The Higher Education Industry: Incumbents and New Players
From legacy institutions to cohort-based courses, the higher education industry is complex and competitive.
In the US, the higher education industry is dominated by traditional universities. There are over 3,000 colleges in the US. These institutions offer a degree and are locally accredited.
Traditional universities benefit from strong brands and a rigorous accreditation process. Creating a new, competitive university requires significant time and capital. Most Ivy League institutions were founded in the 1700s.
While institutions like Harvard have benefited from a long history, brands like Y Combinator and Lambda School have shown the ability to establish credibility in less than a decade.
The competitive dynamic of traditional universities is intense. With many players and rising costs, we have seen many universities file for bankruptcy over the past 20 years.
At the same time, the higher education industry has seen little innovation over the past 200 years. This is beginning to change.
Early in the 2010s, MOOCs (massive open online courses) gained in popularity and promised to disrupt education with technology. While they didn't fully deliver on their promise, they have played an important role in distributing high quality information over the internet. Effectively, MOOCs upload in-person courses onto the internet.
As costs continued to skyrocketed, technology improved the online experience, and COVID forced people online, additional alternatives gained in popularity in the past year.
Notably, bootcamps and cohort-based courses have provided alternatives outside of traditional universities.
Cohort-based courses (CBCs) are short-duration, outcome-based, low-cost, and online courses that teach a specific skill with a cohort of like-minded people.
Bootcamps are similar to CBCs but have longer durations, higher intensity, and a higher cost.
Bootcamps and cohort-based courses have opted out of tradition accreditation standards. As a result, the programs focus on outcomes, student transformation, and alternative credentials.
While traditional institutions benefit from their history and brands, new players are entering the market to provide low-cost, outcome-based alternatives.
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