“More Flexible Options.” An Influential Donor Looks to Redesign American Higher Education
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Arizona State University is home to a new Koch-backed initiative to “redesign higher education.” Travel_with_me/shutterstock
While higher ed funders have announced some big-ticket proposals over the past six months, few have attempted to address the structural problems amplified by COVID-19—escalating costs, rising tuition and philanthropy’s complicity in fueling the student debt crisis.
This shouldn’t come as a surprise. Universities are still in crisis mode, and funders set these initiatives in motion before the pandemic turned higher ed upside-down.
At some point, however, funders must face reality. In July, Forbes contributor Ryan Craig sketched out “the coming chasm between price and value,” in which students pay high tuition rates for services they don’t use. A month later, the Partners for College Affordability and Public Trust launched the Tuition Payer Bill of Rights, which argues that students have the right to opt out of paying fees for athletics, recreation and other services.
“To reach more learners in new ways, universities are going to need to address their cost structure,” said Ryan Stowers, executive director of the Charles Koch Foundation, in a recent interview. “They cannot scale to the level that meets the unmet needs of millions of learners at the current cost.”
In early September, Stand Together, the philanthropic entity founded by Charles Koch and formerly known as the Koch Network, announced a partnership with Arizona State University to “redesign American higher education” by “helping universities change their current models, achieve greater scale, and remove financial and geographic and generational barriers to education.” ASU has raised $12 million of its $30 million goal from the Charles Koch Foundation, the Denver-based Morgridge Family Foundation, and other donors.
Critics may find fault with Koch’s politics, the influence he wields as a philanthropist and political donor, or the utility of the new partnership itself. But the announcement is nonetheless important, as it finds one of philanthropy’s most powerful and deep-pocketed funders looking to bend the higher ed cost curve and boost access at scale.
A Focus on “Individual Empowerment”
We’ve devoted extensive coverage to concerns that Charles Koch his uses philanthropy to advance his libertarian agenda on American campuses. We’ve also tracked how Koch money has started to flow to the United Negro College Fund and the Thurgood Marshall Fund. I won’t revisit those themes too much in this piece, but will instead focus on his long-standing relationship with ASU and why he found the school’s new initiative so appealing.
Previous CKF gifts to Arizona State include $6.5 million to establish the Academy for Justice, $3.5 million for the Center for the Study of Economic Liberty, and $1.13 million in seed money for the Center for Political Thought and Leadership.
In 2017, ASU launched the new School of Civic and Economic Thought and Leadership, using funding from the state legislature to incorporate the Center for the Study of Economic Liberty and the Center for Political Thought and Leadership. Matthew J. Garcia, who was the director of ASU’s School of Historical, Philosophical and Religious Studies from 2012 to 2017, resigned over the new school, pointing to the use of public funding for “ideological indoctrination,” and the way university President Michael Crow exempted it from the usual budgets and hiring protocol.
(IP readers may recall that Crow is himself a major donor to ASU; he was also the highest-paid public school university president in 2016, thanks to supplemental income courtesy of private donors.)
Earlier this year, Crow spoke before 600 members of Stand Together and encouraged them to urge their alma maters to eliminate bureaucracy, cut costs and boost enrollment. Nine months later, ASU and the CKF announced the new partnership. With its first round of funding in hand, the university will focus on four action items:
Advance the development of a University Design Institute (UDI) to build partnerships with university leaders who are driving innovations at their respective institutions.
Accelerate the development of a stackable credential system that will make it easier for students at ASU and elsewhere to adjust their course selection to reflect individualized aptitudes and interests.
Develop key components of ASU’s Trusted Learner Network to drive adoption of a verifiable learner-owned record system that can replace current transcripts with a less expensive credential that lives with the learner, rather than with various institutions.
Scale ASU’s high school programs to enroll 30,000 additional students into ASU’s digital high school curriculum, and reach an additional 30,000 students with personalized online learning and career development tools. ASU currently has more than 175 online degree and certificate programs that serve more than 46,000 undergraduate and graduate students.
