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Most years, this time in August is a boom for Target’s dorm décor section and purveyors of shower caddies and anyone selling that John Belushi Animal House poster. But 2020 isn’t like most years.
This year, higher education across the country will take place online, as COVID-19 has laughed in the face of the traditional residential college model. For anyone hoping to win back the beer pong championship belt, that’s devastating. For everyone else...it isn’t.
Moving to online, tech-forward education for the masses could be a net good for students—it makes degrees more flexible, more specialized, and more accessible, according to today’s guest: Dan Rosensweig, the president and CEO of Chegg.
But Dan thinks making higher education truly work for all means doing more than just sticking with online learning post-coronavirus. College degrees remain a fast-track ticket to upward mobility—in order to meet the needs of all who want them, we need a total reset of the industry.
But how do you reset an industry worth $700 billion a year in the U.S. alone? It won’t be easy. And not all institutions will survive.
Listen now to hear how we move forward.
Business Casual - Dan Rosensweig
Kinsey Grant, Morning Brew business editor and podcast host [00:00:06] Hey, everybody, and welcome to Business Casual, the podcast from Morning Brew, answering your biggest questions in business. I'm your host and Brew business editor, Kinsey Grant. And now, let's get into it. [sound of a ding]
Kinsey [00:00:18] So before I introduce today's amazing theme and topic and guest, a quick note. Business Casual has passed 4 million listens, and it's all because of you. Thank you so much for your support. And if you don't mind, help us get to 5 million in record time by subscribing to the show wherever you're listening and sharing Business Casual with a friend.
Kinsey [00:00:37] Now, to today's topic. It is a big one and it's one that you all have been asking us to talk about, frankly, all summer long, because all summer long we've been wondering what college campuses will look like this fall and really every other fall after that. Could this COVID-induced pivot to online learning actually stick? Could this be a transformational watershed moment for the post-secondary education economy in the U.S., which is almost a $700 billion a year business. It would mean major, major changes, not only for the students enrolling or not enrolling, but for the institutions we've relied on to get us from 18 to 22 years old for centuries now.
Kinsey [00:01:15] So today, we are talking about the business of higher education as it becomes an increasingly online pursuit. And I am jazz to welcome our guest today, Dan Rosensweig, the president and CEO of Chegg. Dan, welcome to Business Casual.
Dan Rosensweig, President and CEO of Chegg [00:01:29] Well, I'm jazz to be here. [laughter]
Kinsey [00:01:32] I like that you also use jazz. Yeah. We're really excited talk about this. I think of all of the topics that listeners have either wrote in, or texted me, or asked me to talk about, higher education and online education have absolutely been at the very top of the list. So we have a lot to cover today. A lot to talk about. I want to just make sure everybody knows about Chegg and what you all are doing. I think for a lot of us, probably, our first time that we came across Chegg was trying to maybe, like, rent a textbook. But now it's more than just getting the AP U.S. history textbook that you need on the cheap. You guys are doing a lot more. Do you want to just explain a little bit what Chegg does?
Dan [00:02:10] Sure. We were built with the philosophy that somebody has to finally put the student first in the education system. So the system seems to be designed, and I'm sure all your listeners will agree, that it's sort of a toll-taking system, which is anything you want to do, they want to take another toll from you. It's expensive. It's not necessarily as relevant as it could be. It's not convenient. It's not affordable. I listened to your introduction of trying to get you from 18 to 22, but the truth is, the average age of a college student in the United States of America now is 25, and that 26% of them actually have a child of their own.
Dan [00:02:49] So there is a group of people who are in a system that feels like what we historically call the traditional system—4-year colleges, residential. That's actually only 20% of the sort of U.S. demographic that goes to higher education. So what Chegg has understood from the beginning is it needs to be more affordable. It needs to be on demand. It needs to support people at the level they come into the system at. It's not a homogeneous system where everybody comes from the same hometown, has the same amount of knowledge. There are people from different demographics, different socio-economic pathways, different languages, different ages, different needs.
Dan [00:03:28] So we have expanded, as you said, from the original textbook rental, which is what could we do first to reduce the cost of education? Also, 19% of students didn't even get textbooks until we came along because they couldn't afford them at all. So we wanted to address that big problem first. And then everything we're doing is to identify the biggest pain points for students and then try to solve them. So the next one is academic support. Most of your listeners probably use, or know of, Chegg Study or Chegg Study pack or EasyBib, our writing product. We just acquired Mathway.
