Welcome to what happens next.
My name is Larry Birdstein.
What happens next is a podcast which covers economics,
political science, and culture.
Today's topic is disruption in higher education.
Our first speaker is Michael D. Smith,
who's professor of information technology
and marketing at Carnegie Mellon.
And he's just published a new book entitled
The Abundant University Remaking Higher Education
for a Digital World.
I want to learn from Michael why he thinks
online education will disrupt the university
in person model.
Others have been calling for the disruption event
for years, so why now?
And what will the future of higher ed look like?
Our second speaker is my son, Jonathan Bernstein,
who's a senior Ed Northwestern.
I want to hear the students' perspective.
I want to find out from Jonathan
how he enjoyed the hybrid model at his university,
how he uses online courses at places like Wall Street Prep,
and how he's using chat GBT to study.
Let's begin this podcast with Michael Smith.
My book is trying to convince my colleagues
in higher education of three things.
The first is that technology will change higher education.
The second is that we in higher education should want
to change, and the third is that we have a way to change.
We were told in the early 2010
that technology would change higher education
because of the rise of online education.
I think what we missed is that to really change higher education,
you need to not only change the ability at access
to the education, you also need to change the credential.
When edX and other online learning came out,
a lot of people were really excited
that that was going to disrupt higher education.
The problem is that you can take as many online courses
as you want, but unless you have the credential,
those online courses aren't going to add up
to anything near as powerful as a four-year degree.
Higher education should want to change.
What we know from the data is that if you're a kid born
into a family in the top 1% of income,
you have a one in four chance of being admitted
to a highly selected school, a top 80 most selected school,
one in four.
If you're a kid born in the bottom 20% of income,
you have a one in 300 chance of getting access
to the same university.
Unless we believe that kids born into the top 1%
are 77 times more likely to be capable
of an elite education than poor kids,
then we've got to believe that the current way
we allocate access to the scarce resources
in higher education is fundamentally unjust.
Every good disruption story is and the incumbent died, right?
Blackberry, dead, Britannica, dead, blockbuster, dead.
The one place where I actually think we're seeing
an industry create a good response to disruption
is the entertainment industry.
The entertainment industry realized
that there was a difference between their business model
and their mission.
They realized my mission isn't selling
any shiny plastic discs for 20 bucks a pop.
My mission is creating great entertainment
in front of an audience.
And if I can use technology to fulfill my mission,
I'm willing to blow up all of the aspects
of my business model.
What I'm trying to argue in the book is
that we in higher education are still stuck
trying to protect our model.
And I would love for us to make the transition
to looking at our mission.
What is our mission as educators?
And can I use technology to do a better job
of achieving that mission?
We're going to be able to create far more abundance
for people who today are excluded
to elite higher education.
What do students want?
In higher education, a lot of our students
just want to get a job.
They just want to have access to the credentials
that would allow them to signal
I'm going to be a capable person in the workforce.
Is there a better way for us to help people
demonstrate those credentials to the job market?
I think there is.
I don't necessarily think it needs to cost
a quarter of a million dollars.
I don't necessarily think it needs to take four years.
That's the model we've always used.
But if our mission is to help people gain skills,
demonstrate the skills in the workforce,
then I think there are a whole bunch
of other things we can do to fulfill that mission.
What is the college's mission?
Some members of the academy think it's
to create a well-rounded individual.
Some say that they're in the skill creation business,
learning how to write, think critically,
make an argument, or an oral presentation.
So others think it's about learning content.
There doesn't seem to be the agreement
on the mission statement.
A lot of people in higher education would argue
that our mission should be to create broadly educated
members of society.
Surveys consistently show that what the market is demanding
is the ability to get a job.
Currently, higher education is the best way to get that job.
What if we created an alternate way for people
who just want to get a job to gain the knowledge they need
and signal that knowledge to the workforce?
Might that allow those of us in higher education
to focus on what we think our mission is,
which is to create broadly educated adults?
If I could get all the people out of my class
who just want to get a job, I could tailor the class
much more to that broad education.
There was an article written in the Chronicle of Higher Education
by a guy named Johann Neem, and the title of the article
was abolish the business major.
And his point was higher education
shouldn't be about gaining access to the workforce.
It should be about these broad learning skills.
So let's get rid of all the majors
that are focused on practical outcomes.
If we're going to get rid of those majors,
we need some other way for people who want to get jobs
in those fields to signal their skills.
Let's use technology to create some of those other ways.
Colleges have invested a lot of money
in residential living, nicer gyms and new stadiums.
None of these investments make a more well-rounded individual
build schools or improves job placement.
This college spending seems to be a form of student consumption,
which is fine.
