The Impact of AI on Higher Education
AI is set to disrupt higher education both through its direct impact on universities and colleges and via its effect on the labor market.
Within universities, AI is likely to affect several distinct areas from admin to teaching, research and learning.[1] AI’s potential to execute administrative tasks lead some to argue that its deployment can contribute to cost reductions in higher education.[2] For example, non-faculty administrative tasks AI could automate include budgeting and staffing assignments. This appears particularly pertinent given that over the past four decades, the number of full-time faculty employed in higher education increased by 92%. At the same time, the number of full-time administrators rose by 164%.[3]
Faculty will be able to use AI for tasks such as course design, grading, and grant writing, freeing up teachers’ time to better focus students’ needs. This, in turn, could improve the quality of the learning experience. In addition, generative AI in particular is likely to facilitate and improve upon self-directed learning allowing content to be tailored to individual students’ needs.[4]
Yet, colleges and universities are facing additional headwinds through AI’s disruption of the labor market. Recent advancements in machine learning and generative AI lead to a significant change in skills demand. Based on a study by the World Economic Forum, the top 10 skills of 2023 did not include specific technical skills per se. Instead, as Table 1 shows, the main focus is on analytical and creative skills.[5]
Table 1: Top 10 skills of 2023. Source: World Economic Forum, Future of Jobs Report 2023.
According to the World Economic Forum, analytical thinking, creative thinking and AI and big data will top the list of in-demand skills by 2027. The organization also reports that 44% of workers’ core skills are expected to change during this period. In addition, lifelong learning is going to become a necessity for workers to keep up with frequent changes in skill demand due to the increasing pace of technological change.
For the higher education sector this raises the question of how to react to the significant transformation of the world of work by technology. This question is particularly pressing in the context of rising tuition cost.
Disaggregating wage data by educational attainment suggests that college education still produces considerable monetary benefits. Figure 1 shows the wage relation of fully employed individuals with a bachelor’s degree and higher to fully employed individuals with a high school degree. As the numbers show, this college premium has been positive over the past 2 decades and by 2024 the weekly wages of college graduates were roughly 86% higher than those of high school graduates.
Figure 1: College premium, 2000-2024. Note: College premium is calculated as median usual weekly nominal earnings for full-time employed individuals with a bachelor’s degree or higher 25 years and over/median usual weekly nominal earnings for full-time employees with a high school degree as highest educational attainment 25 years and over). Source: US Bureau of Labor Statistics.
That being said, a recent study finds that while the income premium has remained positive over the past two decades, college and post-grad wealth premiums have declined since the 1930s cohort. What is more, for the 1980s cohort, the college and post-grad wealth premium is indistinguishable from zero except for White’s with a bachelor’s degree.[6] The authors note rising college costs as one reason for this phenomenon.
Figure 2 plots outstanding student loans per total number of college graduates in the labor force. In 2000, outstanding college debt was around $11,500 per college graduate. By the end of 2023, this amounted to roughly $27,000 – an increase of almost 134%.
Figure 2: Student loans owed and securitized/civilian labor force level – bachelor’s degree and higher, 25 years and over. Source: Board of Governors, Bureau of Labor Statistics.
Increasing levels of student debt can affect the ability to accumulate wealth, contributing to a decline in the college wealth premium.
The combination of AI fundamentally disrupting skills demand and possibly rendering skills obsolete at a faster pace together with increasing tuition cost and declining college wealth premiums necessitate a reevaluation of college education. In a recent report, the World Economic Forum outlines some key features of an updated model for higher education in the age of AI.[7]
First, educational institutions should primarily focus on teaching students ‘how to think’. This includes essential skills such as critical and creative thinking, ethical reasoning, and emotional intelligence. This would equip students to better navigate an evolving and changing labor market, preparing them for a world in which lifelong learning is going to become a necessity.
A second aspect concerns learning styles and assessments. According to the WEF, current models of passive learning need to be replaced by active learning techniques and experiential learning. Skills may be acquired at home and then applied in class solving real-world problems. The application of skills in classroom settings might then be used to change how a student’s performance is graded. Rather than relying on exams, which often assess memorization and ‘rote learning’. The focus should instead lie on assessing a student’s ability for collaborative problem-solving.
