Why universities are no longer in the education business

What students are buying and what universities are selling

When you look at - what students are evaluating, choosing and paying for, and what universities are promoting, selling, and providing - education is rarely the major part - it is one part of a bundle.

And education is commoditising.

University is a bundle between:

• Credential

• Tourism and

• Immigration

• Community

• Education

• Real estate

Every student is choosing a unique combination - a bundle.

And there is a difference between what they say they are buying and what they are actually buying - we don’t openly discuss it this way.

And the nature of the market is changing.

For short term or summer students, they are buying some combination such as: 30% tourism, 10% housing, 10% visa / immigration, and 10% credential, 10% community and 20% education.

For bachelor’s students, they might be buying 0% tourism, 0% immigration, 40% credential, 20% community, and 40% education.

Some international students they may be 0% tourism, 10% housing, 40% immigration, 10% credential, 20% community, and 20% education, but another, perhaps from a wealthier country, may be 25% tourism, 0% immigration, 0% housing, 25% credential, 25% community, and 25% education.

This matters for universities, when they are positioning their products, and also when we discuss the purpose of universities, because each market and each student is quite different.

It also matters because a great deal of the power of universities is the fact that they are bundled together. They’re like a meal in a restaurant. You pay for the location, the environment, a space for community, and the food together.

Now we’ve deconstructed the value of universities, we can better understand their value, and reconstruct around them.

The interesting thing is that the value of education is commoditising - people can learn more and more with AI or on YouTube. But verified learning is still valuable (which is the credential), which competes with proof of work and other sources of verification.

Immigration is policy-dependent and volatile and the one universities have least or even no control over.

They are becoming more important as centers of community.

The components have wildly different margins and disruption curves, so the bundle is a cross-subsidy.

Sometimes the components work well together. Elite universities are highly synergistic.

Sometimes the components compete with each other, and make the bundle more expensive - low ranked universities and many programs the bundle do not complement each other, and is not optimum.

• Education wants to be cheap, and expand to help the greatest number.

• Community wants to be physical, local, synchronous, scarce.

• Credential wants to be trusted, narrow, verifiable.
  These have been forced into one four-year campus product because historically you couldn’t separate them. You now can.

There are new opportunities in community + credential + education without the campus, or with temporary campuses.

It would be interesting to see more innovations in the 3-4 year bachelor’s degree model.

Such as 1 year residential + work + lifelong community memberships.

Now that we have the internet, we can learn and connect from anywhere, the only reason we continue the 3-4 bachelor’s degree is because that’s how it’s always been. For specific hard subjects such as science, but for more practical programs, such as software, or business, more and more learning can be done whilst working.