If it isn't subsidized by government taxes,
what's going on?
I think it's competitive pressures.
If the school down the street has big fancy luxurious dorms,
then I'm going to need big fancy luxurious dorms
that I'm going to track the student to my campus.
And US News and World Report and other rankings
just feed into that sense of competition among schools,
which, again, I think drives up the spending
and drives up the price.
The other thing that I think feeds into it
is we know we have a valuable product.
If you want to get ahead in the world,
you need my four-year degree to do so.
And the return on investment of that degree
is still pretty high.
We know we're offering a product
with a good return on investment.
And we're increasing our prices to capture more of that surplus
we're creating for the customer.
If you're arguing the colleges are offering a valuable product
and that the university can price discriminate
to earn the consumer surplus, then why do colleges
charge the same price for sociology and a finance major?
That's a great question.
My knee-jerk reaction is we don't apply a whole lot
of the business logic to how we price things.
We provide a luxury good where the quality of the product
is signaled by the price, right?
The product is the actual degree
and how valuable that degree is in the marketplace.
What if I started to judge the quality of students
based on their actual skills and not the brand name
of the school that gave them those skills?
I heard that Amazon is creating their own assessments
to evaluate job applicant skills and computer programming.
If Amazon can figure this out,
they can have a good candidate at a reasonable price
and with the others overpay for graduates
of selective universities.
What you're talking about is Google and Amazon
doing this in the context of coding.
Can you demonstrate to me that you have the knowledge
necessary to do the job I'm asking you to do?
If you can, I don't care where you got your degree from
or even if you have a degree.
The efficient market would be one
where we're actually making decisions
based on the true quality of the student.
The market we live in today is one
where we're making decisions based on this proxy,
the brand name of the school you went to.
Harvard is better than Penn State.
Even though there are probably a lot of kids
at Penn State who are more qualified, more motivated,
better prepared for a particular job
than the kid who graduates from Harvard,
it's just that I've got to rely on this really weeks
of signal.
I read some years ago that if you adjust
for the higher tuition costs, then the selective schools
did not increase lifetime incomes relative
to the state schools.
Paul Topth wrote about this in the New York Times
magazine a couple of weeks ago, yeah.
What you're saying is the cost adjusted value
of Harvard is what we should be looking at.
If you graduate from Harvard, this is the boost in salary
you get, if you graduate from Penn State,
this is the boost in salary you get,
factored in the difference in cost between the two.
What I still worry about is, are we leaving people out
by saying you've got to either go to Harvard or Penn State
or you've got to have a four-year degree?
Could we use new technology to do a better job
of judging people's actual skills?
And the example I use in the book is
from Wired Magazine, where there's this kid,
Gilberto Tittoretz, who lives in Brazil,
works for the Brazilian state oil company,
graduated from the 13th top ranked Brazilian engineering
college, and it just so happens that in its spare time,
he likes to participate in the Kaggle Leaderboard Challenge.
And he's gotten good enough at the Kaggle Data Analytics
Challenge that he's risen to the top
of the worldwide Kaggle Leaderboard.
And all of a sudden, he's getting recruited
by Silicon Valley companies, not because of his major,
not because of his GPA, not because of his work experience,
but because they can see based on his actual performance
on Kaggle that he's really good at data analytics.
That's what I'd love for us to create,
is something where the evaluation is less based on the brand
and more based on the actual skills of the person.
There's some things that are hard to test.
What I frequently say when we admit to actual students
is we're looking for decathletes.
And the only thing I know is they're 100 meter dash time.
I know that they can solve small problems
quickly in a time test environment.
What I don't know is how creative they are.
Can they find their own questions?
Can they work independently?
All these other skills.
I'm trying to wrap into how well that you do
on the standardized test.
And I was really scratching my head,
how do we reduce the signal of that brand name?
You graduated from Carnegie Mellon
versus you graduated from Point Park College.
And later that day, I was buying a really expensive scanner
from a company I'd never heard of solely
because it had a 4.9 star rating on Amazon
and a whole bunch of positive reviews.
And I was like, oh, that's how we reduce brand name.
We add information into the market.
I'll stay at a complete stranger's home
because they have a good star rating on Airbnb.
I'll drive home with a complete stranger
because they have good ratings on Uber.
Wouldn't it be cool if we could create
a different way of credentialing someone
that doesn't involve the traditional four-year brand name?
That's what I'd love to see us creating.
The feedback loop here is, once I create a new way
for people who have independent hotels
to signal their quality, all of a sudden,
I give them the incentives they need
to actually invest in quality.
