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among 27 potential factors, the U.S. News ranking came in at #20 in terms of importance in students' decision-making process. Twice as many students said that rankings were "not important at all" as those who said that they were "very important." So what do students care about? The top four factors were majors, cost, safety, and employment.3

We are beginning to see a similar shakeout in higher education. In a survey of 368 small private colleges and midsize state universities, 38 percent failed to meet their 2014–15 budget for both freshman enrollment and net tuition revenue.

If they can truly provide premium programs with a high return on investment, they will be able

to continue to charge high tuition. What they must not do—if they want to survive—is stand still.

Forced to demonstrate definitive value, midtier institutions will have to decide what they want to be when they grow up. If they're in the business of providing basic degree programs—where value to the student accrues primarily as a result of the credential itself—they will become a discount provider: delivering the program as inexpensively as possible.

"a full stack education company might not look like a school at all. It could look like an employer, a lender, a school, and/or a recruiter all rolled into one."6

The good news for students is that following this hollowing out, institutions will provide a higher return on investment.

premium providers will utilize technology for some delivery but will focus on immersive, intensive, employer-focused and -facing experiences for students

In fact, it's conceivable that the only remaining institutions with a return-on-investment profile characteristic of today's market will be the elite colleges and universities that have set the pace for higher education until now.

Full-stack providers that hope to achieve the higher education equivalent of Apple's or Uber's success will have to find a way to do three fundamental things: (1) develop and deliver specific high-quality educational experiences that produce graduates with capabilities that specific employers desperately want; (2) work with students to solve financing problems; and (3) connect students with employers during and following the educational experience and make sure students get a job.

In a decade, online education may be recognized not for making higher education accessible to anyone with a smartphone but, rather, for serving as the midwife who delivered competency-based learning into the world. Although competency-based learning is theoretically possible in a non-technology-enabled environment, it's not nearly as simple and appealing. In a competency-based environment, transfer credits become an anachronism and failure becomes a relic. In a competency-based world, the 41 percent of students who start but don't complete degree programs within six years will still receive value from the competencies they can show to prospective employers.15 Equally important, in our experience, competency-based learning reduces the cost of delivery by half over standard online delivery. Astute providers will pass the savings along to students and become leaders in the new discounter segment.

Some coding bootcamps even guarantee employment or tuition is refunded

the real higher education story of the decade is the crisis of affordability

The average bachelor's degree recipient who has taken out student loans carries $28,400 in debt, and 26 million consumers have two or more open student loans on their credit report.

Between 1999 and 2011, outstanding student loan debt grew by 511 percent; as of early 2014, it exceeded $1 trillion, more than credit card debt.10

In 1979, a typical student could pay his/her way through college working at the minimum wage for 182 hours, the equivalent of a part-time summer job. In 2013, the same student at the same college at the present-day minimum wage would have to work over 991 hours (a full-time job for half the year) just to cover tuition while still needing to find additional resources to pay for living expenses.11 In addition, the wealth gap between young and old has also never been wider. At the end of 2011, the typical U.S. household headed by a person age 65 or older had a net worth 47 times greater than a household headed by someone under 35, a number that more than doubled since 2005

in our current isomorphic system price continues to serve as a signal of quality

As a result, most institutions offering online programs have done so at the same price point as their on-ground programs; to do otherwise would send the wrong signal for a medium that is still young and thirsting for academic legitimacy.

If any product or service should be designed so that a stoned freshman can figure it out, it should be higher education.

Despite this, higher education may be the most complex product or service purportedly designed for mass consumption. This is not a comment on the difficulty of the subject matter being taught in the classroom; rather, it is a comment on the opaque and complex process of enrolling, financing, and ultimately assembling a degree. Focus groups conducted at Macomb Community College in Michigan, offering 200 degree and certificate programs to 48,000 students, revealed that very few students were able to navigate the complexities of enrollment, financial aid, transcript requests, prior credit recognition, program selection, and course selection/scheduling.

Because of the flawed transfer-credit system, students have difficulty identifying pathways toward a degree if they're changing institutions—something that a large percentage of them will do over the course of their studies.

To be successful in improving outcomes, higher education must turn the current process of program design on its head. Traditional program design is based on a system of credit hour inputs rather than outcomes. This has resulted from a culture of faculty-focused curricular development, which moves from an established curriculum to assessment and then to learning outcomes. A simpler, better system would be reverse-engineered by starting with student outcomes, then moving to the assessments that prove that the outcomes have been achieved, and only then turning to the question of what curricula best prepare students for the assessments. Fortunately, technology allows higher education to make this shift.

Even more shocking, approximately half of institutions that claimed to hit budget were reporting against downward-revised budget numbers.5

Technology's efficacy goal for online learning should be to move "focus by choice" as far as possible in the direction of "controlled focus." Two sets of technologies will accomplish this.