Dan [00:04:03] So anything that a student needs to help them advance their learning on their own time, on their own dime, Chegg provides in terms of academic support help. And we've expanded from that to internships. Now we've expanded through the acquisition of Thinkful to be able to get people skills-based training for the most important skills they need to actually get specific jobs in tech. It's not a coding boot camp. It's about digital marketing. It's about data science. It's about product management.
Dan [00:04:31] So the areas that have the highest level of employment opportunities—that pay the most—Chegg's now actually built curriculum to help train people. And we're just going to keep adding more and more services because frankly, no one in the higher education system seems to focus on the needs of the student.
Kinsey [00:04:47] And it's a really, really stale industry in a lot of ways. And I want to make sure that before we get into some of the nitty-gritty of this conversation, that we just reinforce that point—that my college experience isn't like, you know, the vast majority of college experience is out there today.
Dan [00:05:03] Where did you go to school?
Kinsey [00:05:05] I went to Washington and Lee University. And I think that in a lot of ways, college opened my eyes to the world around me. But it also reinforced a lot of stereotypes.
Dan [00:05:14] Just the name of the school.
Kinsey [00:05:15] Exactly. And that's been a huge topic of debate that, if you ask me, should not be a topic of debate. It should be a decision that was made years ago. But it is a school that has a certain reputation. And I think so many of the schools that we traditionally would associate with higher education have similar reputations of reinforcing stereotypes and of creating this feedback loop of rich people who send their rich people-kids to school. W&L, in my experience, I had a scholarship. I didn't pay to go to school. It was a very different experience and a lot of the people who were there. But I think it's important to just reinforce that the college experience isn't just what we see on, you know, like "Gilmore Girls" or something. When Murray goes to Yale, it's a very, very vast experience. It is very different for everybody.
Dan [00:06:01] Just don't hate on me for not knowing any of those examples. [laughter]
Kinsey [00:06:05] OK. And the "Gilmore Girls" fans out there will know them. Don't worry about it. But I guess just what we see on TV isn't always the experience for people. So with that in mind, Dan, I want to start here. Do you think that online, when we say post-secondary education, college, or any sort of higher education, is that a net good or net bad for students today?
Dan [00:06:28] Well, it depends. So it's a net necessary. So let's look at what online education should be able to solve. Everything that you do in your life now. So your generation grew up, we'll call you the Google generation. You probably went to college. You were probably born the year Google was born. So when you realize that everything that you've known in your life is more on demand, more accessible, free, or much more affordable on any device at all times. And then you think about what's been built.
Dan [00:06:59] So, you want to get a car. Nobody waits in the rain anymore. You just hit for Uber. You want to watch a movie. You don't pay $18 to go, go at an inconvenient time, sit next to somebody you don't want to sit next to, eat unhealthy food, and take four hours out of your day to see an hour and 50-minute movie. That sucks. That is expensive. Instead, for $11, you sit on your couch, eat kale, and watch Netflix. So the entire world is being delivered to us.
Dan [00:07:29] But shockingly, education still wants us to have to come to it. That makes it unscalable, unaffordable, oftentimes not nimble, and has become increasingly expensive to afford, inconvenient to do, and not accessible to the overwhelming majority of the people. This is what online education is designed to do. It's designed to use technology the way every other industry has used technology—to the benefit of the user. How do you make it less expensive? How do you make it on demand? How do you make it contextually more relevant? How do you provide more support at scale? And how do you let people start to build the curriculum that they prefer rather than the one that you require them to take, which may have nothing to do with what it is they're trying to do for a living.
Dan [00:08:22] And so, originally online education got a deserved bad reputation because they were the for-profit online schools that tapped into student loans and didn't care about whether or not you learn anything. Didn't care about whether or not you graduated. Didn't care about whether or not you got a job. And so it deserved to be taken down the way it was. But at the same time, 2.6 million Americans decided that was a more convenient way for them to try to get a degree—to try to learn.
Dan [00:08:53] So today, would it surprise you to know that the largest not-for-profit school in the United States of America is actually an online school? It's Southern New Hampshire University. And they have done as close to a brilliant job so far. They have more to do, and they'll tell you that, to lower the cost, to make it more convenient. But they have over 130,000 students, exclusively online. And the largest offline school, I think, is University of Central Florida. You're from Tallahassee, Florida. So you must have heard of UCF, followed by Arizona State University, which has something close to 72,000 students.
