Minerva: Reinventing Higher Education in the 21st Century
Minerva has invented a new higher education model from the ground up to deliver a unique high-quality and low-cost undergraduate student experience.
Today the cost of college is astronomical, and as a result the average U.S. college graduate carries more than $30,000 in debt. Pick up any newspaper – especially as politicians hit the campaign trails – and you’ll read about ideas or initiatives aimed at lowering the cost of higher education. The tricky constraint, however, is that universities are expensive to run! Think about your undergraduate experience: an idyllic campus, state-of-the-art classrooms, football games, student clubs, tenured faculty, and the list goes on.
So how do you provide a high-quality education at a low-cost? Well, you can either take the current institutional model and seek some efficiencies (or subsidies), or you could completely redesign a university from the ground up. The latter is precisely what Minerva has done.
Founded in 2012 by Ben Nelson, former CEO of Snapfish, Minerva is a (for-profit) organization that has raised $95M and aspires to become the best university in the world. Minerva provides a four-year accredited undergraduate program to top students across the world via an immersive global experience, rigorous curriculum, and technology-enabled learning model at a price-tag of only $10,000 per year. How Minerva has managed to flip the traditional operating model of an elite university on its head is fascinating, and theoretically Minerva’s cheaper and more scalable model has the potential to be highly disruptive in an industry facing intense cost pressure. However, in a sector where brand and prestige are of paramount importance and the competitive set maintains hundreds of years of legacy, will Minerva’s business and operating models be good enough to win?
An Overview of Minerva’s Unique Offering:
- Top Students – Minerva’s mission is to educate students who will be global innovators and leaders of the future, and as a result they recruit top students from around the world (think Ivy Leaguers).
- Global Immersion – There is no centralized campus for Minerva. Students at Minerva live in centrally-located residence halls in seven different cities across the globe during their four years of study (Year 1 – San Francisco, Year 2 – Berlin and Buenos Aires, Year 3 – Seoul and Bangalore, Year 4 – Istanbul and London).
- Unique Approach to Academics – Students learn through small interactive seminars enabled by technology (classrooms don’t exist) and the curriculum is rigorous. While the program delivers a liberal arts education, there is a deeper focus – as compared to traditional programs – on intellectual growth and preparing students for operating in a global context.
- Low Price Point – Students pay only $10,000[1] per year in tuition, just a fraction of what many private universities charge.
Stripping the Model Down to the Essentials:
Minerva has taken the traditional operating model for higher education and stripped it down, removing expensive components that are not core to the student learning experience. The following are examples of how Minerva’s operating model differs from that of a traditional institution:
- Physical assets: Minerva does not own any real estate and maintains few facilities beyond the dorm, which is rented space for students to live. Classrooms don’t exist at Minerva, and neither do most of the other fancy and expense campus facilities.
- Labor: There is no such thing as professor tenure at Minerva, helping to again keep costs low. Professors are on three year contracts, and because professors don’t need to be co-located with students, they can live anywhere with an internet connection. Attracting top faculty talent is a key to their strategy of becoming an elite university, and Minerva believes geographic flexibility is a competitive advantage.
- Technology: Minerva has built its own proprietary technology platform (the Minerva Active Learning Forum) to support small-class interactive seminars. The technology is built on robust learning science principles and therefore enables a high-quality learning experience. Employing technology serves to lower the cost of each course and will allow Minerva to scale quickly if it can attract enough qualified students to the university.
- Student Life: Minerva has also foregone other expensive components of the student experience, such as intercollegiate sports (sorry, no tailgates!). However, it does encourage and support co-curricular activities in the cities in which the students are currently learning.
Currently in its second class of 110 students, Minerva is far from self-sustaining. The company projects that it will achieve financial sustainability when it reaches 5,000 students. We can then assume that the average cost to educate each student will be roughly $10,000 (the price of tuition), which is less than half the cost to educate a student at a comparable institution (see chart below).
The Future:
Although Minerva has designed an alternative higher education model that allows it to deliver a unique high-quality and low-cost experience for its students, its ability to scale will depend on convincing potential Ivy Leaguers around the world to forgo hundreds of years of prestige and the student life we’ve come to know on residential campuses. Higher education is a mature industry with entrenched consumer preferences. In a sector where brand and prestige is 80% of the offering, it will be interesting to see how far Minerva’s tightly aligned operating and business model will take it.
