The U.S. higher education system often struggles to deliver on its promise of success for students. This article dives into the pressing challenges facing our current system and introduces an innovative framework designed to transform student outcomes. By reimagining higher education, this new approach achieves the "3 Ds" vision:
De-bundles academics from costly, non-essential college amenities.
De-leverages by significantly reducing student debt burdens.
Delivers high-quality, technology-driven, and affordable academic services.
Read on to discover how this bold vision could reshape the future of higher education and empower students to thrive.
Table of Contents
Background & Challenges
A Vision for Transforming Higher Education
Implementation Timeline and Challenges
Likely Impacts
Conclusion: A Call to Reimagine Higher Education
Appendix: Higher Ed Reimagined Framework
Notes
About the author: Jeff Hulett leads Personal Finance Reimagined, a decision-making and financial education platform. He teaches personal finance at James Madison University and provides personal finance seminars. Check out his book -- Making Choices, Making Money: Your Guide to Making Confident Financial Decisions.
Jeff is a career banker, data scientist, behavioral economist, and choice architect. Jeff has held banking and consulting leadership roles at Wells Fargo, Citibank, KPMG, and IBM.
1. Background & Challenges
The U.S. higher education system often fails to fulfill the "college promise" of better jobs, higher salaries, and lower unemployment rates, leaving many students and families disappointed. College return on investment (ROI)—the long-term financial and personal benefits compared to the costs—has become increasingly difficult to achieve as education expenses continue to outpace general inflation. This escalating cost burden makes attaining a positive ROI progressively more challenging. [i-a]
To fully grasp the risks of today’s higher education system, it’s essential to measure outcomes across all students who begin college. When evaluating success based on graduation, loan repayment, and employment outcomes, fewer than one-third of students graduate and secure jobs requiring a college degree. [i-b] More alarmingly, only 10% of students graduate debt-free and employed in college-level jobs, while nearly 20% default on their student loans, and 40% never graduate. Larger student loans act as a “Life Anchor,” delaying career progress, reducing homeownership, increasing stress, and hindering many young adults from thriving. This leaves 91 out of 100 young people entering adulthood with significant life impairments—an outcome that demands urgent attention.
This static pool-based approach to understanding risk is common in banking and other long-term risk-focused analysis. The approach used by the Bureau of Labor Statistics to suggest "College Pays" is lacking and could be deceptive. Please see: Maximizing College ROI: Navigating the Risks and Rewards of Higher Education
This graphic suggests that more life impairments lead to more risk. Then, more risk means the college investment is less likely to pay off. [ii]
The 2020 pandemic created significant disruption. Colleges are struggling, especially those with a traditional campus model. Approximately 20% of colleges are showing financial stress, and that was based on data before the pandemic started. College financial stress may increase significantly. Beyond the pandemic - a well-known, longer-term trend may be even more disruptive. According to The Chronicle of Higher Education, the number of graduating high school students is going to drop significantly. The drop will start in 2025 and persist until 2037. Over that time, some estimates show that high school graduation volume will drop by 500,000 students. [iii] For the higher ed industry, the pandemic is like a menacing “super low tide before the storm” signal. A signal of a disruptive tsunami that is sure to come. This early disruption signals the opportunity to change our higher ed system before the tsunami comes ashore.
2. A Vision for Transforming Higher Education
The high rate of negative student outcomes, coupled with pandemic-driven financial strain and an impending demographic cliff, signals an urgent need for transformation. Our proposed framework offers a clear roadmap for reshaping higher education to better serve students and society.
"Here's the real crisis: every year, over a million students who won't graduate start college. Their failure is foreseeable; high school students with poor grades and low test scores rarely earn B.A.s. Instead of tempting marginal students with cheap credit, we should bluntly warn them that college is stacked against them."
– Bryan Caplan, George Mason University Economics Professor and author of The Case Against Education
A New Approach to Education
This reimagined model introduces significant changes designed to address core challenges:
Drastically Cuts Costs: By standardizing reusable lectures across institutions.
Enhances Teacher Engagement: Frees educators to focus on one-on-one student support.
Removes the “Tyranny of the Semester:” Empower students to learn at their own pace.