Dan [00:09:31] So one of them can scale. One of them doesn't require you to travel. Doesn't require you to come at a time that's inconvenient for you. Most schools—what you probably don't know about most students is that 40% of them are working 30 hours or more while they're going to school full time.
Kinsey [00:09:50] Right.
Dan [00:09:50] Did you know that 10% of all students in higher education in United States go to a single community college system, which is the state of California, which has over 2 million students? So if you ask yourself what people need, they need something that is more accessible, more affordable, on demand. If I have to choose between learning and earning, I'm going to choose earning. If I have to choose between reading and eating, I'm going to choose eating.
Dan [00:10:16] And you don't know it, because it wasn't your situation, it's not the situation of my daughters, it wasn't my situation. But 36% of college students in this country will tell you they go hungry at least one day a month. So online education solves the problem of you save time, you save money. It can be more contextual. Could be more relevant. It could be on demand. And it can allow you to piece together a curriculum that suits your needs of time, cost, and professional interests.
Kinsey [00:10:48] So, Dan, with what you're saying, it sounds like we should just pack it up and go home. The decision is made—online is better for the vast majority of people. How come we still have such a—maybe it's a romanticized vision of what college should look like. Is that just because that's how it's been for so long? The traditional system of higher education, of going to college or getting an MBA is in person. How do we change that narrative?
Dan [00:11:11] Well, first of all, for some people, what you would call the traditional residential experience is desirable. Is exactly what they want. It allows them to not only learn, but to grow up. That's a period of transition from one part of your life to the next. But what we're learning is that's a privilege for most. For most people in this country, there is no four-year break you get to take and claim to be stressed, right?
Kinsey [00:11:39] Yeah.
Dan [00:11:39] You got to go immediately. And for most people, the thought of taking on $30, $40, $50, $80,000 in college debt is inconceivable and blocks them out of the system. So it's not that residential schools are over. It's they expanded too quickly. There's too many of them. Why are there 4,000 of them? First of all.
Dan [00:11:58] Second of all, they need to improve and increase and modernize their curriculum. So when you go to a school, do you want a curriculum that focuses exclusively and uniquely on academics and nothing that will help you in your professional endeavors? Most of your listeners were probably frustrated when they came out and couldn't articulate a skill that they had that an employer would take.
Kinsey [00:12:22] Right.
Dan [00:12:23] Right. And so we believe that there's not one way anybody should go to school. There is a way that makes sense for that person, given their needs, given their interests, given their financial resources, given the time commitment. And so what has to change is to legitimize degrees from multiple locations. So a degree from certain schools people believe write you a ticket—Ivy League schools, Stanford, probably 25 to 50 schools. My guess is that's not likely to change. So it's what do we do with the other 4,000 schools?
Dan [00:12:58] Some of them we've predicted—about 25% of them, of the private institutions—are going to go out of business. State schools are harder to go out of business because they get funded. But the acceleration of the lack of resources in a state as a result of COVID, it means you either choose healthcare or education. Well, every state's going to opt for healthcare right now.
Kinsey [00:13:18] Right.
Dan [00:13:18] And so education budgets are being cut, staff are being cut, support services are being cut. So this is going to happen inevitably because frankly, there aren't going to be resources to support people coming to campus after a while. Plus, we're going to find that, I think, that finally the cost of education is going to have to go down. I think it's going to have to be more hybrid.
Dan [00:13:40] And so I think it's inevitable. And Chegg built our company to be based on the inevitable. We believe more people are going to have to learn, more frequently over the course of their lives, not just academics, but skills and more job-related, and that people needed to accelerate the path from learning to earning. And you're seeing that now. You're seeing that with nontraditional schools who are saying, you know what? We'll take your credits. We actually don't want you to have your credits excluded. We want you to transfer in and we'll take all of them. Why? Because they recognize that that's a rip-off for the student. Right? That the student needs to accelerate the path to a degree.
Dan [00:14:17] So what has to change is corporations have to be willing to say, we're gonna take people with different degrees or alternative certifications or alternative certificates. And I think that's going in that direction because the tech companies in Silicon Valley have already said that we've dropped the requirement for B.A.s already. And certain jobs will require degrees and certifications, legal jobs, those kinds of things. But the overwhelming majority of jobs are going to be based on what's your ability to do it or to learn how to do it. And I think that's the trend that has started. That's just going to accelerate.