If you're an independent hotel
and people are gonna assume you're lousy
because you're not Hilton affiliated,
then I have no incentive to invest in being good.
But if I have a way of signaling to the marketplace
that, yeah, I'm not Hilton affiliated,
but I'm actually quite good,
then I give you the incentives to invest in your quality.
I think we've got a whole bunch
of potential job market participants today
who we assume are lousy because they don't have
a four-year degree or they don't have a degree
from a great institution.
I think if we gave some of them
a different way of signaling their value,
we would give them new incentives
to invest in quality.
I wanna go back to learning content.
I was an early adopter
of the teaching company's great courses.
I've taken over 20 courses
and they're fantastic and inexpensive.
If an individual is self-motivated to learn,
content is basically free.
Nobody cares without their credential.
I talked to one of our master students
who is taking a machine learning class here
at Carnegie Mellon and what he said was,
I wasn't understanding the professor at all in the class,
but I went to this online site called StatQuest
and I was able to learn the material on StatQuest
and then I took the exams in class.
And if you sort of break that down,
what it says is that the knowledge is free
and the credential costs $20,000.
That strikes me as an economic inefficiency.
I'll give you a personal anecdote on that idea.
I graduated from Penn a year early
and after two years working at Sound Brothers,
I was accepted to Harvard Business School
but was deferred a year because I was too young.
At the time, I lived across the street
from Brooklyn Law School.
I called the admissions department
and asked if I could take some night classes
and the admissions director said,
please apply and take the LSATs.
I asked her if she could make an exception for me
as I had already been accepted to Harvard
and she said, hang on, I have the admission guidelines here
and I hear her turning the pages and she says, nope.
There's nothing in here that says if you get into Harvard,
you can be automatically admitted to Brooklyn Law School.
You're gonna have to apply like everybody else.
So I was not gonna take the LSATs
and write a bunch of essays to take two night classes
at Brooklyn Law.
Now, I bought the textbook for corporations and for tax
and the woman behind the counter asked
if I would like to buy a name plate for the classroom.
So I buy the name plate.
I sneak into the night school class for tax
and the professor opens with his first question
which is, what is the definition of income?
In my hand is the first one up.
After class, I saw one of my pen for turning brothers
in the hallway and he said, Larry, what are you doing here?
And I tell him outside now, I told him
that I was crashing a couple of night law school courses
and he complained that it was totally unfair.
Law school was costing him a fortune
but it won't cost me a dime.
I told him that I'm only getting an education
but you're getting a degree.
Now, you assume there was some sort of a market failure
related to credentials versus knowledge
but that's not what I observed.
Firms like sound brothers where I worked
were excellent spotting talent internally.
Maybe there were problems selecting candidates from the outside
but when individuals get the job,
firms can determine very quickly who is productive.
I think the HR processes that we use today rely heavily
on signals to screen applications.
Who gets access to those signals
are strongly influenced by well.
That's the market failure I'm worried about.
Is the kid who gets screened out
because they went to McCain's business school,
they're every bit as smart as the kid who graduated
from Harvard Business School,
they just don't have the credential.
One of the things I document in the book
is number of hiring managers who say
if you didn't graduate from the top three business school,
we just throw your application in the trash.
Zvikoio spoke on this podcast.
He's the former dean of computing at Georgia Tech.
The school now offers students an online degree
that is the same as the on campus degree
and they get thousands of students to sign up.
Georgia Tech's computer science department
is ranked eighth in the country by US news.
It is relatively inexpensive
at $5,800 for 10 courses
to get a one year master's degree in computer science.
And you're not going to believe this,
but Georgia Tech just cut the price by 12%.
Of note, the online students are almost exclusively Americans
and there's a substantial international student body
for the on campus program.
I suspect that this is because
the international students want to get into the US
and get a work visa.
Also, many of the American online students
prefer to stay in their local community
and work part time.
What do you think of Georgia Tech's desire
to bring down price for the same online degree?
I think Georgia Tech's decision to do
the online computer science masters was absolutely brilliant.
And it was creating the sort of abundance
that I'm trying to talk about in the book.
I love the idea that appealing to working professionals.
If you think about how rapidly technology is changing,
the need for skills in the marketplace,
we're going to have to have ways to teach students
who are working professionals.
Not everybody can take a year and a half off
to get a master's degree.
We're going to have to have some way of allowing people
who are working to develop those new skills
that they need to do their jobs.
How effective was hybrid education during COVID?
What we did during COVID is not a good measure
for the potential of online learning.
If you could get the right professor
using the right technology with the right amount of preparation,
I think we could do a lot better.
Could we do a better job of using data about the student,
about what the student's background is,
what their learning style is,
do they learn by example, do they learn by theory?