Combining adaptive learning with competency-based learning is the "killer app" of online education. Students will progress at their own pace. When they excel on formative assessments integrated into the curricula, they are served up more-challenging learning objects. And when students struggle, adaptive systems throttle back until the student is ready for more.

The second technology is gamification

believing that the solution to the smartphone challenge is simply allowing mobile access to the same online course is tantamount to believing that an institution's online strategy is effectively addressed by putting lectures on YouTube or iTunes.

In other industries, unbundling has driven fundamental change. Over the past decade, sales of recorded music are down 50 percent and continue to fall each year.

Where does this leave the higher education bundle? At present, degrees remain the currency of the labor market. But as currency, they're about as portable as the giant stone coins used on the island of Yap. What if technology could produce a finer currency that would be accepted by consumers and employers alike?

neither dot-com entrepreneurs nor MOOCs have produced courseware that is truly disruptive to higher education.

What if that is because the software that will disrupt higher education isn't courseware at all? What if the software is, instead, an online marketplace? Uber (market cap $40 billion) owns no vehicles. Airbnb (market cap $10 billion) owns no hotel rooms. What they do have are marketplaces with consumer-friendly interfaces. By positioning their interfaces between millions of consumers and sophisticated supply systems, Uber and Airbnb have significantly changed consumer behavior and disrupted these supply systems. Is there a similar marketplace in the higher education arena? There is, and it has 40 million college students and recent graduates on its platform. It is called LinkedIn.

LinkedIn CEO Jeff Weiner has been very clear about his ambition, stating in November 2014: We want to have a profile for every member of the global work force, all 3 billion-plus people. We want to have a profile for every company in the world—that's north of 70 million companies—and digital representation of every job in the world. We also want digital representation of every skill required to obtain those jobs, a digital presence for every university in the world, and we want to make it easy for every individual company and university to share their professionally relevant knowledge. In doing all of this, we hope to allow all forms of capital to flow to where it can best be leveraged to lift and transform the global economy.2

Competency marketplaces will profile the competencies (or capabilities) of students and job seekers, allow them to identify the requirements of employers, evaluate the gap, and follow the educational path that gets them to their destination quickly and cost-effectively.

It could be the "software" that Andreessen foretold and that colleges and universities have long feared.

As competency marketplaces and their associated algorithms become increasingly sophisticated, employers and students will begin to value the signals from these tools more than the signals from nonelite universities' bundled degrees. (The signals from elite universities' bundled degrees will remain strong, largely due to the high caliber of the inputs.) As employees who are matched on the basis of competencies (and then hired through standard interviewing techniques for behavioral and cultural fit) excel in the workplace, this trend will only be reinforced. Employers will adjust job descriptions to reflect the incoming competencies of high-performing candidates, and competency matches will get better and better.

At some point, a student will walk into the college admissions office and say: "I've read your programs of study, and your Environmental Engineering program looks interesting. But how will it help me take my competency profile from where it is today to where LinkedIn says it needs to be in order to get an entry-level job as an engineer?" Colleges and universities that offer competency-based programs will at least speak the same language as this student. That's necessary, but not sufficient. A sufficient response will require unbundling the degree.

Likewise, colleges and universities may soon transition from the bloated degree model to an "Education-as-a-Service" (EaaS) model. Successful providers will sell students what they need when they need it: a "just-in-time" educational model that is much closer to today's coding schools than current degree programs.

Each of these is a potential revenue stream for competency marketplaces, either from the employer or from the education provider.

If ownership is held by the competency marketplace, we may find ourselves in a world where there's more money to be made from owning the competency profile than from delivering postsecondary education.

To avoid marginalization, colleges and universities need to insist that individuals own their competencies. Ensuring that ownership lies with the individual could make the competency profile portable and could facilitate movement across marketplaces, as well as to higher education institutions. In an era of unbundling, when colleges and universities need to move from selling degrees to selling EaaS subscriptions, the winners will be those that can turn their students into "students for life"—providing the right educational programs and experiences at the right time. This becomes possible when individuals own their competencies and allow institutions to manage their profiles, suggesting educational programs and even employment.

In the coming years, many institutions will succumb to the current inertia that is too prevalent in higher education. Some institutions will address some of these issues and will survive. Others will successfully address most of these issues and will then need to prepare for the next seismic change in higher education: The Great Unbundling.

Perhaps the most outdated feature of our current higher education system is how we measure learning. Today, this is done according to the amount of time spent at desks and in classrooms—or sometimes even time spent online—rather than by how much students actually absorb and subsequently what they do with that knowledge.

But what would happen if we turned this system on its head? What if college credits were awarded based not on seat time, but rather on measurable learning? What if we prioritized outcomes over inputs?