Strengthens Research-Teaching Links: Reconnects academic research with effective instruction.
Reforms Student Lending: Redirects loans toward academics, reducing debt burdens.
Leverages Platform Technology: Minimizes reliance on physical campuses to increase efficiency.
Improves Transparency: Uses platform systems to highlight educator quality for students.
Adopting the Flipped Classroom
The heart of this transformation is the "flipped classroom" model. Instead of traditional lectures during class time followed by independent homework, students watch lectures as homework and use class time for tailored support. This strategy prioritizes interaction and aligns learning with how students thrive.
“Formal education must change. It needs to be brought into closer alignment with the world as it actually is, into closer harmony with the way human beings actually learn and thrive.”
– Sal Khan, Founder and CEO of Khan Academy
This approach also recognizes that effective teaching and lecturing require distinct skills. By centralizing high-quality lectures—such as foundational courses like Psychology 101—on digital platforms, expert lecturers can deliver reusable content while educators focus on personalized learning. Research University lecturers and advanced students can also contribute to teaching, ensuring broader access to specialized knowledge.
The Three Pillars of Reimagined Higher Education
This framework is built on three interdependent pillars:
Research Universities: Leading innovation and creating advanced academic content.
Lecturers: Delivering high-impact, reusable educational materials.
Teaching Colleges: Providing personalized, student-focused learning environments.
By incorporating technology-driven platforms similar to those used by Amazon and Netflix, this model fosters competitive marketplaces, reducing costs and expanding access. It aligns with societal trends that value technological efficiency and platform-driven services, making high-quality education more affordable and accessible for all.
Please see the appendix for a fulsome description of our Higher Education Reimagined framework. The appendix specifies objectives, descriptions, governance, and funding sources for these 3 pillars. It also describes how the pillars interact.
Scott Galloway, an NYU business professor, author, and entrepreneur believes higher education is ripe for disruption. In his book, Post Corona, From Crisis To Opportunity, he said:
“Scale will allow individual institutions and individual professors to exponentially expand their reach. ..... Lifetime learning, a recurring revenue model, presents an enormous opportunity for universities to take a page from the private sector (Amazon Prime, Netflix) and evolve to a superior business model.”
Student Lending: The Key Enabler of Transformation
A central element of this reimagined framework is a fundamental redesign of the Federal student lending system. [v] This change serves as the critical enabler for reshaping higher education. Under the new model, Federal student loans will be restricted to funding lecturer and academic teaching college costs only, ensuring that loan dollars are directed solely toward academic expenses. [vi]
Students will still have access to additional funding sources, including private loans, grants, scholarships, or other financial assistance. The Federal Government and industry partners may also provide scholarships or grants to supplement academic costs. By focusing loans exclusively on academics, this change acts as a catalyst for systemic reform, moving away from the current approach of need-adjusted "blank checks" tied to institutional tuition rates.
While financial need will remain a consideration, loans will be capped based on competitive, market-driven lecturer and teaching college costs. This eliminates the unchecked escalation of tuition fueled by the existing loan system. For students needing financial support for essentials like housing and food, alternative social safety nets will address these gaps, ensuring basic needs are met without relying on inflated student loans.
This targeted lending approach does more than reduce student debt—it sets the stage for a revolution in efficiency and accountability, paving the way for a sustainable higher education system focused on affordability and quality.
“You would think competition would drive down prices. Not in Absurdistan! In this bizarre world, competition causes prices to go up!”
Jeff Hulett’s playful Absurdistan story depicts a parallel universe where competition inflates costs instead of reducing them—a sad reflection of how today’s student loan system has distorted the higher education market. This provocative framing underscores the urgency for a fundamental change.
Lecturer and Teaching College Marketplace
The Higher Education Reimagined framework introduces a transformative marketplace model, inspired by platforms like Amazon and Netflix. Both lecturer and teacher services will be integrated into a user-friendly platform designed to empower students with greater choice and transparency. Through intuitive choice architecture and AI-driven recommendations, students can easily explore and evaluate options across three critical areas:
Curriculum and major
What curriculum path choices do I have?
Which curriculum path is best aligned with my psychology and personality?
