Lean, Global, and Tuition-Free: The University of the People Model

Alex Usher: Hi there. I'm Alex Usher, and this is the World of Higher Education Podcast.
One of the most consistent problems in higher education, one that bedevils systems around the globe, is that of cost containment. Costs in higher education grow inexorably, both due to the Baumol effect, that is, services in labor intensive industries like education tend to have costs that grow faster than inflation. And the Bowen Effect, which states that because quality and education is unmeasurable and expenditures are often mistaken for quality, there's a permanent ratchet effect on university costs limited only by the amount of resources a university can amass. Education's expensive and getting ever more so.
But what if I told you there was a university out there that had the cost problem licked? It's a university based in the United States and accredited by the very respected Western Association of Schools and Colleges. It delivers education the world over with 150,000 students in more than 200 countries and territories. And it educates all these students tuition free for a grand total of about $150 US per year per student. Sound miraculous? Well, it is in a way, and it's not easily replicable, but it is real and it's worth learning from. It's called the University of the People, an online institution founded in 2009 and based in California.
Today, my guest is the University of the People's Founder and President Shai Reshef. He's received global recognition for his work at University of the People. He's an Ashoka fellow. He's one of Fast Company's Most Creative in Business, named the Top Global Thinker by Foreign Policy Magazine, and most impressively, he was winner of the 2023 Yidan Prize for Educational Development, which is probably the highest form of global recognition in the field of education.
In our chat today, Shai and I cover the basic economics of running a mega online university. We answer the questions, how do you serve students across 20 plus time zones? How does a university without government support stay tuition free? And most importantly, how — even if most of your staff are volunteer — are you able to manage things like academic governance and quality assurance on a shoestring?
And as I said, not everything Shai is gonna tell us today is gonna be transferrable to other institutions, but his message should have at least some resonance and the University of the People's experiences can lead to change elsewhere. But enough for me. Let's listen to Shai.
Okay. So, Shai, let's start with the basics. For listeners who might not be familiar, what is the University of the People? Who does it serve? How does that make it different from a traditional university?
Shai Reshef: So University of the People is the first nonprofit tuition free, accredited American online university that is there to open the gates of higher education for anyone in the world who is qualified but has no other way to attend a higher education, either because it's too expensive, like the situation in the US for example, or because they live in countries where there aren't enough universities, and Africa would be a great example. Or they're deprived for political reasons, refugees, cultural slash political reasons, women in Afghanistan, or anyone else for any personal reasons, and we use the internet to bring higher education to them.
Alex Usher: And so how big is the institution? How many students do you have? Where are they from? And uh, what's the breadth of programming that you offer?
Shai Reshef: So we started in 2009. By now, we have 153,000 students coming from 209 countries. So pretty much from every country, almost from every country in the world. And the students that we have are um, people who either did not go to high school. Sorry, did go to high school but did not attend university. Did not go to university afterwards.
So people start working and then realize that they need to work or, people from any other background. Because our students tend to be older, they're not 18 years old. They come to us in order to have a better future. So we only offer the degrees that are likely to help them find a job, business administration, computer science and health science, undergraduate degrees, and graduate degrees in um, education, information technology, and business meaning MBA.
Alex Usher: And so how much, I mean, that's huge, right? So this must cost an awful lot of money and you're not you know, you're not a public university in the sense that you're government funded, and you're not charging tuition. How does, how, what does it cost? How do you make ends meet?
Shai Reshef: Well, first of all, we are nonprofit, so we are not making money. We are making maybe some surplus but not money, and we are tuition free. Which means that the students coming to us, they study for free, but when they get to the exam, we expect them to pay 140 US dollars per each end of course, undergraduate degree. For those who cannot afford even that, some of our students, especially from developing countries, they cannot afford even $140 per exam, we give them scholarships as much as we can. So about half of our students pay, the other half do not pay. However, we have a very lean operation, so, our ability to be sustainable and still be tuition free is because we lean heavily on technology. Because we offer only few degrees that are relevant for the job market. Because we operate for many parts of the world where we can achieve quality at the reduction of price. We don't have buildings, obviously, we are online, but also very important, we lean on volunteers. I'm a volunteer. The deans are volunteers, the professors are the faculty are coming to us as volunteers as well. Actually, we have over 40,000 volunteers. And these are people who actually the university? Yeah.
