHINGTON—Information technology has reshaped entire industries, boosting quality and cutting costs, and it is time for the same type of transformation in higher education, according to a new analysis from the Information Technology and Innovation Foundation (ITIF). ITIF, a leading tech policy think tank, urges the federal government to adopt policies to help separate learning from credentialing, which currently comes mostly in the form of traditional college diplomas, in order to allow individuals to more effectively demonstrate educational mastery to prospective employers.

“We have seen that technology creates opportunities to reorganize business processes and reimagine entire industries. But even as IT and the Internet have created new ways to research, learn, and impart knowledge, higher education has avoided disruption,” said ITIF Senior Fellow Joseph V. Kennedy, the report’s lead author. “Colleges and universities hold a legacy franchise—the responsibility to educate students plus the power to grant them degrees. This reduces their incentive to help students take advantage of opportunities to learn outside the classroom, since it would reduce revenue, and they lack strong incentives to raise standards because it could drive away their customers, the students. Students meanwhile have little incentive to push themselves harder than necessary to earn their degrees, since those ‘sheepskins’ derive their value largely from institutional brand quality rather than clear measures of academic achievement. Given the need to build up America’s skilled workforce, now is the time to create alternative paths to certification that would let students pursue their best options for learning while applying competitive pressure on colleges and universities to improve quality and reduce costs.”

Kennedy and coauthors Daniel Castro, ITIF’s vice president, and Robert Atkinson, ITIF’s president, identify two major problems with the current higher education system: First, institutions usually limit students from mixing and matching cheaper ways of learning, such as community college courses, massively open online courses (MOOCs), or self-study, all of which could make higher education more efficient and less costly. Second, since each college and university has its own grading practices and degree standards, students, parents, and employers have little ability to compare the quality of education that different schools provide for a particular degree, diminishing the incentives for schools to compete on how well they actually educate students. Likewise, since degrees do little to differentiate among graduates, students have little motivation for learning more than the minimum to get a degree.

“If we want more educational innovation and lower costs, as well as higher-quality educational outcomes, then it is time to break the legacy connection between teaching students and certifying their academic achievements,” said Castro. “We should move to a model where students have alternative ways of demonstrating their knowledge and skills. But this is in part a chicken-or-egg problem, with employers still relying on degrees and students not having access to alternative accreditation systems. The federal government should solve this by fostering a national network of certified organizations that assess the learning and skills of young people before they enter the workplace.”

The report calls on Congress to enact a series of reforms when it reauthorizes the Higher Education Act:

  • Establish a process to accredit organizations that provide certifications;
  • Encourage federal agencies to accept alternative certifications in lieu of degree requirements;
  • Require the administration to encourage the private sector to recognize and rely on alternative certifications in their hiring decisions;
  • Allow students to use federal aid for alternative learning options, such as MOOCs;
  • Ensure graduate programs consider applicants with alternative certifications; and
  • Require the administration to conduct a regular survey of employer needs.

“Increasingly college graduates lack the skills needed to help effectively drive U.S. economic growth. Dramatic reform of higher education is both necessary and possible,” said Atkinson. “Separating the tasks of education and certification will increase pressure on existing institutions to hold down costs and to provide measurable improvements in education. These reforms will also give students better information about the quality of the education they can expect to get and give employers better information about the readiness of job applicants, both of which are critical to creating the right incentives to boost the quality of teaching and learning.”

Read summary.

Download report.