If we could combine that data and customize
how the education is delivered, we could do even better.
Warren Buffett looks for the moat in every business
that protects the incumbent firm from competitors.
And the moat for liberal art colleges is the small seminar.
Now they're expensive to offer students,
but if the professor is great
and the students are eager and motivated,
it can be a great experience.
I'm sure your colleagues will point to the seminar
as that critical variable in what makes in-person
superior to online schooling.
My pushback at that point is I have the chief data officer
at UPMC, the hospitals,
come and talk to my managing disruption class.
And last year he came in and he said,
you know what, we've looked at our data
and what we've discovered is that for most
doctor-patient interactions,
telehealth yields equivalent health outcomes
in higher education.
I think what we're going to find is that there's some things
that need to be done in person,
but a lot more things than we realize can be done remotely.
The example I think of and I talk about in the book
is Arizona State's organic chemistry.
How do you teach organic chemistry online?
13 weeks of OCAM works perfectly fine online
and the labs have to be done in person.
So what they did is they redesigned the experience.
So we deliver the online stuff online
and then we bring our students in for a one week
intensive organic chemistry lab experience
where you do two labs a day for five days.
The students who did the online plus a one week intensive
had equivalent knowledge of organic chemistry labs
as the people who did the residential experience.
That's what I love for us in higher education to say
is we've got these new tools.
Let's figure out how to use them
for the benefit of the students.
I loved residential college living.
The quad at Penn was great
and the fraternity house was even better.
Can we create residential living for college students
who do not live on campus or even go to the same school?
Think old school for college kids.
I think we saw that actually during COVID,
we're seeing a lot of people who are taking online classes
but living in community, live in Rome, Italy
while you take classes online.
You can live in a community of other people your age
in a world class city somewhere.
And so we can give you that same community fraternity
whatever you want to call it experience
and give you the online learning.
We unbundle those things and recombine them in a new way.
Let's end on a note of optimism.
I'm actually optimistic that higher education
is moving in this direction.
When I started giving talks about this,
there was a good deal of anger towards the idea
that technology would change how we deliver education.
I'm starting to see much more receptiveness
among my colleagues to the idea that we need a new system.
Not as a replacement, but as an alternative
for students who don't fit into the traditional boundaries
of a four-year degree.
Thanks, Michael.
It's now time to switch to our second speaker,
my son, Jonathan Bernstein,
who would tell us about the disruption in higher education
from the student's perspective.
I'm Jonathan Bernstein.
I'm a rising senior at Northwestern,
studying cognitive science and entrepreneurship.
John, tell me about your first year as a freshman
and your experience with COVID.
My first year at Northwestern was 2020,
which was the first year of the hybrid online model.
And to say the least, it was problematic.
The online classes were not engaging
and not cohesive, really.
The classes that were taking were mostly lectures
and tro classes.
And I could not connect with other students in those classes
as it was just too wide.
And we did not have a smaller group interaction.
Did it get better the second year?
Surprisingly, it did not get better.
The second year of online learning,
Northwestern was a bit slow and be transitioned back to in person.
But there was no improvement, really,
between the first year and the next.
Tell us about some of your online learning experiences.
My online academic experience apart from university
has been extremely positive.
So I took the online class at Wall Street Prep
on technical finance.
And I really enjoyed this class.
It focused on accounting and financial modeling and analysis.
And why was Wall Street Prep's course successful?
The course was very efficient and effective.
It would start with a high level overview
and we would then break down to the nitty gritty,
quantitative aspects.
This really worked for me in developing
an understanding of financial modeling,
but also how to do these things myself.
Tell us about your coding experience
using online courses.
My coding experience was also very positive.
So I first started with code academy,
which is an online course.
However, it was a bit slow and I didn't feel engaged.
So I went on YouTube.
I typed in, teach me how to code an R.
I went through about five or six videos
and I settled on an individual who appeared smart
and who I enjoyed listening to.
This was a 10 hour course.
And it's rather organized on YouTube
where you can split it up in different sections
so you can click and skip to what lesson you want to go to.
He also included a zip file
where I could download the assignments
and follow what he was doing on YouTube.
How did your YouTube teacher make any money?
There were ads running.
Did you find the advertisements annoying?
I usually do find these ads annoying.
However, I'm gaining so much from this video
so I really don't mind.
How do you plan to learn after graduating from Northwestern?
I have an entrepreneurship minor
where I feel like I've developed these soft skills
that an MBA provides.
However, for the more technical skills,
I could either learn this on the job
or through these online courses.