Alex Usher: But uh, I mean, so, surely $140 an exam on its own, that's not enough to run the institution, right? You have other sources of, of income, I imagine.
Shai Reshef: Look, our budget, we run a university with $150,000 on a budget of 20 million US dollars. Two third of this amount is coming from the student fees. The other one third is coming from donations. And donations are either a wealthy individuals foundation such as the Gates Foundation, Ford Foundation, Ulet Foundation.
A little bit we get from government, such as the German government. But uh, yeah, but 7 million is donations. 13, 14 million is coming from uh, the student fees. But again, you know, we operate on the fraction of of any other university, fraction amount of any other university our size. So, yeah.
Alex Usher: No I, I'm just looking at it and 20 million to teach 150,000 students, that's uh, that's $120 a student, basically $130 a student. That's very, very low. And one of the ways you do that, I understand is you say you have, lots and lots of volunteers. How do you get people to teach for free?
Shai Reshef: Well, it's a good question because you know, in my previous life before I started the university, I started and ran the first uh, online university in Europe. And so I pretty much knew how online university is supposed to run. And when I decided to start University of the People and to make it tuition free, the main difference, the number one difference, there were others, but the main one was to rely on volunteers rather than uh, pay our employees and our faculty. And I was shocked there because I didn't know how well it would work. And I announced the university in January, 2009 in a conference in Munich. The next day, the New York Times wrote about a page about it, and the following day I already had hundreds of professors writing me, "We love the idea, we want to help." So, the people are coming to us and they're coming to us because I'm not the only one to believe that higher education should be a basic right for all, and money should not be a reason not to attend higher education. And I came with the idea of higher education to be tuition free. And a lot of people believe that this is the right thing to do and they want to help and they coming to us to help us. So I'm not attracting them. They coming to us. So, yeah.
Alex Usher: And what kind of support services are you able to offer students, right? I mean, this is uh, student services, academic support. How can you do that within a tuition free model? Are there some things you're still able to do?
Shai Reshef: Oh, we are able to do a lot. So first of all all the courses are being written in advance by subject matter expert. Go through a peer review like any other academic program. And then they're being taught to uh, in the classes now, students who sign up are being placed in a class of 20 to 30 students from 20 to 30 different countries. By the way, every time they take a class, 20 to 30 different countries,
Alex Usher: Right.
Shai Reshef: uh, new students, and, together with them, the each course take takes eight weeks and with them they go to the first day of the week and they find the lecture notes of the week, the reading assignment, the homework assignment, and the discussion question. So the, the core of our pedagogy is the students discuss the topic of the week among themself all week long. However, in every class there is, every day a professor who is reading and moderating the discussion. Every student has a program advisor that follow them from the day they sign up until they graduate. So there is a lot of support when students, you know, when we realize that the students don't show up in the class, they get a phone call. Where are you? Well, usually email, not a phone call. Uh, The professors are there Uh, to help, even though they're volunteers, they spend 10 to 15 hours a week per course to help the students with everything they need. So it's a full service university. I don't think that uh, the difference between us and traditional university is all the nice to have that we don't have. So we don't have football team, we don't have a gym, we don't have psychological help, which is important, but we can't afford it. But all the core of our, of the academics is there and with a high quality.
Alex Usher: We're gonna take a short break. We'll be right back.