Which curriculum path is best to align with high-growth industries or occupations?
What classes do I need to complete the curriculum path and graduate?
If I am a first-generation college student, what additional supports are available to help complete the curriculum path?
Lecturer
Who are the highest-rated lecturers for my class?
Which lecturer was best able to facilitate mastery for my class?
Which lecturer was the most entertaining?
Which lecturer was the least costly?
Teaching College
Who is the highest-rated teacher for my class?
Which teacher was best able to facilitate mastery for my class?
Which teacher has most often taught my class?
Which teacher was most flexible to meet my scheduling needs?
Which teacher was least costly?
Personalized Recommendations
The platform incorporates artificial intelligence to refine the decision-making process. It might suggest:
"Students like you often choose lecturers or teachers like this…"
By introducing marketplace dynamics into higher education, this framework fosters transparency, affordability, and accountability. It ensures students are equipped with the tools they need to make informed decisions while reimagining a system long overdue for meaningful reform.
3. Implementation time and challenges
The new approach presents a significant change to the higher education system. Ideally, it is hoped this change will be implemented and grandfathered over a period of 4-5 years. The grandfathering period is generally aligned with:
The expected undergraduate completion time period and
The U.S. presidential election cycle
Realistically though, the implementation time may take longer, as current participants adapt to this new model. The good news is that students and teachers will be big beneficiaries. Be that as it may, there may still be implementation delays. As such, portions of this framework may be implemented over time. As mentioned earlier, a key catalyst is changing student lending. We should start there.
4. Likely impacts
This section discusses the potential impacts on key higher education participants and related assets. We believe our reimagined approach will greatly benefit society, take advantage of the latest advances in technology and teaching, and improve student outcomes. This section identifies the related system agents and the likely benefits or challenges they may face. While many agents will benefit, many agents will also need to change how they provide higher education services. Change and uncertainty may create resistance.
Increase in teachers:
Individuals who wish to focus on teaching students will be in demand. It is likely more accredited teachers will be necessary than exist today.
Increase in teaching colleges:
Teaching-focused colleges will likely increase.
Increase in teaching quality:
The “flipping the classroom” model is intended to take advantage of highly gifted lecturers and maintain a highly focused teaching environment. This is very important: This model enables affordable and wide access to some of the world's most talented educators. The student may be self-paced, potentially moving faster or slower as to the individual student's needs. The outcome standard is mastery. Once mastery is demonstrated, the class is considered complete. Some students, may not need teachers. The content delivery from the lecturer may be sufficient to achieve mastery. For those students who may need assistance - smaller student-teacher ratios and a wider, more transparent choice of teachers enable students to receive tailored educational services. As facilitated by the TC Platform, the market will reveal the students’ demand preferences for the teacher supply.
Increase out-of-classroom development:
By removing “The Tyranny of the Semester,” time ceases as the operating standard. This allows students to move at an appropriate pace and enables interesting longer-term internships, co-ops, or volunteering opportunities. [vii]
Reduction in lecturers:
The biggest reduction will be in the number of educators identifying as a lecturer. Lecturing will be consolidated into a pool of highly gifted lecture communicators. Feedback from previous students will inform potential future student lecturer clients as to the mastery achievement quality of lecturer content. The market, as facilitated by the Lecturer Platform, will reveal the students’ demand preferences for the lecturer supply. Important to note: By its nature, the lecture service creates business leverage for the lecturer. Over time, the lecturer will likely be able to reuse their lecture service at almost no incremental cost. The only requirement to update a lecture or mastery assessment is based on periodic curriculum changes or accreditation audit compliance requirements from the Research University System.
Reduction in universities focused on research and eligible for federal funding:
This approach requires federally funded research universities to inform curriculum, perform basic research, and other mandated activities. It is anticipated the number of Research Universities needed for this task is less than what exists today. Please note: Some private and state universities maintain large endowments. For example, Harvard University's endowment is approximately $50 Billion. Endowed universities may co-exist with the new federally funded research university. They may also provide teaching college services within the context of the federal student lending cost model outlined earlier.