Sources:
- https://www.minerva.kgi.edu/
- http://www.theatlantic.com/magazine/archive/2014/09/the-future-of-college/375071/
- http://www.inc.com/issie-lapowsky/minerva-project-elite-undergrad-education-for-10k.html
- http://www.wsj.com/articles/education-startup-minerva-project-to-offer-masters-degree-program-1449679243
- http://www.deltacostproject.org/sites/default/files/products/Delta%20Cost_Trends%20College%20Spending%202001-2011_071414_rev.pdf
- https://www.insidehighered.com/blogs/higher-ed-beta/future-future-higher-education
- http://www.xconomy.com/national/2014/04/18/minervas-plan-to-disrupt-universities-a-talk-with-ceo-ben-nelson/
[1] The cost of room and board is additional, but this portion is not paid to Minerva
Minerva is an interesting concept that I really hope it will take off. There is no doubt that many of their operational decisions adhere to their overall mission but only time will tell if the public will perceive these tradeoffs as something that will not be detrimental to their education.
I’m curious as to how they attract and retain their top talent given their constraint on staff costs. It would seem as if they would need to find a niche market for teachers who are willing to teach, for a low wage, and for only 3 years. While it may be easy to find teachers who need some extra income to do this, it probably is a lot more difficult if they are pursing top talent.
Another curious thing is their global immersion all over the world. Someone will have to pay for students to fly internationally, whether the school through the tuition, or the parents/students out of their own pockets. I’m curious as to what their rationale is for offering such an expensive endeavor.
Beyond Minerva, it would be amazing if this business model in general would prove profitable. This could potentially lower the cost of education all over the world, particularly benefiting the emerging countries.
Such an important issue, thanks for sharing this post! I love the component of experiential learning that they have included in their curriculum. I think getting an international perspective during college is one of the most important things to develop future global leaders.
However, I do worry about the effectiveness of purely online learning and the competition Minerva faces from other e-learning sites such as kahn academy, udemy, and schools with their own platforms such as Stanford, Harvard, and MIT. As an ivy league qualified student why would I attend Minerva when I can access top professors and courses online for free or a fraction of the cost? Minerva doesn’t bring me prestige, career help, or other traditional college resources.
In addition, I am keen to see if Minerva can attract top academic talent on both the professor and student side. It sounds like they are cost cutting around their teaching talent which seems risky. Online teaching is a specific skill and by only engaging professors for a short time they lose talent just as they are getting good at teaching in an online classroom setting. Additionally as a teacher that could get tenure at an ivy league university (the type of talent they say they want to attract) what would make me want to work at Minerva where I have no job security and presumably lower pay. There is the geographic advantage but I worry about Minerva truly being able to attract top teaching talent that will in turn attract top students.
Lots of questions to answer but I hope they do well and I love that they are innovating around such a traditional institution as academia!
I love the idea of providing high-quality education at low costs. If Minerva can attract high-quality professors to design well-run courses, taught online with minimal infrastructure, then it will be able to achieve that. However, that strikes me as a rather large “if.” What sort of incentives do professors have to teach for Minerva? At the top-tier institutions Minerva wants to compete with (as you said yourself, think “Ivy League”), professors are incentivized not just with tenure but with access to incredible infrastructure and resources to advance their field of study. The large costs top-tier universities incur for their campus are not just for picturesque grass-lined walkways and new football stadiums (although we can argue how a campus and athletics program contribute to the overall purpose of higher education, which should ideally be both knowledge-based in the classroom and personal-growth based often outside the classroom) – they often go to state-of-the-art research laboratories and vast libraries with a huge amount of information. If we assume the top-tier schools have the top-tier professors, and that those top-tier schools are the only ones with the resources to allow those top-tier professors to work on what they want, how can Minerva compete? Furthermore, isn’t part of the benefit to the students at those institutions the access to assist in the research and other non-teaching work in which their professors engage? I find it unlikely that a Minerva student would be able to publish an honors thesis in a STEM field, for example, given the school’s operating model.
Beyond that, what makes Minerva so different from any of the other for-profit higher institutions that contribute so much to student debt (without arguably providing nearly as much benefit to students as non-profit, accredited institutions)? Of course, the $10K price tag is significantly lower than the $70K+ price tag at a different institution such as University of Phoenix, but what is to stop Minerva from becoming the next UoP? And how do they ensure that the quality of their education is better than other for-profit institutions? I’m looking forward to seeing what Minerva does in the future – if it can sustainably provide high-quality education for that price, it’ll be a force to be reckoned with.