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Alex Usher: And we're back. Shai, I just wanna know, look the, the, one of the things that you must have to deal with when you've got students from all over the, the, the world, and you've got you, you are operating in so many jurisdictions. What does that do to your accreditation strategy? Like, it seems to me that accreditation is one of those things that's very bureaucratic, takes a lot of time. Do you do any jurisdiction shopping? Where are your degrees accredited? And is that one of the reasons that people seek them?
Shai Reshef: Well, we are originally in 2014, we were accredited by the DAC, which is a national accreditation agency, and a couple of weeks ago we were accredited by, WASC, Western Accreditation Commission and which is one of the regional accreditations, one of the six regional accreditations bodies in the US. We are now at the same group with the Stanford, Berkeley, UCLA.
You know, some people would argue that they need to work harder to meet our standards, but you know, we are still in the same bucket. And um, we reach this accreditation. Look, we have people from around the world, but people admire American education. That's why they're coming to us. In some, very few, but in some countries we are not recognized locally because we are online. But people, but people, thousands of them study with us because they appreciate American uh, degree, and because the local employers appreciate our standard of of education. Now, was it easy? No, it was hard. It was a lot of work. We need to convince them that what we do is similar in term of the outcome to traditional universities, both in term of accepting the students, giving them what they need in order to succeed, and then following their learning outcome. So, we are doing everything that they expect us to do and apparently we met our, their standards and therefore we became a accredited.
Alex Usher: You know, it just occurred to me, you know, as I was, as I was thinking about this that, that maybe this is your secret sauce. This is the kind of stuff that costs millions of dollars at many universities. And so if you're able to do it without complex quality assurance structures and academic senates and, and registrar's offices and all those kinds of things, if you're able to do it with the leanest of those, isn't that something that other institutions could learn from?
Shai Reshef: Yeah, they can learn. Do they want to learn? That's a different question because I think that one of the challenges that we pose to other universities. Look when you charge 30 or $50,000 a year, and here is a university that charge 1400 a year. If our students pay in full and study full time, that's how much it cost them 1,400 US dollars a year.
And they look at it and they simply say, no way. And turn around. They simply don't believe that it's real. So it's, you know, it is uh, it's challenging for them. Our, I think that our secret is that we build a new institution from scratch and therefore we could choose what we do and what we don't do.
Now, I'll give you one example, which I think tells it all. When you look at university our size, probably their admission office will have thousands of people reading all the resume of the students and their essays, and look at social media to see if they, they're the real students and blah, blah, blah, and checking them as thorough as as they can.
We do it differently. We tell any students with high school diploma simply come to us, take two courses. If you pass these two courses, you meet our standards, you get credit for these courses, you become degree seeking students and continue with us. If you can't pass these two courses, you simply cannot continue with us.
Now when you think about it, not only that, it's much better system as much as I'm concerned, because we actually see that they can meet our standards. It's not theoretically what the, how well the coach prepare them for the application, but how well they do in the class. But second, it saves us tons, a ton of money because we don't need all this operation of admission. Just come in and show us that you're good. Well, it's operating differently and in much more efficient way, and I think that's our secret. It's not that secret, but.
Alex Usher: So listen, you've scaled up incredibly quickly, you know, 15 years to get to 150,000 students, 15 years to be embedded in, I guess, every country in the world. What were the biggest hurdles in, in that scaling process? Were there places where you stumbled and said, wow, we, I'm not sure we can grow this quickly? Or were, was it pretty smooth?
Shai Reshef: Well. First of all, if you ask me, my answer to the question would be, answering a different question, which is, why aren't you bigger than what you are? Because simply because we are online and you know, there are no limits of seats in online. Nobody needs to stand in the back of the lecture hall so we can double ourself. Why don't we double ourself? I think that, so I'll start by answering that question by saying that the main challenge that we have is that most people in the world haven't heard about us. And I myself, when I go anywhere and people ask me what you do, and they say, university of the people, I'm shocked if anyone knows what University of the people is.
