Competency-based education (CBE) continues to gain momentum as an alternative to the four-year college degree. Yet, while CBE programs are gaining traction, they struggle against regulatory, accreditation, and financial aid systems built to measure student progress by the ticking of the clock. A look at the recent Zenefits scandal provides a perfect example of the absurdity in incentivizing “seat time” rather than content mastery.

The $4.5 billion startup fell from grace recently when news broke that it had long been allowing employees to skirt regulatory requirements when obtaining a health insurance broker license—a mandatory credential for their line of work. In a gigantic lapse of judgment, Zenefits actively and systemically encouraged employees to expedite a required 52-hour online course using software that enabled employees to remain logged in even when they were inactive in the course. Brokers still have to pass the course, as well as the brokerage exam.

Clearly managers made poor ethical decisions, and Zenefits is paying the price. The CEO has resigned and the company has announced major layoffs. But the situation here is akin to Zenefits being stopped for going 65mph on the freeway—when regulators have placed a speed limit of 15mph. It’s worth a hard look at what these regulatory standards are actually incentivizing. Zenefits isn’t facing regulatory action because its brokers falsified their knowledge of industry standards or failed the brokerage exam, or even because they didn’t complete the course. The issue is that they completed the course too quickly.

As ridiculous as that sounds, a similar standard exists in the majority of U.S. schools and universities and is deeply embedded in our regulatory structure. A major competency-based program, Wisconsin’s UW Flex, initially had to launch without being eligible for federal financial aid because it allowed students to sign up for classes throughout the academic year and because it measured student progress in terms of mastery rather than credit hours. In fact, all competency-based programs that do have access to federal financial aid have it only through a temporary U.S. Department of Education exception. The current standards measure educational attainment by how long someone sits in class.

Even government efforts to move toward CBE programs in higher education have faced an uphill battle. The U.S. Department of Education is investigating whether Western Governors University’s (WGU) courses should be defined as “distance education” or “correspondence courses”—the difference may sound arcane, but it will determine whether WGU students can use federal financial aid dollars to pay for their education. This uncertainly prevents the growth of new CBE programs, stifles innovation in education, and entrenches a system that values time spent rather than lessons learned.

Mastery-based standards and CBE programs unlock huge value for students, employers, and society at large. Fast learners can get into the workforce more quickly, and slower learners aren’t forced to move ahead before they’re ready. These programs also tend to be more affordable to students and accessible to those who don’t have the flexibility to meet seat-time requirements. For these reasons, we view CBE as a disruptive innovation in education. Focusing on how much students have learned creates a workforce-ready graduate in a way that setting a four-year timer does not. We’ve seen this in the explosive growth of coding bootcamp enrollment and high job placement rates—employers are looking for workers who have critical competencies and skills.

We don’t recommend that universities take a Zenefits-type approach and flout existing regulations. But we do encourage regulators—from the U.S. Department of Education to the California Department of Insurance—to take a closer look at what they are incentivizing. It’s easy to measure time. It’s tougher to measure quality education and learning—but technology-enabled platforms are beginning to make it possible across a vast range of subject areas. Standards matter. We are hugely in favor of a tough-to-pass California insurance license exam. But what should be irrelevant is how many hours it takes to study for it.

(Disclosure: the Christensen Institute is a satisfied Zenefits client.)


  • Alana Dunagan
    Alana Dunagan