“What we’re excited about with this partnership,” Stowers told me, “is the ability for UDI to help universities experiment with a variety of innovations that allow their students to identify their aptitudes, develop them, and apply those to fulfilling jobs and careers that make their lives and the lives of others better.”
Barriers to Access
In order to contextualize ASU’s initiative, let’s explore Stowers’ contention that universities, as currently constructed, can’t properly scale to ensure that new students earn “the gold standard for stable employment and lifetime earnings”—a bachelor’s degree.
Universities can increase enrollment levels to admit more students. However, administrators often fear this strategy will erode the school’s exclusive brand and sticker price. This explains why the mega-donors’ attempts to boost the number of low-income students at expensive schools are usually so underwhelming.
If funders really wanted to drive change at scale, they’d commit millions to community colleges, which provide a broader “on-ramp” to a bachelor’s degree by catering to students who work part time, tend to family members, and raise children. Yet according to the Council for Aid to Education, only 1.5% of the $43.6 billion raised by universities in 2017 flowed to two-year institutions.
Are donors getting their money’s worth by focusing so heavily on the traditional four-year university experience? Proponents of the current system would say yes. However, the data reveals a more complicated calculus. According to the National Center for Education Statistics, only 41% of first-time, full-time college students earn a bachelor’s degree in four years. That figure rises to 59% in six years. Many graduates find themselves burdened by a debt load that will follow them to the grave. And a 2018 McGraw-Hill survey found that only 41% of students say they consider themselves “very prepared” or “extremely prepared” for their careers.
That’s a meager return on an annual $43.6 billion investment (pre-pandemic).
So one way for access-oriented universities and funders to move forward is by attempting to roll out different on-ramps to a bachelor’s degree without burdening students with debt or impinging on their ability to hold a job or take care of sick relatives.
“The current system of higher education has far more barriers to access than just cost,” Stowers said. “It is not yet flexible to meet all learners where they may be in their lives and engage them in how they learn best.”
Unconventional On-Ramps
“There’s no longer a single on-ramp into higher education with two off-ramps (completion or drop out),” wrote Karen Ferguson, Colorado State University-Global Campus provost. What do alternative on-ramps look like?
CKF’s Stowers cited the Starbucks College Achievement Plan, which allows baristas working at least 20 hours per week to earn a bachelor’s degree online through ASU with full tuition coverage. Starbucks has committed to producing at least 25,000 graduates by 2025.
“For Starbucks,” Stowers said, “this allowed them to offer a benefit that helps their employees discover their aptitudes, develop knowledge and skills, and set them on a path to lifelong learning that will serve them well in their jobs and careers—whether with Starbucks or even elsewhere.” Arizona State, on the other hand, “was able to provide access to higher education to learners who did not fit the traditional model, and engage in additional learning about how to meet these audiences where they are and provide them with educational opportunities at costs lower than their present alternatives.”
CSU’s Ferguson pointed to another promising on-ramp that has caught the attention of the Lumina Foundation and also happens to be a key part of ASU’s plan—stackable credentials.
Stackable credentials allow students to work toward a bachelor’s degree in small, affordable bites. They can first get a credential in a skill, get a job, earn money, save it, take online courses, and so on, until it adds up to a bachelor’s degree. No four uninterrupted years on campus; no $40,000 in student debt.
“Advocates say the approach can not only help people who need credentials quickly to reenter the workforce, but also reduce the number of people who leave college before finishing,” wrote Jon Marcus for Wired.
To this point, Stowers cited a survey in which 61% of college graduates said they would change their major if they could go back. “Students,” he said, “need more flexible options, and on- and off-ramps can help them take ownership of their educational pathway, increasing the likelihood that they truly find their passions.”
“This is How You’d Do It”
Stackable credentials sound like a dream come true to funders concerned about the dropout epidemic, enrolling low-income students, and providing graduates with employable skills. But let’s not put the cart before the horse. You’ll recall that ASU hopes to accelerate the development of a stackable credential system. What’s been stopping four-year institutions from implementing these systems already?