Kinsey [00:14:54] OK. So, Dan, one thing that you just mentioned that I want to dig a little bit deeper—well, there are several things that you just mentioned that I want to dig deeper into. But one of many is this concept of 25-plus schools that are tickets to a high-earning job, the Stanfords, the Harvards, the Yales of the world. If they continue to operate in the system that we are used to, when we consider traditional residential higher learning, and all the other innovators continue to innovate and we lose—there's this middle that is gone, eventually, that we have too many schools. I assume the middle is where a lot of these schools will evaporate or cease to exist. Does that not —
Dan [00:15:30] Well, one is that they don't have a clear reason to be.
Kinsey [00:15:33] OK.
Dan [00:15:34] That are unaffordable. They'll go first because students will say, what is a degree from here actually mean? You're seeing it right now with people arguing the education experience is worth X, the in-person experience is worth Y. So if I can't come in person, lower my costs. Right. So you're already seeing that.
Kinsey [00:15:51] Do you see, though, that this might reinforce this kind of inequality in terms of education. That if you can afford to go to Harvard, you're going to get that ticket to a great job, but you now are losing out on the opportunity for what we would consider more of this middle area of higher learning?
Dan [00:16:08] I think that's curriculum-based and attitude-based and work ethic-based. Sure, we have systemic racism in this country. We have institutionalized poverty in this country. And your generation, I think, is doing a phenomenal job in voicing that and asking the common sense questions like, does this make any sense to anybody?
Dan [00:16:28] And the answer should be no. But there's always going to be a category for the elites. But those schools don't have very many people that go to them. There's [indistinct] people, we're talking about 20 million people in the system. I ended up going to Hobart William Smith. I didn't go to business school. I've never founded a company. I cannot code. And I'm doing just fine. Now, yes, I've experienced and benefited from certain levels of privilege. But we live in a world that is more entrepreneurial now, where people are taking more control of their lives, where remoteness is something that is advocated as opposed to not.
Dan [00:17:09] Which means people are going to be able to stay where they want to stay, live where they want to stay, accumulate more wealth because they'll be able to live in places that are more affordable, rather than be forced to go to major cities which they cannot afford, and which companies are paying extremely high rates only to sustain the cost of paying off that student loan and that rent that that person has to pay. So I think we're gonna see a breakdown of a lot of the norms, which should free up resources and opportunities for people in all parts of the country, from all parts of the background, to be given opportunities that never really existed for them.
Dan [00:17:46] So, yes, I do think there's going to remain privilege. I do think there's going to remain elite scenarios. I do think money will always play a factor. But I think the rest of the world, if this generation and others come along and keep pushing, we'll see greater pathways at lower costs. If we can get rid of this systemic poverty that comes with the fact that 40% of people are never going to pay off their student loans and could never actually declare bankruptcy on it, we could start getting rid of things that set you even further behind. More people can rise up from it. And when more people rise up, and they prove the point that more employers will hire those people, and they'll hire people who look more like them, and the system improves.
Kinsey [00:18:35] So let's talk a little bit about the cost. Is there any way to measure how much we could foresee the average cost of getting higher education—of attaining some sort of post-secondary degree—can we measure how much it would possibly shrink if this transformation to online learning stuck?
Dan [00:18:53] Well, I can predict based on economic models. What I can't do is based on the fact that schools are not designed for economic models. They are controlled, not by the administrators or the presidents, but by the academics. There is very little interest in a large number of them to make changes because it's inconvenient to what they want.
Kinsey [00:19:15] Right.
Dan [00:19:15] So what I believe is that what technology has historically done, is cut the prices substantially by more than half. Accelerated people's ability to finish it. Like, if you can binge "Gilmore Girls," why can't you binge your education? If you can commit that time—not everybody can—but if you're able to, and you can commit that time, why can't you accelerate through the process faster? Why does it have to take—why do we call it a four-year degree? It's just a matter of credits. Why can't we just have a certain number of credits? But I also think what you're going to see is lower pathways.
Dan [00:19:52] So if you look at what Chegg's doing just with skills. We've lowered our price almost in half of when we acquired Thinkful. So we're trying to save an average of $5,600 over a five- or eight-month period, depending on if you want to take it live or on your own pace, and with real-time support built in, which nobody else has. Through our chat-based tutoring, you can actually be fully qualified for a high-paying job in five to eight months. So I think colleges are going to start competing with career pathways as opposed to just other academic institutions. I think you're going to see the price drop quite significantly.
