Two-thousand fifteen marked a year where the combination of debt and challenging employment outcomes for a number of graduates has led to increasing concerns about the value of the education that they've paid for.
Americans increasingly expect a college education to be accessible and affordable for everyone who wants one. While a laudable goal, this expectation is driving a creeping crisis in American higher education. To survive it, colleges and universities will need to fundamentally rethink their business model.
The problem starts with poor retention. Too many people start college but don't finish. In fact, for every 100 students that enroll in a standard, four-year program, about 40 will not have earned a degree within six years.
The problem is even worse at non-traditional institutions. For every 100 students that enroll in a two-year associates program, over 70 will not have graduated within three years.
A college degree used to guarantee entrance into the American middle class. That's no longer the case. A four-year degree -- even from a prestigious university -- is often insufficient to secure gainful employment. The joblessness rate among young college graduates now sits at 7.2 percent -- that's up from 5.5 percent eight years ago. And among those grads that have landed a full-time job, almost half are in a position that doesn't actually require a bachelor's degree.
And yet, in an odd dissonance, as millions of underemployed graduates are wondering what the point of their education was exactly, schools are raising their prices. In inflation-adjusted dollars, average tuition has quadrupled over the last 35 years.
In turn, students are drowning in debt. The average college grad is entering the workforce with $35,000 in loans. That load, particularly for those that can't find a job or sufficiently high salary, is often unbearable. And American bankruptcy law makes it effectively impossible for them to ever get rid of it. Today, one in six college loan borrowers is either behind on payments or in outright default.
The combination of rapidly rising college prices and rapidly declining perceived value of their product has an inevitable result: widespread customer dissatisfaction. Today, nearly 40 percent of graduates say their student loan debt isn't worth it.
To be clear, a traditional liberal arts education still holds value for many. But for a growing share of students, it simply isn't best fit for their needs. Schools must evolve to meet this demand. And that starts by considering what the successful students of the future will look like.
Take the hypothetical student of Chloe, an upstate New York native. While earning a Bachelor of Arts at SUNY Buffalo, Chloe spends four months learning to code at an outsider developer bootcamp. Thanks in part to that additional training, she secures a full-time job before she even graduates.
Or how about Prasanna. After graduating with an engineering degree from NC State, he lands a job at an analytics company. Itching to shift into management he enrolls at McKinsey Academy, a multi-week course run by my employer on interpersonal and leadership skills.
And then there's community college student Manuela. After a couple years in the job market after graduating high school, she returns to earn a two-year associate's degree to become a DNA sequencing lab technician. She's the first in her family to study for any sort of post-secondary degree and the college provides one-on-one counseling to help her stick with it.
These three examples demonstrate some of the most important trends in higher education. Peripheral learning opportunities operating outside of traditional institutions, like bootcamps and technical training programs, are proliferating. Students are increasingly interested in specific skills acquisition. And people are looking for opportunities to keep learning throughout their careers.
Colleges and universities ought to adapt to these trends. Administrators should break from the standard pedagogy and develop new programs offering clear value propositions for this new crop of students.
For starters, schools could offer "built to order" curricula designed to train students for specific jobs. These programs would be designed with input from promising employers. Colleges and universities could also expand their life-long learning opportunities, offering short classes available to all alums that provide micro-credentials, which certify that participants have acquired specific valuable aptitudes, such as basic coding or accounting.
The future represents a serious challenge to the higher-education establishment. Institutions that don't evolve risk dying out. But these tectonic changes also represent a profound opportunity -- an opportunity for colleges and universities to improve their offerings and help students flourish long after they've gotten their diploma.
Andre Dua is a Director in McKinsey's Public Sector practice.