Will a Bachelor’s Degree Matter as Much for Gen Z?
Faster and cheaper pathways to good first jobs are poised to supplant slow, expensive bachelor’s degrees (particularly from non-selective colleges and universities) in Gen Z’s affections. Gen Z has already been prejudiced against large upfront investments. Why buy a car when you can summon one with an app? Why subscribe to a cable bundle when you can stream individual networks and shows? The sharing economy will not leave the $500B higher education sector unscathed. Gen Z wants to get its foot on the first rung of a career ladder — a good first job quickly, and without incurring any debt — before deciding what secondary or tertiary postsecondary education pathways to follow in order to bolster cognitive skills, become managers, move on, and move up. The goal isn’t less postsecondary education per capita. That would be economic suicide in today’s global knowledge economy. Rather, the goal is to restage how that education is consumed, from all you can eat in one sitting, to what you need, when you need it.
College has changed a great deal in the last 25 years. For one thing, we have an urgent crisis of college affordability. Due to skyrocketing tuition, the average student in the U.S. now graduates with about $30,000 in student loans. Simultaneously, colleges are facing crises of completion — only about 50% of matriculating students ever complete a degree — and employability. More than 40% of new and recent graduates are underemployed in their first job. And for those who are underemployed in their first job, two thirds are underemployed five years later, and half are underemployed a decade later.
Underemployment and pathways to careers are increasingly pressing issues as colleges and universities haven’t come close to keeping up with the digital skills demanded by employers.
The World Economic Forum found that only 27% of small companies and 29% of large companies believe they have the digital talent they require. Three quarters of Business Roundtable CEOs say they can’t find workers to fill jobs in STEM-related fields. Deloitte has found that in the UK, only 25% of “digital leaders” believe that their workforce is sufficiently skilled to execute their digital strategy. Another survey found that 80% of executives are highly concerned about a digital skills gap.
The result has been financial calamity for American Millennials in particular: overall, some 57% of borrowers are current on their loan payments, and one-third of borrowers who graduated between 2006 and 2011 have defaulted. Home ownership and new business creation by young adults has dropped. As Gen Z reaches college age, they’re looking at the example of Millennials and contemplating whether a traditional four-year accredited college or university is the optimal path for achieving their primary goal: a good first (and probably digital) job in a growing sector of the economy.
Faster and cheaper pathways to good first jobs are poised to supplant slow, expensive bachelor’s degrees (particularly from non-selective colleges and universities) in Gen Z’s affections. Gen Z has already been prejudiced against large upfront investments. Why buy a car when you can summon one with an app? Why subscribe to a cable bundle when you can stream individual networks and shows? The sharing economy will not leave the $500 billion higher education sector unscathed. Gen Z wants to get its foot on the first rung of a career ladder — a good first job quickly, and without incurring any debt — before deciding what secondary or tertiary postsecondary education pathways to follow in order to bolster cognitive skills, become managers, move on, and move up.
The goal isn’t less postsecondary education per capita. That wouldn’t make sense in today’s global knowledge economy. Rather, the goal is to restage how that education is consumed, from all you can eat in one sitting, to what you need, when you need it. To that end, we’re seeing the emergence of faster and cheaper alternatives to college in the form of bootcamps that provide last-mile training and lead directly to good digital jobs, as well as income sharing-based programs like Lambda School – although none have reached a critical mass of 18 year olds yet.
Before bachelor’s degrees became the ante to try to win a starting position in a desirable profession, and before colleges and universities began spinning up thousands of carefully crafted and market-research-tested master’s programs, your best option was to get a foot in the door with an existing practitioner: get an entry level job or internship, try to be useful, learn what you could. In some industries and throughout history, that has taken the form of apprenticeships, which not only don’t charge tuition, they actually pay students to learn on the job.
In the next decade, I expect apprenticeships of various flavors to emerge as a viable and scalable alternative to college as a first pathway to a good job in growth sectors. These largest programs will be offered by staffing and service providers in skill-gap areas — providers that have built big businesses in sourcing, screening, and training entry-level talent. It’s logical that the largest apprenticeship providers will be those with a commercial incentive to scale the production and through-putting of purpose-trained, entry-level talent for clients facing talent shortages. Apprenticeship programs that scale will be those that incorporate talent as a product or service for customers — models that can help the apprenticeship providers themselves meet financial goals. We call these “outsourced apprenticeships” i.e., apprenticeships operated by specialist companies on behalf of hundreds of clients.
As most employers now believe that our current system of entry-level hiring is broken, the next front in the talent war will be entry-level hiring. And the primary loser in this battle is likely to be traditional colleges and universities.
Ryan Craig is the author of College Disrupted and A New U: Faster + Cheaper Alternatives to College. He is a Managing Director at University Ventures, which is reimagining the future of higher education and creating new pathways from education to employment.
Will a Bachelor’s Degree Matter as Much for Gen Z?
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