Dan [00:20:29] But in addition to the price drop, they have to increase their relevance. The curriculum has to expand. I'm not saying the curriculum they have isn't good, but it's incomplete now. If you want to go into finance, I don't care how brilliant you are in terms of analyzing things, if you can't use Excel, nobody's hiring you. Do you want to go into sales? You better know how to use Salesforce. If you're a creative, you better know how to use Adobe. It doesn't make you a coder. It doesn't make you an engineer. These are just the tools. Look at you doing a podcast. You'd better know how to use Zoom and recording and editing. They don't teach you any of that.
Kinsey [00:21:04] No. No, they didn't. And I think that's part of the big argument—if we can even call it an argument—that's part of the argument in favor of in-person learning as opposed to online, is that we miss out on the classroom experience. And we surveyed a lot of our listeners and by and large, their biggest complaint about a transition to online, if they had previously been in a more traditional, residential, higher-learning experience, was that they couldn't ask questions of a professor and they missed out on those kind of, you know, extemporaneous moments.
Dan [00:21:38] But that's a choice by the professor. I mean, you guys live all day on communications tools. You spend all day on chat. You spend all day on Snapchat. Now you spend all day on TikTok. You spend all day on, not so much Facebook anymore, but Instagram. Every one of those things has a mechanism which you communicate back and forth.
Kinsey [00:21:58] Right.
Dan [00:21:59] There's relentless communication. That's a choice by the professor not to engage online. The question is, is the educator utilizing those things? If the answer is yes, people are much more satisfied. But this semester is sort of a mulligan, a sort of a do over, which is professors, schools, students were all forced, in a very stressful time, fearing their health, not knowing what was going to happen, losing jobs, losing internships, to suddenly go home. Relive with their parents the nightmare of all nightmares. And trust me, I have 27- and 25-year-old daughters [Kinsey laughs] living with me—and both their boyfriends. That's a whole 'nother podcast.
Kinsey [00:22:39] [laughs] That it is.
Dan [00:22:40] For four months now. And so you do all that and then you professors don't know how to teach online. Most of them don't. They weren't prepared for it. The school didn't invest in the technology. Nobody invested in the training. So you can't use this moment as an example of what it could be.
Kinsey [00:22:57] OK.
Dan [00:22:57] That's just not fair to any participant in the process. And I actually commend almost every participant in actually getting this far, this quickly. But what it proves, in my mind, is imagine what a concerted effort to actually invest in this kind of thing could actually do.
Kinsey [00:23:14] So I want to talk more about this exact moment. You use the word mulligan, which I think is a really apt descriptor for what we've been experiencing this semester. Quickly, we're going to take a short break to hear from our sponsor. —
Kinsey [00:23:28] And now back to the conversation with Dan. So, Dan, this semester, like you said, it should not be taken as the promise that online education can bear in the future. This is a one-off experience that kind of caught us all by surprise. My question is why it caught us all by surprise. Why weren't these systems put in place such that the education system in the United States could pivot to online easily or more seamlessly than it did? What did we need to make that happen more easily?
Dan [00:23:55] Well, there's a whole bunch of questions in there. So let me [indistinct]. [Kinsey laughs] The last one I'll do last, which is what do we need. The first question about why weren't we prepared is because, unfortunately, in most things in our lives and our personal lives and our professional lives, we act only when it's necessary to act. Very rarely do we invest in our future, which is the same decision we make with our spending habits. I'll just use a credit card and then when that credit card gets filled up, I'll get another credit card. [laughs] And then when that gets filled up, I'll pay the 18% credit card off with a 22% interest rate credit card.
Dan [00:24:34] We do that with money. We do that with almost everything we do. Look at our government and our institutions. They're the worst single example of preparing for our future. You know, there was a time when presidents built roadways, built Central Park. Invested in things that would have no immediate value for the people that were using them. Somebody thought of building the subways a long time ago. That kind of thinking is replaced by short-term thinking. Same thing in the public markets. There's activists, there's short-term investors. There's short sellers. Rarely do you get rewarded for long-term thinking. It's a mistake.
Dan [00:25:11] Look at the pandemic as a great example. Some people said we should prepare. Some people said we don't have the money for it. Well, they chose to spend the money on some more immediate need. Can you blame them if that immediate need was to go to somebody's immediate healthcare? Probably not. Now you can blame them because, like, well, why the hell didn't you invest? That's very typical American, right? Which is, until we need it, we don't invest in it. And then everybody else, why didn't we invest in it?