Reduction in college-affiliated sports entertainment:
Revenue sports (e.g., basketball and football) – may be viable without federal loan support. It will be based on a private “de-bundled” college business decision. The intended decision considers actual profit after all costs (coaches salaries, facilities debt service, scholarships, recruiting, etc.).
Non-revenue sports (all other, soccer, track, wrestling, etc.) – may not be viable unless students are willing to pay the extra costs privately. Unprofitable revenue sports may fall in this category.
(Please note: The NCAA changed rules allowing college athletes to monetize their Name, Image, and Likeness (NIL). This change likely accelerates related college sports disruption consistent with this article. This rule change was prompted by a Supreme Court ruling.)
Reduction in all other traditional college-affiliated activities and services:
This includes clubs, dining, workout facilities, etc. Many of these amenities are available privately. (a student could join a local club in their community, eat off-campus, or join the local gym) Or, some teaching colleges may provide access to these services for an extra fee.
Change how we think about diplomas:
Today, diplomas are issued from colleges and universities. The new approach anticipates diplomas will be issued by the Teacher’s College platform. The platform's responsibility includes tracking class completion and progress toward diploma accreditation requirements. This approach eliminates the need to transfer credits between schools. Rapidly improving blockchain ledger technology makes efficient, broad-based diploma tracking achievable.
Significant reduction in student debt and associated costs:
Given federal debt is only issued for academic activities, students will have lower loan balances and market forces will drive down costs. Also, the consolidation of the lecturer and the reduction of participating Research Universities should reduce costs. Finally, the platforming of Teaching Colleges and Lecturers should create significant competitive pressure to reduce costs.
5. Conclusion: A Call to Reimagine Higher Education
The United States higher education system often fails to meet its promise, leaving many students burdened by debt and unmet expectations. This reimagined approach offers a transformative solution that delivers significant cost savings while drastically reducing the student debt crisis. By integrating accreditation standards, market-driven forces, and a more effective teaching model, this framework not only enhances quality but also improves student outcomes.
This vision transforms the higher education delivery model through the “3 Ds”:
De-bundles academics from non-essential amenities like dining, sports entertainment, and recreational facilities, allowing students to choose the level of additional services they desire or can afford.
De-leverages by dramatically reducing student debt burdens, curbing the runaway student loan system, and alleviating the financial stress that hinders young adults from thriving.
Delivers high-quality, cost-effective academic services through advanced technology and industry partnerships, creating accessible education options tailored to individual needs.
It is time to rethink and reimagine higher education. This approach embraces innovation to make education more affordable, effective, and adaptable for students and families. By focusing on these principles, we can shift from a system that often traps students in debt to one that empowers them with opportunity, financial stability, and long-term success.
6. Appendix: Higher Education Reimagined Framework:
Research University System
Objective:
Provide basic research and testing in key research segments (“RS”). This will inform the lecturers and will update lecturer content
Train and mentor future researchers (Ph.D. and related degrees)
Set accreditation standards audit to ensure the proper implementation of the accreditation standards.
Description:
A small number of RS is generally based on the current university colleges. (e.g., Business, Arts and Letters, Education, Health, Integrated Science and Engineering, Science and Math, Visual and Performing Arts, etc.)
RS may consist of a single organization or multiple organizations. Organization requirements will be determined by the governing board.
RS is responsible for auditing the lecturer and teacher colleges to ensure accreditation standards compliance.
Governance:
Each RS will have a board consisting of an equal number of related 1) federal government executive branch cabinet members and 2) industry (or industry association) members. One additional board member will come from a related teaching college. The board will oversee research curriculum and accreditation standards (Lecturer, Teaching College, and diploma standards)
Funding:
Primary funding source: Federal Government in partnership with related industry participants.
Lecturer
Objective:
Provided lecture content from key research segments
Present content for mass consumption in individual class formats. (eg., Psyc 101)
Description:
The individual lecturer focuses on a small number of classes related to the Research Segments
Governance:
Primary governing standards are based upon:
Accreditation standards
Lecturer Platform feedback from students or teachers
It is expected the Lecturer platform will administer the assessments and determine mastery (grades). This information will be recorded on the Teaching College platform on behalf of the students.
Funding:
Primary funding source: Students — as part of a Lecturer platform.
