Cheaper and Smarter: Blowing Up College With Nanodegrees

A man waits before the University of Pennsylvania's 258th Commencement ceremony on May 19, 2014 in Philadelphia, Pennsylvania. With the success of digital learning companies like Udacity, which offers "microdegrees" in software development and other studies that are recognized by leading companies (unlike other kinds of online courses), the traditional liberal arts degree "package" -- even from Ivy League schools -- may face competition. Gilbert Carrasquillo/Getty

For more than a decade, we've been expecting the Internet to blow up universities. But last time anyone looked, colleges are still raising their tuition costs and getting record numbers of applications. Online courses have so far been about as disruptive to college as tofurkey has been to Thanksgiving.

But now a company called Udacity, partnering with Google, shows us that we've been focused on the wrong disruption. The big change won't be the digitization of college—it will be the unbundling of the college degree into discrete, focused chunks, which Udacity calls nanodegrees. In other words, technology will assault the college degree, not the experience of college, and that will make all the difference.

In fact, if you play this development forward a decade, it likely means that an expensive B.A. or B.S. won't be necessary for a good career. A lot of people will do really well by skipping college and assembling a collection of nanodegrees throughout their lives.

The nanodegree got its start earlier this year. Innovations often begin with a problem to be solved. Google was wrestling with a severe shortage of people who knew how to develop apps for Android phones. Somehow, Google needed to get more Android developers trained and working. Google asked for help from Sebastian Thrun, a former Stanford professor who used to run Google X labs and now is CEO of Udacity.

Thrun founded Udacity in 2011 to offer massive open online courses (MOOCs), which are online versions of traditional college courses. For Udacity and just about every other MOOC company, that business, to be blunt, has sucked. There are probably tons of reasons why MOOCs haven't disrupted college and lured the masses, but here's the main one: You can't take Stanford-level MOOCs and come away with a degree that carries Stanford-level weight in the job market. While MOOCs are cheaper and more accessible than college, they confer few of the benefits of college—not the degree, the social networks, the football games or the throwing up at frat parties. So why bother?

To solve Google's problem, though, Udacity began offering something completely different from college. A Udacity nanodegree program might cost a thousand bucks and take a few months to complete. It's focused on a specific subject, like Android coding. At the end, you can take your nanodegree to Google job interviews, and the company will recognize its value and perhaps hire you.

At the end of September, the nanodegree moved another step forward. Udacity will offer the program in India and is adding Indian giant Tata as a partner. So now Tata, a huge, respected conglomerate of businesses ranging from cars to chemicals, will recognize Udacity nanodegrees when hiring.

You can see the path opening for other companies to embrace nanodegrees. Companies around the world find a shortage of coders, and they can't expect a giant new batch to suddenly burst out of traditional four-year schools. If Udacity's nanodegree-holding graduates prove capable in the workplace, employers will increasingly trust the value of a nanodegree. Before long, a nanodegree will become an accepted thing in technical circles.

But the concept does not have to be stuck in coding. Why not separate out any focused area of knowledge and create a nanodegree? A B.A. or B.S. from a college represents a bundle of courses taken and passed, supposedly representing a well-rounded education. But maybe the bundle isn't all that helpful—the French lit course isn't helping in your marketing job. And as you go through life, you might need knowledge that wasn't in your original bundle. Sooner or later, Udacity or some entity is going to offer nanodegrees in all sorts of subjects: accounting, writing, ancient Greek history.

This kind of higher education seems to fit better with the modern age. "It's a mistake to think that a single college education can carry you for a lifetime," Thrun told The New York Times. "To keep pace with change, your education has to be done throughout your life." Technology keeps driving faster change, affecting all industries. Just look how Airbnb is changing hospitality, or Zenefits is changing human resources. What you learned five years ago might not be worth a bowl of chili today.

A lot of people are developing overlapping, free-agent micro-careers, each needing a different skill set: freelance designer by day, Etsy seller at night, DJ on weekends. It must follow that a good way to advance micro-careers would be with nanodegrees.

Of course, there are lots of really good arguments for the whole, bundled college experience. For four years you grow up, learn how to think, get exposed to a lot of stuff and party your ass off. Maybe that will always be important to a certain slice of society. But the cool thing about nanodegree programs is that they're not trying to be another version of college—they're different from college. If employers accept nanodegrees, they will become a path to a full and successful life without the expense and time commitment of college.

Technology tends to unbundle stuff. Look how it's unbundling television, or how it unbundled the music album. The college degree is a bundle that doesn't work for everybody and creates unnatural market conditions, which is why college costs consistently rise faster than inflation. The next generation will be able to pull apart the college bundle the way people today are pulling the plug on cable.

They'll just have to learn how to puke at parties on their own.