College degrees seeing ‘a decrease in the ROI,’ Chegg Skills president says

Chegg Skills President John Fillmore joins Yahoo Finance Live to discuss college enrollments, job skills gaps, and why Americans are finding college degrees less valuable in some cases.

Video transcript

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AKIKO FUJITA: With college enrollment down for the third straight year since the pandemic began, more and more people are looking at alternatives to higher education, so much so that even major companies like Google and IBM are reducing education requirements, instead focusing more on skills and experience. So what does this shift mean for our society and the economy?

Let's bring in John Fillmore. He's president of Chegg Skills. John, this is an interesting storyline that your CEO, Dan Rosensweig, actually flagged in the spring, saying that you were increasingly seeing more students forego college education for a job, a full-time job, largely because of inflation. To what extent have you seen that accelerate over the last few months?

JOHN FILLMORE: You know, it does just continue. And you won't have the continued strength in the economy. And while we talk a lot about the headlines of layoffs more recently, the reality is there are still more technology job openings than there were pre-pandemic. And so there is a continued need to get people into the workforce. And the reality is there's also just a decrease in the ROI on the college education space. We've talked a lot, obviously, about the increase in tuition over the last few years.

But the reality beyond that is only 60% of people who even start college graduate, and only about 50% of them end up fully employed after graduation. So, really, 2/3 of people who are going into college are not getting the outcome that they wanted, which tells you, for a lot of people, if there's an easier, cheaper, faster way to get the skills necessary to participate in the labor force, they're going to go that route.

RACHELLE AKUFFO: And are you seeing this more in some sectors than others? I know we talk about that in the tech space. But what about other sectors?

JOHN FILLMORE: Yeah, you are definitely starting to see it more in places like healthcare. Certainly, if you're a nurse or if you're a doctor, there are degree requirements. But if you're thinking about things like pharmacy tech, if you're thinking things like certified medical assistant, you're getting a lot of places in that don't necessarily require a degree. And you are seeing more and more places that are struggling to fill those job openings. Say, wait, do we really need this degree inflation of seeing the skills for this don't actually require for you to go to a four-year college?

AKIKO FUJITA: You mentioned the decrease on ROI of college education. I mean, what does that return on investment look like now? We've seen sort of the salary comparisons between high school education versus a college education. Has that divide been narrowed significantly because of the pandemic?

JOHN FILLMORE: There are certainly opportunities for people, especially if you're in a sector like technology. We teach a lot of people in cybersecurity, where the average job salary coming out for an entry level job tends to be in the $70,000 to $90,000 range. So certainly in places like that, there are opportunities. And there's, again-- there's nothing wrong with a college degree.

And obviously, there are stats on the lifetime earnings of somebody who gets that four-year degree. The problem is for so many people, they go into that situation. They end up with $10,000 to $30,000 worth of debt, and then they end up with no degree. And so you have this people with the overhang of debt plus no degree that essentially get no benefit versus being in high school.

Now what's changing in the world on this and where you see incredible organizations like opportunity at work pushing on this, is, to start this push, as you mentioned, to say, let's evaluate people on the skills. And so whatever their training is, whether you go to what we do with the Thinkful brand within Chegg Skills, and you're learning cybersecurity, or whether you go to Southern New Hampshire University, and you do one year or three years or four years, you're picking up skills. And if more employers and as more employers start to evaluate you on that basis, you're going to see more and more people be able to participate in the economy that, today, are locked out.

RACHELLE AKUFFO: And John, to that point about disparities, we know that sometimes when people sort of do a review of the jobs that they have, they realize that some of them don't actually require a bachelor's degree. But there is that consistency that some employees look for. They think there's a certain standard that comes with a bachelor's degree. What does it mean, then, if you have so many different organizations offering skills-based services, and employers are trying to figure out who's the most qualified candidate, based on just that?

JOHN FILLMORE: Yeah, that's right. And it's also why you see companies like Vervoe starting to jump out on the assessment space because if you're going to move away from a degree, you need, as an employer, to be able to have some level of confidence that the person actually knows the skills.

And so you're seeing incredible evolutions in the assessment space of being able to say, do you actually understand cybersecurity? Do you understand data analytics? Do you understand data science, which are some of the most popular jobs that we teach. I think you'll continue to see pushes on that assessment side, as employers say, wait a minute. This certificate can show that you have the skills. But I do need to, for the old adage, trust but verify.

RACHELLE AKUFFO: Indeed. Well, thank you for joining us with your insight. The president there of Chegg Skills, John Fillmore. Thank you so much.