Dan [00:25:39] So colleges are the same thing. If there's no motivation, if there's no incentive for schools and professors to spend money to change the system in a way that's more convenient for the student and maybe less convenient for them, why would they invest in it? And they didn't. That's why not-for-profit online schools have sprung up because in almost any industry, the incumbent knows the other thing is coming, but tries to protect what they have. And that's why new companies come along.
Dan [00:26:14] Today, for any of your listeners that are investors, it might shock them to know that when you add up the collective market caps in the traditional education companies, collectively, they're worse worth less than Chegg is. And if you take all the new ones, they're worth well over a $100 billion in market cap. Point being that people try to protect what they know, what they're comfortable with, that doesn't put them at risk. And then they get usurped by the new that says it doesn't work anymore. We can build a better version of it. We could build a better mousetrap.
Dan [00:26:48] Crazy enough, if you look in your own world, is something you can compare it to. There is a day when Facebook was unassailable. And then all of a sudden came Snapchat. OK, but Instagram took care of Snapchat to a large degree. Well, then along comes TikTok. There's always somebody that's going to invest in the future and the incumbents try to protect themselves and they often lose.
Kinsey [00:27:10] So if these are supposed to be the smartest people in the world who are educators, who are these academics, how come they can't see this coming? How come they didn't recognize that?
Dan [00:27:19] They might have, but like most human beings, they say this can't happen to me. I was unfortunate or fortunate, dependent on professionally and how you want to look at it, which is I was the publisher of the largest computer magazine in the world, called PC Magazine, in the early '90s, which meant that when the internet came along, we saw our users start to want to use the internet rather than read print.
Dan [00:27:43] Why? Because it's logical that computer users would want to use the internet versus print before anybody else did. We experienced it. I switched off the magazines and took our internet division public, called ZDNet, which then sold to CNET, and so on and so forth. Why didn't every other magazine publisher see that, and say that's going to happen to me at some point? Because the people in those jobs know how to do the jobs they're in. Rarely are people able to make the transition from what they are doing to what needs to be done.
Dan [00:28:18] And so your generation has lived every day with technology at the core of what you do. It's going to take your generation to help people understand how technology can be used to their advantage, how it could be used to lowering prices. Professors are domain experts in what they teach. They're not necessarily domain experts in how it can be taught.
Kinsey [00:28:41] So, yeah, it's not like we should expect—I don't know—an art history professor to be able to predict all of this. And to, I think, also to assign blame to just professors. [laughs]
Dan [00:28:51] Hasn't your generation figured out that don't count on our generation to figure stuff out on your behalf?
Kinsey [00:28:56] You know [laughs] —
Dan [00:28:57] I think we have a track record of screwing it up pretty good. [laughs]
Kinsey [00:29:00] I don't want to go on the record as saying that—my mom and dad might not like it. But, Andrew Yang did say that on this podcast, so if he said it. All right, then. So the incentives—this conversation around incentives that we need these to shift in order to have any sort of meaningful change—do you think that those incentives are present today? Has COVID taught us that we need to make a change past when we get a vaccine and it's possible to go back to campus, do the incentives exist today such that we'll actually make that change, that pivot online?
Dan [00:29:30] Well, the fear exists in many places, but the incentives are not yet aligned. The incentives of the employer—what do they want that person to be trained to do? The parent, if they're involved, as my daughter's high school headmaster said, there's a right school for every kid; it just might not be the right school for their parents.
Dan [00:29:54] So you have to align a lot of constituencies. You have to align the employer, the parent, the student, the professor, the administration. And to do that, you have to evolve the curriculum, modernize it, accelerate it. It can't take four years. It just can't. People don't have four years in their life. It's unfortunate. Better they take it off later in their life after they've been able to acquire enough experience and money to be able to do it in a relaxing scenario, hopefully.
Dan [00:30:26] But those incentives aren't aligned yet, but they're going to start to be aligned because what colleges seem to do—not unique to them—but what colleges seem to do is align with the person that pays them. So if the employer is helping subsidize a student's education, the curriculum will evolve towards the employer. When it evolved to the government, which is who gives 90% of the loans, nothing got aligned because somebody said, President Obama and every other president said, that the ticket to the middle class was in education. Fair point.
