This article originally appeared on Forbes.
Last week, tens of thousands of high school seniors across the country got bad news. Acceptance rates at selective colleges hit record lows, down to a minuscule 4.7% at Stanford and 5.2% at Harvard from an already stingy 10.9% and 10.5% ten years ago. The same trend was true at Brown, Penn, Duke and just about every other national university.
Why is it that competition for college degrees is heating up despite the arrival of online resources that offer college-level classes nearly for free? Part of the explanation is demographics -- there are more 18-year olds right now than at many other points in history. Part of it is that the economy is more competitive than ever, and a college education is seen as more and more necessary to prepare.
But perhaps the biggest driver is that young people want more from an education than just to learn; they crave an identity and community, and this desire holds more strongly than ever and drives interest in certain institutions.
What do I mean? I ran Manhattan GMAT, the country's largest GMAT prep company by enrollment, for five years. Here were the top reasons that students told me they wanted to attend business school:
1. Credentialing: They wanted to get a degree that would mark them as smart and qualified for the rest of their career and set them up for good opportunities.
2. Network: They wanted to become friends and colleagues with smart, ambitious people that would look out for them for years to come.
3. Social/personal: They wanted to socialize, party and meet an appropriate mate (Yes, I heard this all the time).
4. Confidence: They didn't feel confident in their career direction and wanted to become a manager or professional.
5. Coursework: They wanted to learn finance, basic accounting, marketing and the like.
The big point is this -- what they learned in class was not the primary draw. Many applicants had spent years at a bank or consulting firm or had studied business as an undergrad and saw the coursework as mostly review. Yet they were willing to spend $100k+ and two years of missed wages for what they felt was mostly credentialing, networking and socialization.
We see it here at Venture for America too. Over 1,300 college grads applied for 180 spots this year to work at startups in Detroit, Baltimore, St. Louis and other cities. The main draw, if you ask them, is "the network of other smart, enterprising people."
The same motivations apply at the college level. Most parents and students have little idea who individual professors are or how departments stack up before applying. They'll visit schools to see what they think. They might look at a few third party rankings. But they're primarily seeking for their son or daughter or themselves the credentialing, network, socialization, identity formation and job prospects that come with a particular school. What is learned is less central -- learning is simply presumed to happen above a certain baseline and come packaged with the degree.
You can literally take a Stanford or MIT computer science course online right now nearly for free. But applications are up at these schools, not down.
Top educational institutions today don't confer lessons. They confer a brand, a network, a credential, friends, a personal life, a residential experience, a set of opportunities and a sense of self. In short, an identity. This is the main reason why the Internet isn't displacing traditional education and, in the face of increasing pressures, people are applying to selective colleges more than ever.
This isn't to say that there won't be changes upcoming. Marginal schools will struggle in the coming years due to increased costs and competitive pressures. And entrepreneurs will find ways to supplement learning with the non-classroom benefits that students and parents are seeking.
Perhaps the most prominent example of the latter is the Minerva Project, a startup university now entering its third year. At Minerva, students take classes online.* But they do so while living together in dorm-style housing. They spend up to one year each in different dorms in San Francisco, Buenos Aires, London, Seoul and Istanbul. Minerva is selective -- the acceptance rate for the latest class was only 1.9%. Students socialize and build connections because they live and travel together. Minerva delivers learning yes, but it also delivers the credential, network, socialization and identity that students crave. And it does this at $28k a year, a little more than half of what similarly selective universities charge.**
Minerva is a signal of the future of college education. College as an institution is safe. What students and parents want is constant. But it's going to be the combination of old and new institutions that successfully compete to deliver credentialing, networks, socialization -- and learning -- in innovative ways that will thrive.
*Minerva's online education is unusual in that the student's face is shown the whole time and they get called on to ensure accountability and engagement. This 'facetime' is even the main performance metric -- there aren't final exams.
** Minerva saves money by not investing in things like libraries, athletic facilities, sports teams and the like. So if you really love those things and don't like public libraries and gyms, it's probably not the school for you.