An additional challenge to traditional colleges and universities is that college degrees are at danger of being eroded by specific skills training and certifications.[8] The accelerating need for retraining and upskilling necessitates broader changes in how learning is organized and how accomplishments are recognized.[9] Some larger universities are already responding to this challenge by creating partnerships with international universities and online teaching companies. Some are building their own remote-learning programs.[10]
The Harvard Extension School, for example, offers a unique educational model, catering to nearly 2,000 degree candidates and over 13,000 non-degree students. These students have the flexibility to choose between online, on-campus, or blended learning formats. The school provides the opportunity to pursue a Bachelor of Liberal Arts degree in extension studies, which, at an estimated cost of $49,500 for a four-year program, is more cost-effective than a single year on campus at Harvard.
However, the majority of students at Harvard Extension School are not seeking a degree. Instead, they are interested in specific courses that align with their interests or career goals, creating a personalized educational experience.
Looking ahead, employers are likely to embrace similar flexible education options. Universities may be called upon to develop specialized programs tailored to the needs of specific companies. Additionally, universities will need to explore how artificial intelligence technologies can be leveraged to reduce the overall cost of education.
References
[1] Abdous, M. 2023. How AI Is Shaping the Future of Higher Ed, Inside Higher Ed, March 21, 2023. https://www.insidehighered.com/views/2023/03/22/how-ai-shaping-future-higher-ed-opinion
[2] Bowen, J. and C. E. Watson. 2024. Is AI Finally a Way to Reduce Higher Ed Costs? , Inside Higher Ed, April 23, 2024. https://www.insidehighered.com/opinion/views/2024/04/23/ai-finally-way-reduce-higher-ed-costs-opinion#:~:text=True%E2%80%94and%20the%20need%20for,important%20educational%20and%20relational%20tasks
Press, G. 2024. Is AI Going to Transform Higher Education and How?, Forbes. https://www.forbes.com/sites/gilpress/2024/02/14/is-ai-going-to-transform-higher-education-and-how/?sh=1b04427c2a5d
[3] Weinstein, P. Jr. 2023. How to Cut Administrative Bloat at U.S. Colleges. Progressive Policy Institute.
[4] Schroeder, R. 2024. How Will AI Disrupt Higher Education in 2024?, Inside Higher Ed, January 5, 2024. https://www.insidehighered.com/opinion/blogs/online-trending-now/2024/01/05/how-will-ai-disrupt-higher-education-2024#:~:text=Generative%20AI%20will%20lift%20heutagogical,meet%20the%20personalized%20learner's%20needs
[5] World Economic Forum. 2023. Future of jobs 2023: These are the most in-demand skills now – and beyond. https://www.weforum.org/agenda/2023/05/future-of-jobs-2023-skills/
[6] Emmons, W. R., Kent, A. H. and L. R. Ricketts. 2018. Is College Still Worth It? The New Calculus of Falling Returns. Federal Reserve Bank of St. Louis. https://www.stlouisfed.org/-/media/project/frbstl/stlouisfed/Files/PDFs/HFS/Is-College-Worth-it/Emmons_Symposium.pdf?la=en
[7] World Economic Forum. 2023. Why AI makes traditional education models obsolete – and what do to about it. https://www.weforum.org/agenda/2023/09/higher-education-model-for-ai/
[8] Ehlers, U.D. 2018. Higher Creduation – Degree or Education? The Rise of Microcredentials and its Consequences for the University of the Future, European Distance and E-Learning Network. https://www.ceeol.com/search/article-detail?id=847014
[9] Fishman, B., Teasley, S. and Cederquist, S. 2018. Micro-credentials as evidence of college readiness: Report of an NSF workshop.
[10] Kak, S. 2018. Will Traditional Colleges and Universities Become Obsolete?, Smithsonian Magazine. https://www.smithsonianmag.com/innovation/will-traditional-colleges-universities-become-obsolete-180967788/