Dan [00:31:04] However, that gave colleges the freedom to keep raising their prices. And the government said we'll just keep giving you loans at more and more money. Well, that was an incentive to get more people into a system, but it wasn't an incentive to make the system more relevant, more affordable. And it didn't protect students who were never gonna be able to get a return on that investment. So we need to realign what is the objective of our academic institutions? Are they research? Are they learning and education?
Dan [00:31:36] And if they're learning and education, then what is the curriculum? What are the multiple forms of curriculum that students may want? And they should be able to choose between the ones that have the curriculum that is most relevant to them. And is that curriculum the right kind of curriculum to put a student on a pathway where an employer will accept that degree as something they value so that they can pay the student when they come in.
Kinsey [00:31:59] Right.
Dan [00:31:59] Then we need to align things to get rid of the current debt. So one of the things that Chegg does, is we made a commitment to try to lower student debt. And we put our money where our mouth is, which is we said we're going to pay off all of our employee student debt—and we're doing that. One of the things we uncovered was that there's a disincentive for corporations to pay off your existing student debt.
Dan [00:32:20] So if I pay for you as an employee to do continuing education, I can give you up to $50, $250 a year in continuing education benefits where you don't get taxed. But if I use that same $50, $250 to pay off your existing debt, which is what got you qualified to work for me to begin with, you have to pay taxes on it, which means it's worth half as much. So we need to realign the entire system to say, what is the objective? If we wanted to be ubiquitous, where everybody should be able to participate, what are the pathways that we want to have? What is the length of time? What should the costs be? How will it be valued? And who is going to help pay for it?
Kinsey [00:33:01] Right.
Dan [00:33:01] It cannot be left in the hands of hardworking families to pay for the stuff on their own. It's just inconceivable and impossible. So corporations need to participate. Yes, taxpayers need to participate. But we also need to improve—if all we did was make it free, we still wouldn't change the fact that most employers say the students are coming out not qualified for the jobs that they want. So we need to realign all the incentives.
Kinsey [00:33:25] Right. All right. Dan, I've got a big question for you. I'll ask it in just a second. But quickly, a short break to hear from our partner. — And now back to the conversation with Dan Rosensweig from Chegg. Dan, should college be free?
Dan [00:33:40] Well, nothing is actually free.
Kinsey [00:33:42] No such thing as a free lunch. I learned that in my econ classes. [laughs]
Dan [00:33:46] There you go. So there is an expense to college. The question is, what should that expense be? What should we expect for a return on that investment? And who are the constituents that should help fund it? So the answer is college needs to be more relevant, more convenient, more supportive, more affordable, and more contextual to the modern day workforce. Therefore, taxpayers should contribute. The individual—if an individual doesn't contribute on their own, then why wouldn't everybody join the system and then drop out? And we've got a heck of a lot of costs, but no return on that for the investment we, the taxpayers, made.
Dan [00:34:33] So I think everybody needs skin in the game. But I think one thing is we need to have a price that we are sure has a return on that price for the individual, for the taxpayer, for businesses. So I think college needs to be something that we all say if it is a ticket to the middle class, we all have to be able to help it become more affordable. And de-risk it for students, but not completely de-risk it to the point where they have no responsibility to actually perform. If there is some participation that you have to do, people value it a lot more. So I think it needs to be affordable and relevant and available.
Dan [00:35:13] And I think it needs to be something that a lot of constituents help pay for, including employers, because if we're the beneficiaries of your education, then we should help. So whether that's through corporate taxes that pay more into higher education or whether that's what Chegg is doing, which is paying off our students' debt, there's many ways to approach it.
Dan [00:35:36] But I think if we make it an uncapped expense, unavailable, and something where the return on the investment for whoever pays for it isn't obvious, it won't work.
Kinsey [00:35:49] OK. All right. So what about in the short term—do you think that, you know, with the fall semester getting ready to gear up for many of these schools that had not in recent memory taken online learning all that seriously, do you see a meaningful drop-off in enrollment?
Dan [00:36:06] Well, I see a change in enrollment. So people say, well, what about a gap year? Well, where are you going to go, and who are you going to work for? You either work to earn money or get experience, or you travel to get life experience, or you do some combination of both of them. Since you're not gonna be able to travel anywhere, and jobs are not readily available, I know what we're seeing is a shift to people saying, if I'm not going to go, or my school doesn't provide online, I'm going to go to someplace that does have online and then transfer the credits if I ultimately want to get a degree from that school.
