Higher Education Has a Business Model Problem

Higher education has a business model problem. The business model for U.S. colleges and universities — how they create, deliver, and capture value — hasn’t changed since Harvard, our country’s first college, was founded in 1636. Our higher education system is a national treasure that creates enormous societal value, but its 380-year-old business model fails to deliver affordable access and post-secondary credentials to an increasing percentage of our population.

The American social contract was clear throughout the Industrial Era. While many jobs moved out of reach for those without a college degree, there were still ample opportunities for everyone to earn a good living in order to support a family. The U.S. became an economic powerhouse with a robust and thriving middle class.

Then the rug got pulled out from under the economy. The Industrial Era ended, taking with it most of the career opportunities for those without a college degree or relevant post-secondary credential.

The existing social contract broke and was replaced by a new one, with the expectation that everyone gain some form of post- secondary credential in order to be relevant to the new economy and to earn enough to sustain a good living.

Unfortunately, while societal expectations for higher education changed, its business…