In a 2015 broadside against Crow’s leadership, consultant John Warner wrote for Inside Higher Ed, “ASU is pretty clearly set up as a factory of credentialing,” he wrote, “and any lip service to educational excellence, particularly in the undergraduate sphere, is exactly that.” In 2017, the Community College Research Center found “only weakly positive and inconsistent gains” in the labor market for stackable credentials.
That same year, a Lumina Foundation report on stackable credentials cited three challenges limiting its wider adoption: the high financial cost for students to take certification exams, inconsistency in how they are accepted by employers, and the need for ongoing communication and assessment by institutions and industry.
Lumina is doing its part to boost stackable credentials as part of its effort to increase the proportion of working-age Americans with high-quality degrees and other credentials to 60% by 2025. The foundation has given $320,000 to Workcred, an organization that seeks to embed work-based learning and industry-recognized credentialing into traditional bachelor’s programs at U.S. universities.
Will funders follow the lead of Lumina and the CKF? Jon Marcus suggests they may have no choice. U.S. Department of Education data found that institutions awarded 670,000 certificates in 2018, a 117% increase over 2000. “That’s cutting into a market for bachelor’s degrees that’s already suffering from a decline in the number of 18- to 24-year-olds,” he wrote.
COVID-19 amplified this dynamic, compelling students and unemployed workers to pursue stackable credentials en route to a degree. Enrollment in online course provider edX’s micro-credential program, for instance, saw a 14-fold increase between early March and the end of April.
“If you were designing [college] from scratch, this is how you’d do it,” said Clark Gilbert, president of BYU-Pathway Worldwide, in Marcus’ article for Wired. The online spinoff of Brigham Young University-Idaho offers stackable bachelor’s degrees in all of its subjects.
A Post-COVID Role for Funders
We’ve previously explored how, pre-pandemic, philanthropy was reluctant to engage with the messy and disruptive work of tackling the higher ed cost structure. A more recent announcement from the Chan Zuckerberg Initiative (CZI) illustrates how innovation can lead to unintended consequences.
CZI participated in a $113 million Series D financing round with Eruditus, an India-based startup that partners with top schools to offer online master’s courses. If the model takes root, “working adults who once chose to enroll in a master’s program at their local college or university will instead choose the convenience, lower cost and targeted credential of an online certificate,” wrote Joshua Kim, the director of online programs and strategy at the Dartmouth Center for the Advancement of Learning, for Inside Higher Ed.
However, Kim continues, this exodus of students could doom regional universities whose high graduate school tuition rates pay for undergraduate programs that don’t bring in enough revenues to cover costs. For all the promise of virtual master’s programs, I suspect few funders want to accelerate what he calls “a collapse in demand for master’s programs from regionally branded schools.”
But a fear of disruption is not going to cut it in a post-COVID world. Institutions will need to re-examine their operations to “move toward a more cost-effective solution for making quality learning happen, and therefore reset its price, and therefore increase the value, real and perceived, in what it’s offering,” said Richard Staisloff, principal of the RPK Group, in a recent article in the Chronicle of Higher Education.
Most experts agree that virtual learning, for all its flaws, has to be part of the cost equation moving forward. Even the Brookings Institution—hardly a shill for the Koch Empire—published an interview with Crow focusing on ASU’s work in expanding online education.
Time will tell if ASU can ultimately “redesign higher education,” but at the very least, the Charles Koch Foundation’s participation points to a post-COVID funder playbook that doesn’t involve tuition-busting construction projects or gifts to boost access that fail to generate impact at scale.
“Many schools have made progress in revising the recruiting and admissions processes to increase access for students from all backgrounds,” Stowers said, “but enrollment caps and concerns about balancing access with markers of prestige are an ongoing issue. ASU is among the leaders challenging current models by measuring success based on who they include, rather than who they exclude.”
ASU “is showing what that transformation can look like, and they’re ready to share their insights with whoever is willing to take up the challenge.”
