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May 20, 2020

Can Higher Education Remain Status Quo Once COVID-19 is Contained?

MHT Partners  | Education Investment Bank

The coronavirus pandemic is accelerating change across nearly every sector of the economy from healthcare to retail. The same is true for education as colleges and universities have been forced to transition to online learning and rely on technology as the sole means for instruction. One question that students and spectators alike are asking is whether these institutions view this involuntary transition as a temporary issue or a catalyst for a new method of learning that could better benefit students in the long run.

The traditional higher education path has historically looked like this … universities annually attract new students, expand their endowments, and reinvest in their physical campuses, teaching faculties, and extracurricular programs. Teaching methods and instructional approaches have largely remained the same. All the while, tuition prices have increased exponentially, despite the bachelor’s degree offering remaining relatively the same. Offerings between institutions have also become more standardized, and differentiation more often lies in athletics and student amenities, as opposed to the curriculum or degree programs themselves. Coupled with the mounting student debt required to achieve a bachelor’s degree, the ROI of a college degree is a far cry from what it used to be. Students have never had the power or influence to mandate a change in teaching methods and the cost of college . . . until now.

There is significant need for low cost, online learning tools and curriculum. Moving instruction online can enable the flexibility of teaching and learning anywhere, anytime. Despite research showing otherwise, online learning carries a stigma of being inferior to face-to-face learning. True, taking courses online from the kitchen table with no campus environment, no new life experiences or social connections instinctively feels like a lower quality product. Yet, it should be fair to say that emergency remote teaching is not the equivalent of a well-planned, online learning course. While most universities had no trouble pivoting to online instruction, many instructors modified their course agendas to one that was reasonably achievable in a remote setting. While forced moves to remote learning regrettably could seal the perception of online learning as lower quality, when done intentionally and purposefully, the online format can create cost and scale advantages that are unachievable by traditional methods.

Though an unplanned pandemic is no fault of universities, it gives the customers a great deal of time to reflect and weigh their options. Already, many college students and prospects are reconsidering plans for next school year. As a result, the uncertainty of enrollments is sure to create financial pressure for universities, which may force them to reconsider their offerings and related tuition prices. Nearly every institution expects to see increased attrition due to students faced with financial inability to return to school, dissatisfaction with the remote learning experience during COVID, the desire to remain close to home, or a combination thereof. Students are unlikely to cough up top dollar in the long run as a result of these dynamics and the prospect of continued remote learning.

All of these influencing factors have created a breeding ground for substantive change in higher education. While ROI and scalability issues have been deliberated for years, these discussions will be accelerated due to the pressures created by the COVID pandemic. At a minimum, institutions should be cautious to focus on how quickly business can resume as usual. Instead, they should be asking themselves how they can adapt and innovate to better serve their students in the next several decades. Alterations to the higher education degree in the form of a cost-effective, high-quality experience will be required for the long-term survival of these programs.

MHT Partners, a leading education investment bank, welcomes further discussion on the effects of COVID-19 on the education industry: Rebecca Bell (rbell@mhtpartners.com); Shawn D. Terry (sterry@mhtpartners.com) or Alex Hicks (ahicks@mhtpartners.com).

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