Dan [00:36:38] But we're seeing a surge in online usage. Chegg is seeing a surge in summer school usage. You know, a friend of mine, my closest friend from high school, still my closest friend today, he had four kids, two sets of twins. All those kids were going to school at one point, at the same time. He had every one of them take summer school online because the cost of the credit was $600 rather than $4,000 dollars.
Dan [00:37:05] So I think people are learning new tricks. They're learning that one, not every class you take has to be on that campus. Not every class you take has to cost as much as they charge you for it. You know, there's been feeder systems for Notre Dame, for University of Texas, forever, that are local community colleges where you get the degree from the big-name school, but you take 50% of the courses at a much lower expense from another school. So I don't think you're going to see a decline in enrollment. I think there's going to be a shift in where people are learning from and how they're choosing to learn.
Kinsey [00:37:39] OK. If you were, you know, 17, 18 years old again, would you elect to pursue the same kind of degree that you did back then, today? Do you think you need your college degree to be where you are right now?
Dan [00:37:52] Those are two very separate questions.
Kinsey [00:37:54] OK, let's do them one at a time, then. Would do you what you did? Would you get the same degree?
Dan [00:38:00] The way I look at my life at this point is, if I'm happy where I am now, then why would I change anything that helped me get here, even if it was uncomfortable or unhappy? I've had extraordinary successes and failures in life and in business. So I've had personal failures. I've had professional failures. Did I want to go through any one of them at the time? No.
Dan [00:38:27] But I don't know who said it, but you don't want a permanent solution for a temporary problem. So the fact that I survived those things and got to a place where I have a fabulous family, I'm married for 32 years, I run a company that I have great passion for, with people that I love working with every single day who embrace that mission and make me better. I don't know that I would change anything because I like where I am now.
Dan [00:38:54] Having said that, if I knew what I knew now, what would I be studying would be a very different question, and I'm not sure I know the answer to that, because I'm not good at math, which I think is an extraordinary [laughs] valuable asset to have today. I cannot code. I'm not an engineer, so I'd suck at that. I forced my oldest daughter to take a coding class and I said, "What do you think?" She goes, "It was exactly what I expected." I said, "What is that?" She goes, "It sucks. And I suck at it. And I blame you for making me take it." [Kinsey laughs]
Dan [00:39:27] So I was never cut out to do that. But I would take things that help me with communication, with empathy, with appreciation. So I would take as much of the soft stuff as I would of the hard stuff, because I think we live in a world now where listening is even more important than it's ever been. Where being able to look through someone else's lens, not just your own, and have appreciation for their lens. I think there are soft skills and hard skills. So I took political science and I thought that served me well.
Dan [00:40:01] But I don't really know. I probably—if I was the same level of immaturity I was now, I probably would have taken more of an online class because I needed more focus and more help and less stupidity in my life. To be honest with you.
Kinsey [00:40:19] Yeah. All right. Well, Dan, thank you so much for coming on Business Casual. It's made me a little nostalgic for my college days thinking about all of this for so long. But it's also definitely encouraged me to take a very different approach to what college looks like for people who are not Kinsey Grant and not my peers who I met in college. So thank you so much for taking the time. I really, really enjoyed this conversation.
Dan [00:40:43] I enjoyed it as well. You did a magnificent job of asking very difficult questions. And if I can say anything to the audience that's thinking about going back to school: Do what you feel safest in. Don't be bullied into doing anything. The schools want you back because it's in their economic best interest, but it may not be in yours. So do what's right for you at this moment. This moment will pass at some point, but you don't have to put yourself in harm's way if that's not where your head's at. We should all be wearing masks. We should all stay inside. And there's of plenty ways to learn, even if it's not as fun as the way you want to learn.
Dan [00:41:20] But there's moments now that we just all have to deal with and we're all in it together. And I wish you tremendous success and good luck. And thanks for talking to Chegg today.
Kinsey [00:41:29] Thank you.
Kinsey [00:41:37] Thank you so much for listening to this episode of Business Casual. Like I mentioned at the top, we hit 4 million listeners. Thank you so much for your support this summer. We've tried a lot of new things, and it's been great to get your feedback. Now we want to cruise to 5 million listens. So, first, share Business Casual with a friend. And second, make sure you are subscribed to Business Casual on your platform of choice. That will, first of all, help us reach our next goal even faster, and second, will ensure you don't miss our next episode with fan favorite—drum roll, please—Scott Galloway. See you next time. [sound of a ding]