Alternative Credentials and Providers: A Second Look

Much as it is convenient to single-out an individual or one particular event, significant changes - wherever they unfold - are invariably the result of several co-dependent factors. My colleagues and I find it useful to remember this when trying to understand changes in higher education. More than most organisations, higher education operates as a part of a coordinated and mutually dependent ecosystem of organisations and practices. This includes student loan systems, high schools, employers, government funding schemes, and regulators. 

The interdependencies created by these relationships increase the value of higher education by, for example, helping students get access to the funds they need to pay for higher education. But the dependencies between these entities also make change more difficult, as changing one component of the eco-system often requires changes to one or more other components. 

Lending a Helping Hand, Albeit Inadvertently

In a recent post, I looked at the growing interest among colleges and universities in offering alternative credentials. While there are many dimensions to this move, I am especially interested in how this leads to a situation in which accredited institutions of higher education are delivering the same variety of credentials as organisations outside of traditional higher education (i.e., “alternative providers”).

Advocates of Alternative Credentials in higher education offer three rationales: 

  • The narrowly defined competencies represented by the credentials fill an essential gap for learners, especially adults;
  • The courses and programs that fit under this umbrella of Alternative Credentials may serve as a much needed new source of revenue for colleges and universities which are facing budget shortfalls, brought on by recent demographic trends, increasing operating costs, and flat public funding;
  • The perception in higher education that alternative credentials - and the expansion of alternative providers that offer these credentials - represent a competitive threat to traditional higher education.

(Mis)Applying Market Principles to Higher Education

The third and last rationale applies a widespread understanding of how organisations compete; an understanding that doesn’t account for differences in higher education markets. A fast-food burger chain, for example, may learn of increased sales at new chains offering healthier menu items. In response, the burger chain may adopt some of the attributes of the healthier fast-food chains: adding healthier menu items, changing how they prepare current menu items (e.g., reducing salt), stressing the quality of its’ existing menu, or all of the above. By mimicking certain aspects of the emergent competitors, the incumbent hopes to limit the growth of the competition and, ideally, put them out of business. Pundits who call for higher education to offer alternative credentials, such as Daniel Hickey, are interpreting competition in this same manner:

“ . . . it seems certain that e-credentials will transform education in the next two decades much as e-commerce has changed retailing today. If that is true, colleges and academic programs that continue to ignore or resist e-credentials may have already begun a slow but inevitable decline.” link

But competition in higher education doesn’t always work as it does in most other markets - understanding these differences is critical. In this case, the difference resides in the way the credential economy is regulated and how, over time, credentials from accredited, traditional colleges and universities have became embedded in institutional standards, employer practices and expectations, and cultural and social class notions of what constitutes an “educated” person. 

Not a Level-Playing Field

Higher education is not merely another provider of education, then, but an officially sanctioned and dominant that has a near-monopoly on what is commonly understood as a legitimate education. A tight and deeply entrenched bond exists between accredited institutions, the types of credentials that these institutions, alone, can provide, and social definitions of what constitutes “real education”. 

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A recent study nicely illustrated the strong bond between higher education, the credentials they offer, and the labour market. It describes how employers have raised the credential requirements for job candidates. As colleges and universities produce more graduates at every level, employers have followed in lockstep by requiring more advanced degrees (from traditional institutions). The degree requirements have increased even though the work doesn’t necessarily call for additional qualifications. (If you’re over 40 years of age, you likely know a few people who would no longer be considered for the jobs they now occupy.) Rather than deviate from higher education, employers move in lock-step as the supply changes. One effect, certainly, is to increase costs to students and society; a second is to increase demand for higher education credentials. 

Alternative Providers of education can’t simply begin offering Bachelor degrees. They can’t choose to adopt the properties that define and sustain the monopoly. They may want to offer something healthier than burgers and fries, but they can’t. 

But let’s clear: for this essay, what matters is not whether or not this particular system is justified or beneficial to students and society. Rather, the point is that the current arrangement has had the effect of dramatically limiting the value of what alternative providers can offer. 

Credentials or Disruption

This unique arrangement is one of the main reasons why the frequently predicted “disruption” of higher education has yet to materialise. Pundits explain that higher education will suffer the fate of other information-rich, digital-friendly industries, such as bookstores, journalism, and music recording. But unlike other industries, the credential economy ensures that students don’t have access to “substitute goods”. Students need the widely recognised credential that only officially sanctioned institutions can offer. A music fan, though, doesn’t care a great deal about who supplies her music fix. If a new source music files can provide lower prices, better file quality, or superior convenience, consumers will gravitate toward it. Most students need to learn at an accredited institution that offers the widely recognised credentials to ensure that their investment of time and money will have value in the labour market or at other educational institutions (e.g., for admission to graduate studies)*

Given the importance of credentials to higher education as a stalwart against competition, the decision to move into the Alternative Credential space seems odd, at best - especially given that the motivation for this venture is to combat competition. The move places traditional institutions in a market in which it is no longer afforded the protection that the credential economy provides. More importantly and in the long term, the move bestows credibility on a new, largely unfamiliar category of credentials that other organisations can provide. In an attempt to compete with these upstarts, traditional higher ed is providing precisely what these emergent competitors currently lack: legitimacy in the eyes of students looking to build their skills and resumes. 

Other Factors Supporting Alternative Providers & Credentials

This indirect and likely unintended validation of alternative credentials (and, by extension, alternative providers) isn’t going to single-handedly enable the upstarts to establish a major foothold in adult education. But several other developments are unfolding in most OECD nations that support the rise of alternative providers and alternative credentials. Together, these developments are beginning to form a new, second education eco-system that will cut into what has become a near “natural” preeminence of traditional higher education for learning skills and competencies. Our next post on this subject looks directly at these developments.

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By Keith Christopher Hampson, PhD

*The credential economy in higher education explains the form that much of the commercial involvement in higher education has taken to date. Businesses that want to sell to higher education, need to focus on sales to institutions of higher education, rather than directly students. Efforts to get around this obstacle include the “online program management” industry, with the likes of 2U, Pearson-Embanet, Bisk, and others. They sell a range of services and resources that institutions need to fund, develop, manage, and market online education programs. Despite the considerable competencies and resources these vendors bring to the table, the actual programs of study must be presented to the public and regulators as strictly by-products of the institution. In other markets, new competitors would inevitably emerge offering comparable products and services - i.e., serving as competitors, not solely suppliers. 

Keith HampsonComment