Who will provide entry-level and continuing vocational education?

Universities are doing an increasingly poor job of entry-level training -- will industry take over?

My first job after college was with IBM. As soon as I was hired, I was sent to San Francisco for an eight-week training course in which I was introduced to the organization and its culture and taught to wire the control panels of unit-record machines and design unit-record systems. After that phase one training, I worked for a while, then went to a second and later a third class.

In those days, IBM hired people regardless of their major in school, based on an aptitude test and interviews. (The most senior technical person in our office and my first mentor was an English major). IBM assumed the responsibility of training entry-level employees.

A few decades later, universities were expected to finance entry-level training. Companies wanted new hires who were productive on day one. That worked pretty well as long as the cost of education was reasonable. (My tuition at UCLA was $76 per semester).

But, that system has broken down -- society has cut support for universities and, to be honest, IBM did a better job of entry-level training than many of our universities. As we see below, today's students often borrow large sums to pay for their college education and many end up in dead-end jobs.

Percent of graduates in jobs not requiring a degree
College graduates: age 22-65 with a bachelor's degree or higher
Recent graduates: age 22-27 with a bachelor's degree or higher
Shaded areas designate recessions.

Good non-college jobs: at least $45,000 a year
low-wage jobs: $25,000 a year or less
Shaded areas designate recessions.

It is way too soon to call it a trend, but the Internet may be taking us back toward industry-financed entry-level job training. The most IBM-like example is AT&T's sponsorship of the development of an online masters degree in computer science at Georgia Tech. The first semester of that program has been completed and the students are satisfied and the administration is optimistic, but not declaring victory yet.

Yesterday, AT&T (and others) announced that they would be participating in the development of tech-oriented "nanodegrees" on the Udacity platform. (Udacity also hosts the Georgia Tech MS).

IBM may not be offering the same 3-phase training that I had as a new hire, but they are offering MOOCs at universities through their Academic Initiative and have recently agreed to partner with 28 business schools and universities on developing data science curriculum and programs.

The Georgia Tech MS degree will cost students $7,000 and a Udacity nanodegree will cost approximately $2,400 -- about $200 per month for 12 months. AT&T is sponsoring some of their employees in the masters program and will offer internships to 100 nanodegree graduates.

Online education has also reduced the cost of tuition reimbursement benefits for employers. Starbucks is offering tuition reimbursement for employees who complete an online bachelor’s degree at Arizona State University.

Online education has boomed with the spread of Massive open online courses (MOOCs). MOOCs have had successes and failures, but the infusion of capital and interest has triggered a wave of innovation in technology and pedagogy. New media often mimic and substitute for old media. We first saw MOOCs as a replacement for university education, but it may be that their major impact will be on vocational training.

Udacity has pivoted from university education to lifelong vocational training and the deal looks good enough to induce companies like AT&T and Starbucks to cover part of the cost.

What might it mean if employer-subsidized vocational training catches on?

Traditional universities will lose students. The majority of students see a degree as a path to a job, and universities control certification. If a $2,400 nanodegree gets one a good entry-level job, many students will skip the university.

University education is much more common today than it was when I started at IBM. Universities, like many other organizations, typically try to grow, leading to aggressive marketing programs and lowered admission standards. While a university might have an incentive to admit and retain poorly qualified students, an employer does not. The company personnel department may replace the university admission committee as the gatekeeper to the middle class.

That might be efficient, but tying education to employment has a downside. Consider the effect of tying medical insurance to employment -- it is an important part of an employee's benefits, but it discourages mobility, harming both the economy and the individual.

The courses I have mentioned here are not typical MOOCs, but they are compatible with MOOCs. For example, Udacity has not spelled out the details, but a nanodegree will involve testing for certification and, no doubt, more personal interaction with instructors than today's MOOCs. However, they also intend to make the teaching material available as a MOOC. Self-study students will not get credit or personal attention, but they will have access to the same material as paying students. The material will be a fringe benefit for society and an advertisement for Udacity.

As Steve Jobs used to say -- one more thing. I've been talking about vocational training, but I think there is also demand for curiosity-driven, non-degree, lifelong edcuation -- edutainment if you will. That may be the way those nanodegree graduates round out their education.

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Update 9/19/2014

At a lower level, we are also seeing online trade schools. For example, Open Colleges in Australia. They claim to have over 700,000 students and offer trade school courses in these areas:

That sounds good, but digging a bit deeper I became skeptical. The site reminded me of a TV ad for a trade school -- lots of rosy career promises, special offers and testimonials from students. I tried to find the cost of their classes or career preparation programs, but did not find a way to get the cost without starting to enroll. I did, however, learn that I could pay by the month or fortnight and would get a discount if I paid up front for the entire course.

With my skepticism aroused, I took their multiple choice test of my language, literacy and numeracy skills and learned that I was skillful enough to be admitted to their Certificate III and IV level courses. I was not qualified for their Diploma level courses. Did I mention that I gave random answers to the questions? Just lucky I guess.

I did not spend much time on their site and they may do a great job of training and finding employment for their students, but whether they do or do not, there may be room for MOOC-like trade schools.

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Update 6/1/2015

Google wants more Android developers so Udacity has added an Android Development nanodegree.