Blockchain technology is penetrating almost every industry. This mass adoption by businesses is due to the benefits that apply to virtually any business platform. The innovation drives down the cost of transacting while creating a secure, transparent ledger. The application to Higher Education is substantial as more ICOs and cryptos are emerging every day looking to enter this niche market.
Blockchain Technology and Distributed Ledger Technology
Blockchain technology is built around Distributed Ledger Technology (DLT). This decentralization of a digital ledger across an ever-expanding network of computers creates a degree of security and transparency not previously witnessed.
The blockchain has already made strides penetrating the freelance markets and supply chain management industry. Eventually, every market will have implemented some form of the advance, but it seems the next to begin the process is the higher education sector.
The Value of a Degree
Credentials, or one’s education history, theoretically behave like a currency. A degree has the value a student is willing to pay for it and incurs the value an employer places on it.
This is where blockchain technology and DLT come into play. DLT codes ownership of the specific unit based on a lengthy data file stored on the distributed ledger. This process creates a digital record of one’s credential history.
Credly is the current leading provider of credentials in a digital format. What many thought was an unnecessary concept has turned into the complete business model for Credly. They have demonstrated how to harness the power of unbundling credentials down to the level of competency for thousands of employers and universities.
Verification of one’s resume was an issue plaguing the hiring industry for many years, and now by placing one’s credentials on the blockchain, this issue will be alleviated. Without having to verify references and university attendance through lengthy processes, organizations interested in an individual will instantly be able to check their credentials for any discrepancies.
As such, the easier a company or university can verify an individual’s past credentials the more efficiently they can make an educated decision. Time is money, and the blockchain speeds up the processes of credential verification on a secure distributed ledger.
Universities will be able to place students’ diplomas on these blockchains to demonstrate their credentials to the world. Students and employers would be able to showcase references and prior job experience thus providing instant credential verification when required.
The benefits are clear for what blockchain technology will be able to do for verification of one’s credentials. However, how else can it benefit the higher education system?
The System of Student Financing is Not Working
In some instances there is the possibility for a strong first job, in other cases, the degree leads to no visible career path. Either way, the degree and credentials obtained can and should be input into the blockchain. But what about paying for this degree? How could the blockchain benefit financing?
There are many emerging career paths, such as blockchain architects and developers, that guarantee a minimum starting salary once credentialing is complete. Usually, these “programs” are far shorter than typical university four-year programs. By ensuring a graduate a starting salary while paying for their tuition costs an employer knows they have an educated, incoming workforce in a specific period. Like most trade-offs, however, having your tuition paid for and a guaranteed salary comes with some negatives.
These negatives usually include an income share agreement and an employment period of committal at a predetermined salary. Often, there is an income share agreement to help pay for other individual’s education or to pay your own back. This share is generally capped at 15 percent, so the majority of the employee’s salary is still theirs.
There is also an employment agreement often spanning four to five years ensuring that once educated and ‘tuition’ is paid for, the employee is committed to working for the employer that spent for their education. Income sharing and an employer paying for credentialing have two things in common.
Firstly, they do not charge the student for tuition upfront, and secondly, payment is guaranteed at a future date to the educators.
How Can the Blockchain and DLT Benefit Future Payments for Credentials?
Simply put, DLT allows for information related to all the above transaction to be stored on the blockchain. Each accreditation would be separated by a user profile and able to be viewed and sorted. Once accreditation or degree completion occurs, the employer pays back the institution at the promised rate based on the employees predetermined salary.
By having a DLT based credential implies that the financing of the system is built into the cost of the credentialing itself. This sets the stage for a paradigm shift from the standard tuition-based debt-laden system into which students are placed. The result would be a combination of guaranteed employment post accreditation, much cheaper alternatives to “universities,” and unique new abilities to finance one’s degree.
Currently, universities, in most instances, provide the same subsidies to both wealthy and poor students. Beyond the few scholarships allocated for lower-income families, universities treat wealthy and poor students equally when it comes to tuition costs.
At a minimum, it would be logical for lower socioeconomic individuals to have costs which were also decreased. Universities treat most degrees the same; some degrees provide society a considerable benefit (teachers) but little financial opportunity. Other degrees benefit the individual exponentially more than society as a whole. With a new blockchain DLT network, many of these issues can be addressed.
Governments would know which jobs were of the highest demand by looking at the blockchain. This perspective would allow them to allocate scholarships to specific degree tracks insofar as they needed immediate job candidates.
Fiscal support from the government could be restricted to post-secondary schools that have already passed accreditation verification. This would allow the government to either provide funds to those of a lower socioeconomic class or to push individuals toward a specific career path.
Student debt in the United States has surpassed $1.4 trillion in 2018. Many legislators are debating what to do with this ever-growing number. This frightening amount has to be addressed with questions regarding what to do with the plethora of “useless” degrees determined as well.
Should students be able to take out hundreds of thousands of dollars in debt with no future employment guaranteed for a degree no employer wants? Regardless of your answer to that question, any easy solution would be implementing blockchain DLT. Such an implementation would help push students to certain paths based on ease of financing and post-education employment.
The blockchain would not solve the debt crisis that already exists, but it would provide a way for employers to incentivize employees to focus on certain career tracks which are paid for by the employer at a later date.
Like Most Industries Higher Education Can Benefit from The Blockchain
It can benefit the higher education system through a better verification of accreditation, while also solving some of the financing woes facing the system as a whole. It is evident the higher education system is going to be teaming up with employers and governments to implement DLT for their benefit. This should benefit society’s growing student loan epidemic while providing a better route for guaranteed employment.
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