The Trouble with Trying to Fix College
Liz Biscevic—New and Improved
There’s no question millennials feel cheated by the higher education system: The rising cost of tuition, the dim prospect of graduating in four years, and the slim pickings of high-quality jobs available upon graduation seem to guarantee debt for all eternity. But while our student loan crisis has so far been stubbornly resistant to disruption, that hasn’t stopped entrepreneurs from trying. The latest innovation—a short-term, career-focused program—is both for-profit and free of high upfront costs, but it still might not be the bargain many students seek.
Adam Braun, CEO and co-founder of MissionU, says that his wife inspired him to create an alternative to the traditional four-year degree. By the time they met, she had over $100,000 of student debt without a bachelor’s degree. Witnessing the “absolute crushing toll” that the debt took on his wife prompted Braun to start MissionU, a one-year business studies program that Braun describes as “career-oriented” and “debt-free.”
The program is a hybrid in data analytics and business intelligence, which, Braun tells me, introduces many of the skills and knowledge required for an undergrad business degree. The company says it developed the curriculum in consultation with companies such as Uber, Lyft, Spotify, and Birchbox, and its website implies these "partners" stand ready to hire MissionU students who complete the program (when asked, Braun did not cite specific companies committed to hiring the grads). Starting this September, the inaugural class of 24 students will attend both virtual and on-location classes in San Francisco, as well as in-person meetings with a mentor. MissionU plans to expand to New York City in 2019.
But as Reddit users were quick to point out, MissionU claiming to be a debt-free education feels the same as calling student loans free money. In addition to the “very small deposit that holds your spot,” graduates of the program are expected to pay MissionU 15 percent of their income for 36 months after they’ve secured a job making $50,000 or more. Students who graduate will still have debt, they just won’t know how much until they sign the offer letters at their future jobs. And if a graduate doesn’t land a salary of $50,000 or more within four years of completing the program, they don’t pay anything. It’s one of the most appealing things about MissionU: the opportunity to pursue education without simultaneously worrying about how you’ll pay for it. And, unlike most liberal arts programs, MissionU has an earnest, immediate interest in helping its enrollees secure good jobs as soon as the program wraps up. Without steep upfront costs, the program is feasible for a wider range of applicants and allows potential students to take a career leap of faith with fewer immediate financial repercussions.
Still, for those who do earn the minimum $50,000 a year, the payback ends up being $22,500 total, or $625 a month. That’s a lot to pay, considering that student loan payments can often be decreased to as little as $150 a month. Especially if students stick around one of the initial cities MissionU is offered in—San Francisco or New York—that obligation may not even be feasible for those making the minimum or slightly more.
Braun believes that limiting payments to a percentage of income “should prevent situations where graduates cannot afford their payments,” but that might not prove true, given the high cost of living in the cities where the program is offered. A $50,000 annual salary equates to less than $3,000 a month after federal taxes. In the Bay Area, the cost of living for a single person is $1,118 not including rent. In New York, the cost of living for a single person is $1,109 not including rent. Those who land a good job and relocate to a less-expensive part of the country might have an easier time coughing up an extra $625 on top of rent and living expenses, though the high paying jobs they’re targeting will likely be in a bigger, more expensive city.
Braun tells me graduates with jobs that meet the salary threshold who fail to pay their debt would enter default—which would lower your credit score just like failing to pay back loans—and paying late or less than the income percentage would accrue “small fees intended to cover the additional administrative cost of following up with the graduate.” In other words, if it looks like a loan, defaults like a loan, and accrues charges like a loan, it’s probably a loan.
And because the program payment is based on a percentage of salary, if graduates end up making $80,000, they’d owe MissionU $36,000 with monthly payments of $1,000. That’s just slightly under the average debt for students who receive a four-year, accredited degree, and while the interpersonal skills and industry contacts MissionU promises are valuable, many employers still favor applicants with bachelor’s degrees.
Scott Loenhorst, a tech recruiter in the Bay Area, tells me that he often comes across candidates from career bootcamps as opposed to four-year colleges, and that while most companies don’t automatically reject those applicants, he has found that candidates who pursue a four-year education “tend to be more passionate about the field, versus candidates that take a short-term crash course.” He also says that at startups, candidates with four-year degrees are preferred because new companies are more risk-averse, whereas larger companies can be more open to nontraditional applicants.
Sebastien Garcia, an executive recruiter at Cybercoders in Los Angeles, tells me via email that “people with degrees take priority over other candidates” unless the role is one where knowledge of a specific program or system would carry more weight than a formal degree—for example, a CAD drafter. A recruiter at Facebook, requesting anonymity, says he has “hired engineers that either haven’t finished or don’t have four-year degrees, but the academic training and environment of a degree is immensely helpful, and sometimes necessary for the success at most tech companies.”
Braun isn’t the only entrepreneur who wants to offer prospective students a different type of education. There are many similar niche, career bootcamps, and some even guarantee jobs upon completion. SpringBoard offers a data science certificate for $4,800 and guarantees you a job or your money back. App Academy is an in-person coding training program in San Francisco that takes 22 percent of your first year’s salary upon graduating and securing a job. Bloc.io and Thinkful are programs for front-end developers, software engineers, and web developers that guarantee job placement upon completion and charge fixed upfront tuition.
As a country, we’re still stuck in a weird relationship with college: The undergraduate degree is becoming more of an entry-level requirement than a way to have an advantage in the job market. Even though the majority of millennials feel negatively towards the current education system, they also believe that people “who enroll in higher education benefit from it.” On average, college graduates earn $1 million more than high school graduates over their lifetime. Another study found that college graduates tend to land more specialized, complex, and evolving jobs that allow for more wage growth and promotions.
For-profit trade programs like MissionU might give candidates a boost, but they have yet to demonstrate that they’re a better solution to an overpriced degree, especially if students fulfill prerequisites at a low-cost junior college first. Some cities, like San Francisco and New York, offer free city college to residents who have lived there more than a year.
While pretty much everyone agrees that higher education needs a major overhaul, the other overwhelming consensus is that no one has figured it out, yet.