In many finance jobs, there is a one or two-year training program
and a lot of them use Wall Street prep
where they have their new graduates take these classes
and then they'll have a retired banker come in
and reinforce this knowledge.
How have you started using ChatGBT to improve your studying?
So ChatGBT is a fantastic resource
for learning technical skills
and it really functioned as a TA or a tutor.
I would say, please explain this topic to me.
Then can you give me a quiz?
If I would get something wrong,
I would ask it to explain it to me.
I can specify what I wanted to go in depth in
and this was very effective.
As if I took an online quiz with Quizlet, for example,
there would be no further depth
other than I'm right or wrong
and I have to look up an online PDF and figure it out.
I've really enjoyed this interactive aspect.
I would get something wrong, it would explain it to me
then I would say, give me another one, hit me again.
And eventually I would become very confident and we'd move on.
From your perspective as a student,
where do you see online education going?
The online learning experience is not a spectrum, it's binary.
You're in the classroom or you are at your computer
doing it at your convenience.
When you get in the middle,
you're losing significant aspects on either side.
So the optimal online experience is one where I can work on
my studies and continue this class in a very efficient manner
or if I have 20 minutes right now in between
meetings I can hop on, review a topic and really reinforce this.
So I can learn much quicker and implement this knowledge
very effectively.
Where has collaboration been most successful at Northwestern?
My entrepreneurship class is extremely collaborative.
A majority of the time I am pitching a business idea
to my fellow students and working on my public speaking skills
and being creative,
one of my entrepreneurship professors had recently
won first place in the New York City startup competition,
being able to learn directly
from my very accomplished entrepreneur is priceless.
You currently live in a residential college.
What are the benefits of living with your fellow students?
Living with my friends has been valuable
in a lot of fun.
One person living in the house,
we were in the same computer science class
and we would be able to work together every night.
We'd be grinding on the same assignment.
How did Northwestern professors handle students
that cheated on exams?
So the professors were very outward in,
we know that some of you are gonna cheat
and want us out okay and two,
we're gonna implement some security measures.
There's some software that locks your browser
so you're not able to do anything else
on your computer and not able to exit the quiz.
They also changed the final exams to open book.
Tell us about your experience with academic clubs.
I've run the Business Healthcare Undergraduate Club
at Northwestern and this experience
has been extremely positive.
I've run the speaker events.
It's actually kind of fun to exceed the podcast.
I've run the speaker events
in which I get speakers in finance and healthcare
to come speak with us.
So our most notable speaker was my former boss,
David Bonin.
He was absolutely fantastic
and I got a rather large crowd
as I reached out to the economics major,
Listerv to Kellogg and through other channels.
And this is really beneficial for the students
and we greatly enjoyed having him come in
to not only get his perspective
but also I know some students of ours
were able to approach him and maybe ask him
for an internship or a reference.
So this also really helped our students
career opportunities.
If you enrolled at an online university
and you had a club and asked people to join it
and participate by Zoom,
would it work effectively?
Not at all.
We had some club meetings on Zoom.
People wouldn't show up.
People would have their cameras and mics off.
It felt like you were talking to the screen.
It was no fun and the engagement,
which is the core of this whole club is not there.
Jonathan, I end each episode with a note of optimism.
What are you optimistic about as it relates
to online education?
I'm very optimistic that people of water backgrounds
and ages will be able to gain a solid education
even though that may primarily be in technical skills.
Thanks to Michael and Jonathan for joining us today.
If you missed last week's show, check it out.
The podcast was the art of conversation.
Our first speaker was Paula Morant's Cone
who's the Dean of the Honors College at Drexel University.
Paula has a new book entitled Talking Cure
and Essay on the Civilizing Power of Conversation.
Paula spoke about what is critical
to a successful conversation and why we should care.
Our second speaker was Darren Schwartz,
who is our What Happens Next film critic.
Darren reviewed three of my favorite movies
that deal directly with talk.
They were Woody Allen's Annie Hall,
David Mammett's Glen Garic on Ross,
and Spike Jones's movie Her.
Darren's discussion was very entertaining
and I hope you enjoy it.
I now wanna make a plug for next week's podcast
with Stanford Law Professor Michael McConnell,
who has a new book entitled Agreeing to Disagree,
how the establishment clause protects religious diversity
and freedom of conscience.
Michael thinks that separation of church and state
has been misunderstood.
The government should not endorse any specific religion
or encourage secular views in public institutions.
You can find our previous episodes and transcripts
on our website, What Happens Next at 6 Minutes.com.
Please subscribe to our weekly emails
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Thank you for joining us.
Goodbye.
Thanks for watching.
I hope you enjoyed this episode.
I'm looking forward to seeing you.
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