So it’s time for a change. It’s time for a system that awards learning credits that are based on learning, not time. It’s time for a student-centered credentialing system that prioritizes what you know and can do over where and how you get your education. And the only way to do this is to remove and replace the credit hour.

we know the basic aspects of the higher education system the nation needs: At its core, it’s a system that offers multiple, clearly marked pathways to various levels of student success—pathways that are affordable, clear and interconnected, with no dead ends, no cul-de-sacs and plenty of on- and off-ramps.

all learning certified as high-quality should count—no matter how, when, or where it was obtained.

In the ideal scenario, then, in this new system every student will know where they are going, how much it will cost to get there, how much time it will take, and what to expect at journey’s end—both in terms of learning outcomes and career prospects.

We must focus on learning outcomes as the true measure of educational quality. Not time, not institutional reputation (like the US News & World Report and other rankings do), but genuine learning. That is, those competencies that are informed by the real world in which students must thrive.

In our experience, this critical transition from prediction to intervention (and assessment of the resulting impact) is actually quite rare in higher education learning analytics research and practice.

Although online, competency-based programs have been around for some time, opening up federal funding at scale across the higher education system for lots of new players has never been done before. As the government gets into this game, harnessing, and not limiting, the potential that competency-based learning brings—to be fundamentally about a student’s learning—as it seeks to assure quality is critical. The nation has yet to master that.

What the PISA found, according to its manager Andreas Schleicher and as reported by Thomas Friedman in The New York Times, is

The single entity and mode of delivery may need rethinking to account for the wealth of access to information now in place with the Internet and mobile technology.

that the most successful students are those who feel real "ownership" of their education. In all the best performing school systems, said Schleicher, "students feel they personally can make a difference in their own outcomes and that education will make a difference for their future.”

All the building blocks are in place for breakthroughs: the Internet goes everywhere. Everyone has a device connected to the network. And the cost of technology experimentation is so low.

Students can grow frustrated by not feeling ownership over their learning, and can get trapped in a power struggle with teachers over choice and direction with learning.

The single entity of the teacher needs to be reconsidered and recalibrated.

The learning paradigm is shifting toward student "agency."

Learner agency is characterized by a pedagogy that builds on the passions of learners and also has real world relevance. We are seeing numerous examples of this in our schools, and the school structure is also beginning to change to accommodate this transition. Schools are adopting more flexible schedules, new and more personalized methods of reporting are being adopted, and examples of hands-on experiences from outdoor learning to community business partnerships are flourishing. Many do see learner agency as being key to the future of schooling.

“There was still an audience that we were missing, and that was working adults,” Box says. The problem was one of scheduling, because many “could not commit to a traditional semester.”

Under Learn on Demand, students can enroll whenever they want. There are no class schedules or assignment deadlines in the self-paced courses. And students can leave without facing problems when they re-enroll. As Box says, with modular courses, students have “exit points along the way.”

Each module is worth a half-credit, and the course is pay-as-you go, like other modular classes. Tuition is a flat $140 per credit. So in the management course, that’s $67.50 per module. With additional fees, such as charges for e-texts, the course’s modules range from $88 to $105, which is fairly standard across the program. So students can expect to drop no more than a c-note per credit.

Faculty members at Kentucky’s two-year colleges studied the Western Governors model when they were building their new online program, officials said. They also took a long look at the University of Phoenix, mostly to try to duplicate how the for-profit runs its online programs all day, every day, with instructors and student services always on-call. Rio Salado College, an online two-year institution that is part of Arizona's Maricopa Community College System, also served as an example.

what is more intriguing is the rationale for this growth. Is it an attempt to expand institutional reach and better meet customer needs, especially those of students, parents and employers, or is it simply a means to fill budgetary gaps?

In the Eli Broad College of Business at Michigan State University, we have taken a very customer-oriented approach to online learning and have put customer needs, as well as the overall student experience and learning outcomes, at the forefront of our online development efforts.

Can you provide different degree or certificate offerings for different customer groups and how do you effectively manage these different offerings?

Is your institution open to alternative business models, not to replace the primary one, but to supplement and enhance the overall portfolio?

In the past, the inclination would be to create a generic program that would serve the needs of many different individuals; however, the risk is that such a program might not address the full set of needs for any one individual.

As a result, we need to become much more flexible and agile in defining requirements and how best to meet those requirements. Competency-based learning, micro-learning, MOOCs and any number of other emerging approaches must be considered in this “solution” context. Flexible, online learning is an important part of the solutions mix, too.

While it is impossible to accurately predict what might happen if higher education is unable to adjust to these new realities, the experience from business suggests that the result could be dramatic. The Fortune 500 of today looks dramatically different than the Fortune 500 of even 20 years ago. Bankruptcies, consolidations and new technologies continue to transform the commercial marketplace. It would be foolish to think that something similar couldn’t happen in higher education, too. The challenges are significant, but the opportunities for those who can embrace these new realities could be equally significant and exciting!