The model of higher education that we’ve inherited is you go to college, you get your diploma, you go through graduation, done. We don’t live in that world anymore. So now lets talk about the two R that were in that equation So R subscript E is the required return to equity holders. And we are going to follow a model that’s famous in finance called the capital asset pricing model. This teacher is creating a digital learning experience with the help of a team at Georgia Tech university. Once it’s incorporated into a course, her lecture will be watchable anywhere her students can get online. It’s part of a trend that’s spurred a fair amount of hype. Could this be a revolution for online education? I have to wonder if physical classrooms could become another casualty of the internet age. It’s hard to imagine a future for college that isn’t touched somehow by the ongoing digital revolution. But the widely-hyped courses that are massive, open and online, so-called MOOCs that emphasize passively watching video lectures, they turn out to have a disappointing track record. It’s a priviledge for me to be your calculus professor this term, and I’m glad that you’ve chosen this course. One study of a million users found only 4 percent of students ever completed their course. Which is why some educators say reinventing college isn’t as simple as posting a video online and watching the whole world learn. It’s a misnomer to think that online education is less work. it’s a lot more work hands on with the students, but the work’s distributed in a way that is constantly making the course better as opposed to constantly making the course run. At Georgia Tech, Joshua Donegal is taking a computer science class and, while he rarely meets his professor in person, he sees him regularly like this. I don’t think it’s possible to slack off, you know that there’s another human on the other side of the screen watching over you, checking you, making sure that you understand the concepts. On the other side of the country in San Francisco, a new college called Minerva only offers classes as online seminars. And while everyone here takes their classes remotely, teachers track students as closely as if they’re in the same room. Possibly more. It’s a live video environment where up to 20 students / professors can interact with one-another in real time. All of the classes are synchronized. It is about real time communication. I think if you came to a Minerva class with a hangover, you would regret it by the end. Welcome to Financial Modelling. Both of these schools bill themselves as being on higher education’s cutting edge, and both are facing an economic truth, which might surprise those who believe technological disruption always means saving lots of money. If you do online right, it is not cheap. Economist David Feldman says digital technology is not likely to lead to a world where everyone skips college and gets an online degree for free. Getting a college degree is not a financial guarantee. Nothing is a financial guarantee. But over the past 35 to 40 years, getting a college degree has become an ever better bet. Which is why, despite mounting student debt, going to college usually makes sense, even for people who borrow to pay for it. The data are very clear that the most promising way for someone who starts out at the bottom of the income distribution, who comes from a low income family to move up, the best way to do that is to get a bachelors degree. I absolutely believe that college is more essential than ever, period, full stop. And I believe that we have to be remaking education. One of the more pressing reasons for this change grows out of a new reality graduates will face as technology transforms the landscape of employment. The world is moving so fast that you can’t go to college for four years and be prepared for four years. If your focus is on, “Let’s make this 18-year-old really happy with going to football games,” you’re not going to stay in business very long. There are people that are changing jobs five or six times over the course of their career. They tend to be in industries where disruptive change is happening all the time. And so, they come back to universities and say, “Can you help me with this?” And this has some students and universities rethinking the model of college as a single stage of life. So the old model for college was that people would show up as 18-year-old high school graduates, spend four years with you, and then you would send them out and they would work for the next 40 or 50 years. And this classic model of college is newer than you might think. The most common cliché I hear about education is that is hasn’t changed in 2000 years. That’s totally not true. In the end of the 19th Century, both European and American colleges realized the whole world had been industrialized. You had to have a different role in society. You had to a different kind of education, and education went through massive transformations. A lot of the things we take for granted in the US college experience like entrance exams, multiple choice questions, grades, even the divisions among many academic disciplines – were adopted during another time of rapid technological change, between the 1880s and 1920s. And we now equally need to go through massive transformations for a world that is not an industrial world, but an interconnected, linked world. And I always say if people did this in 1890, we can change higher education now. I think we’re at the tipping point, and we’re about to see massive changes in higher education from inside. And Georgia Tech is betting on this future with programs like a full-credit master’s degree in computer science that students can take online, from anywhere in the world. The new model is that people come back to you episodically over the course of their lifetimes. The online master’s program is a window into this future that we imagine. College isn’t for kids. I mean, I’m 36 years old now. I have three children I’ve been working professionally for a number of years. But I find it very beneficial to come back to the college environment to help improve my skillset. Otherwise, I could be behind the eight ball. And it’s not just mid-career professionals who are feeling this pressure. Sarah Hernandez is a 24 year old aerospace engineer who, shortly after graduating with a mechanical engineering degree from Rice University in 2016, landed what you might think is the job of a lifetime. I am a research engineer at the NASA Ames Research Center here in Mountain View, California. And that means I climb around wind tunnels, set up experiments, run wind tunnels, take data, and then analyze the data after the fact. We test anything from just 18 wheelers to full sized rockets. I’d like to think this kind of makes me a rocket scientist… since I work on rockets. Yeah. But she wants to match her skills to a workplace that’s becoming more digital all the time. That’s why, a little more than a year out of school, she’s going back – taking Georgia Tech’s master’s in computer science program from home. There’s a lot of scary stuff out there in terms of where the world’s heading. I think a lot of us are just very antsy right now. This is kind of how I’m dealing with it. The reality of the world we’re in right now is that you have to keep learning and keep retooling yourself to be, useful in our society, which is unfortunately how our society functions. I feel like I always have to be accelerating. Which could suggest that, for many of us, the future of college will be more of it. The challenge, for students, will be finding ways to pay for more schooling particularly when they’re in between jobs. Some advocates are calling for colleges to rethink the business model for education that’s lifelong. I’m fascinated and encouraged by a new trend of many universities to offer lifelong alumni benefits where you can come back to your own college and either for a reduced rate, or sometimes even free, take classes. It’s good business on college’s part to do this, but it’s also a sense that we owe something to you for the rest of your life.