This platform allows students or teachers to choose a lecture most relevant and of appropriate quality. The lecture cost will be market-driven and will consider past student, teacher, and accreditation ratings. A lecturer may be changed as needed.
Teaching College
Objective:
Provide teaching services for related lectures tailored to individual students. The intent is to enable students to learn at a suitable pace and to facilitate learning based on the lecture.
Description:
Individual colleges that provide organization for teachers. It is possible for Teaching Colleges to be sole proprietors or a small number of accredited teachers. The teachers provide one on one (or one to a small number) services to students. This is closely related to tutoring or professor office hours.
Governance:
Primary governing standards are based upon:
Accreditation standards
Teaching College feedback from students
It is expected diplomas will be issued once the students master the accreditation required coursework. The diploma will be issued from the teaching platform, not the individual college.
Funding:
Primary funding source: Students — as part of the Teaching College platform.
This platform allows students to choose a Teaching College most relevant and of appropriate quality. The Teaching College cost will be market-driven and will consider past student and accreditation ratings. Teachers can be changed as needed.
7. Notes
[i-a] The significant challenges to achieving a positive college ROI are addressed in the article:
Hulett, College ROI: Prioritizing Graduation and GPA for Job Success, The Curiosity Vine, 2024
College costs outpacing many other goods:
The difference in the prices of some goods in the U.S. from 1998-2018.
Farmer, J. D. (2022). Making Sense of Chaos: A Better Economics for a Better World. Oxford University Press.
[i-b] This is based on data provided in the Wall Street Journal article “Calculating the Risk of College,” 12/10/18, and was supported by Pew Research. The author did estimate based on a small number of interpolations when the article data was not available. Interpolated estimates are considered reasonable approximations because they are bounded by observed data. Also, the author developed the 4 segments observed in the graphic. The following graphic provides the segment data and definitions:
[ii] Hulett, The College Decision: Proceed at your own risk, The Curiosity Vine, 2021
[iii] Hoover, The Demographic Cliff: 5 Findings From New Projections of High-School Graduates, 2020, The Chronicle of Higher Education
[iv] The "Flip The Classroom" approach is outlined by Sal Kahn in his book, The One World Schoolhouse: Education Reimagined. Also the Massive Open Online Courses (or "MOOC") model uses a similar concept. Some MOOCs appear to create lower-cost / low delivery channel canalization delivery models for higher-cost schools. (for example, EdX is a MOOC utilizing content from MIT, Georgetown, Harvard, Cal Berkeley, etc.) These higher-cost schools may utilize the MOOCs to monetize existing content, plus, test and improve educational concepts. This is done with minimal impact to the higher-price campus delivery channels via credential control. That is, class completion on a MOOC generally does not count toward a higher-cost university degree, even though the content is provided by the same higher-cost university.
[v] The U.S Student Lending system has several features creating adverse Higher Education system incentives for system participants. Please see our articles for more information:
Hulett, The College Stoic: The Stoic's Arbitrage and making a great college decision, The Curiosity Vine, 2022
Hulett, The Road To Absurdistan: Student lending psychology and bizarre incentives, The Curiosity Vine, 2022
[vi] Lecturer and academic teaching college costs – only include direct costs for the lecturer, teacher, and related supporting infrastructure. (supporting costs such as Buildings, Technology, and management related to delivering teacher services.) It does not include housing, clubs, sports entertainment, or other costs outside lecturer and teacher direct costs. Permissible costs will also be based on a schedule provided by the Department of Education. The schedule will include permissible costs based on historical averages within allowable cost categories. The schedule will allow for the relevant cost of living adjustments based on regional cost differences.
[vii] Volunteer Marketplaces are becoming more common. For example, LinkedIn has a volunteer marketplace. Also, several startup marketplaces have begun as a result of the pandemic and the cancellation of many internships. It would not surprise me if internship programs themselves become integrated across a marketplace instead of a single company, as 1) talented students desire broader experiences than a single company internship, and 2) companies realize the costs and effectiveness of managing independent internships are better served in a marketplace environment.
Further Reading:
Foundation
High School Students
College Students
10. College Success!
Career and Beyond
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