Could “Nanodegrees” Be The Solution To The Student Debt Crisis?

What if you could earn a technology-centric credential at a similar level to a postgraduate for less than $1,000? And what if earning that high-level credential took about six to nine months?

What if, after earning this credential, you went into a job interview with solid evidence revealing your skills, backed by several relevant projects you created that very clearly disclosed your innovativeness and creativity, along with showing how advanced you were in relation to the latest developments in your field of study?

The World Of Nanodegrees

Welcome to the nanodegree, the brainchild of Stanford Professor Sebastian Thrun, CEO of Udacity, an online education service that is changing the way adults get educated and find jobs at a fraction of the cost of traditional higher education pursuits. Thrun and Google Director of Research Peter Norvig created one of the first freely available online MOOCs (massive open online course) on artificial intelligence in 2011. The course quickly garnered more than 160,000 students from around the world.

But as he witnessed this phenomenal activity, Thrun started to question its true effectiveness when he discovered that somewhere around 90% of students never completed the MOOC. He wound up calling it “a lousy product” and a painful discovery. But it gave him the drive to create a different kind of online learning system: the nanodegrees now being offered by Udacity (which according to the site’s page means, “We are audacious for you, the student”).

A Tech Focus

Currently, Udacity offers eight tech-centric nanodegrees in web development, data analysis, full stack development, mobile development, and tech entrepreneurialism. These rigorous, project-based, career-focused nanodegree courses, with plenty of video instruction and highly specialized assessments, have been codeveloped with such companies as AT&T, Google, Facebook, Cloudera, and mongoDB.

“Combined, nanodegree courses currently enroll about 10,000 students. So far, after officially launching its first nanodegree in October 2014 with a $35 million investment infusion round,1,000 students have completed nanodegrees. At least 150 students have been directly assisted by Udacity with finding meaningful work. That number is expected to increase through a new job service called Talent Source in which students post their profiles and showcase their projects for vetted Udacity partner organizations to review.

“Many more have found jobs,” Thrun says. The business partnerships have certainly helped. “What we basically get from these companies is accreditation,” he says. “If they say we are more than happy to hire these people, that we trust Udacity, then the entire machine works out for us and the students.”

From Event Planner To Web Developer In Six Months

Sheryl Lun recently relocated from Mountain View, California—where she was working as an independent event planner for companies like Google—to Washington, D.C. She decided that it was the right time to switch careers to be more consistent with what she really wanted to become: a web developer.

She had some limited tech experience in the field and a bachelor’s degree in business that she had earned in 2008 (most students in nanodegrees already have an undergraduate degree). She had enrolled in the first Udacity cohort in the front-end web developer program in October 2014, and graduated within six months at a cost of $1,000.

While enrolled in the program, she was hired as an intern for a local media company. A few months after graduating, she was hired as a full-time web developer for Homesnap, a D.C.-based real estate data/technology platform.

What got her the job was not the slip of paper showing that she had earned a nanodegree—her employers, in fact, had never heard of it. Instead, she had several projects she created while studying for the degree that were first-rate examples of what kind of web development capabilities and creative insights she had.

“They were impressed with what I learned in such a short period of time,” she says. “The fact that I had these working projects made them understand that I was able to write this code and put it together and make it work. I was able to demonstrate my abilities. Just the fact that I could work through these different technologies using Google maps and APIs made them understand that I had what they were looking for.” Lun adds that she is now earning quite a bit more than what she made as an event planner in California.

“We have been working very hard over the last few months on the job side,” Thrun explains. “We believe that for education to be complete really requires that you find a job. I get excited every time a student finds a job. It puts a big smile on my face.”

Sustainable At $100 Per Month

Another incredible aspect of Udacity’s success is that, unlike most institutes of higher learning, they have actually lowered their nanodegree tuition rates, now offering a 50% refund to students who complete a nanodegree within 12 months. This means that last year’s $200 per month rate for these courses has been cut down to only $100 per month.

We asked Thrun how this model could possibly be sustainable and profitable. His answer: outsourcing. Beyond the company’s relatively small team of core employees located at Mountain View and San Francisco, Udacity has hired several hundred remote independent contractors from around the world who are highly qualified program reviewers, mentors, and content developers.

“We’ve copied a page from the playbook of startups like Lyft, Uber, and eLance, ” Thrun says. The program reviewers, for instance, get paid the equivalent of about $50 per hour on a per-project basis (with video and assessments) to evaluate and conduct line-by-line code review on more than 15,000 monthly student project submissions.

These reviewers get rated by students on a regular basis. Those who get poor ratings more than once are let go. “They are incentivized,” Thrun adds. “They want to keep that source of income by doing a phenomenal job. It is really working well. Plus, we have no scaling limitations because there are thousands of people already wait-listed who want to do this.” He claims, “The $200 [per month] that we charge and the tuition reimbursement of $100 [per month] when they finish is enough to pay for all of this and more.”

What’s Next?

What’s on the horizon for Udacity? “By the end of next year, we are going to have more than 50 [nanodegree programs],” Thrun says. “We have a meticulous plan that we are working through, and it covers areas such as big data, cybersecurity, and tech entrepreneurship with things such as project management and design.”

At its current relatively small scale of eight nanodegrees, however, it remains to be seen how disruptive a force Udacity might become to traditional IT higher education that often puts students into enormous debt . “We believe in the modern age,” Thrun says, referring to how the agricultural, transportation, and manufacturing industries have all become less expensive over time due to the growth and creative implementation of new technologies.

“It is the same for education. It is always available and something that can be affordable. If I am not mistaken about us, all these things are now fitting together. It is working out. We are placing people in jobs, and we are doing it at a low price point. It is sustainable. We have bleeding edge content. We have a scalable system that can accommodate any number of students we can get. We are growing, living on, and adding a lot of value to the people of the world.”