Listen to the Podcast here: (5 min.)
In 2004, I spoke at several conferences discussing how creative destruction had taken place in the telecommunications industry and that the financial service industry, would be next. Well, the financial meltdown, along with technology, has transformed the financial industry.
I now believe that the next industry that will be transformed by technology is higher education. With the Great Recession still in session, universities throughout the country are faced with the realities that gifting is down, endowments influx and online education coming at them in full force.
There is no doubt that the educational cost for college degrees, masters and doctorates have exponentially increased over these past ten years. These graduates and their families have invested thousands of dollars for these degrees. It will be interesting to see the dialogue I will have with families over these next five years regarding college expenses.
Recently, Seth Godin wrote a blog that I really enjoyed about higher education. Take time to read Seth’s blog as well because we are in agreement that this is the next industry model that could have dramatic changes.
On May 4th, the Obama Administration also began the push for tougher regulations on for-profit colleges by reducing the amount of federal financial aid flowing to these types of educational institutions. Projections are that this would cut these companies annual revenues by a third.
These new proposed rules would disqualify federal financial aid if their graduates spend more than 8 percent of their starting salaries on repaying their loans. These “for-profit” education companies like ITT Education Services, Career Education Corp. and Apollo Group have been raising tuition about 4 to 6 percent a year.
So this leads us to several questions. Will government use the for-profit colleges as a stepping stone to address all higher education tuition rate increases and financial aid requirements? Will technology and online education bring the cost down for students and their families? Will we see some for-profit and non-profit colleges experience consolidation or going out of business situations over the next ten years?
Watch these trends not only in education, but the new types of technology being unveiled by companies like Apple. So what do you think?