Most people in the world haven't heard about us and definitely not the refugees and the people were in around the world who need us most. And the second challenge that goes with it is that when these people approach us, we don't have enough resources to accommodate them all. We have 4,300 Afghan women who are hiding and studying with us in Afghanistan. Well, we have 20,000 applicants there. We cannot accommodate them, so we accommodate 4,300, which is great, but we can't accommodate all of them. To answer your original question about the difficulties that we did encounter, look, there are some countries that do not accept online. And we are simply stand out there and waiting for them to be much more open to the 21st century technology and means of self teaching and accept us. So I think that this is the main challenge in many parts of the world.
Alex Usher: In lots of traditional universities, success is measured through things like research income, rankings. How do you measure success at University of the People?
Shai Reshef: Well, the first thing is how many people I gave them the opportunity for higher education. And these are people with no other alternative to what we are. And you know, I was once interviewed by someone who asked me, he was from Ivy League uh, students journal, and he said well, you're setting up competition to my institution. And what I said is that anyone that wants to go to your institution should do so, but we are there for those who have no other alternatives. So the more people that we open the gates for, that's one measure of of success. The second one, how many of them graduate and what they do when they graduate. And we have graduates who work with Amazon and, and Google and Apple and IBM and the World Bank. This is sign of success. Now, I think that it's between how many people we gave them the opportunity and what our graduates do uh, we are there in order to help them have a better life. And that's how we measure ourself. Do they have a better life while studying with us?
Uh, we don't participate in any ranking competition calling this way. We are not you know, many universities compete on how expensive they are. The more expensive, supposedly, the better they are. That's a weird industry to measure ourselves, yourself this way, but uh, it is what it is and we are proud of being different and changing the model of higher education and make it accessible, affordable, and quality.
Alex Usher: So a few days ago in the New York Times uh, you may have seen an article by the Russian writer, Masha Gessen. And they uh, talking about the attacks on higher education in the United States, they suggested that the correct model right now was the University of the People in Poland, which was a communist era free university. And that institutions in the US would be better off simply teaching for free, getting as many students together as they can. And as I was preparing for this interview, it occurred to me, wait a minute, that's the University of the People. I'm curious what you think about that argument. I mean, is, I mean, there's, there's a lot of problems in US higher education even before Trump came, are more approaches like university of the people the solution?
Shai Reshef: So to start with, I read, I read this very article and so, believe it or not, we just sent them an an email today saying the same thing. It's like you're talking about University of the People. I assume that they don't know about us and that's otherwise, otherwise they would talk about University of the People.
I think that we are the future. I believe that every person should have the right for higher education. I think that universities should open their gates way wider than they do right now because the more people are being educated, the better country is. People have a better future, the country has a better economy. People are well-rounded individual with critical thinking. That's what the world need. So I believe that higher education should be open to all. Now, you know, the American system created amazing universities. You look at the top universities of the world are US universities. So I'm not against them. I'm against not having the opportunity for the rest of the people. And I think that what we show is that higher education can be accessible and affordable to all. And we are, that's one of the reasons that we grow so fast to show that this model exists and this model is sustainable with the belief that others will follow this model in the US, and you know, there are this, the challenge of higher education for various reasons exist almost everywhere in the world. And everyone can uh, look at our model and replicate it or ask us to help them replicate it, which we will be gladly do. So, yeah.
Alex Usher: So you've been around for I think, just a little over 15 years. So if I ask you the question, what does the University of the People look like in 2040? Will you be twice as big again? Will you be even bigger than that? Will you offer different kinds of degrees? How do you see the next decade and a half playing out for you?
Shai Reshef: You know, in 2010 following the earthquake in Haiti, we announced that we are going to take 250 Haitian and uh, teach them for free. I didn't realize that following the earthquake, they live in tents. They don't have electricity, they don't have internet, et cetera. Anyway, but I came them, when they started, two months later, the first group of, of 15 a 16 students started studying, I went there to welcome them. And I met a lot of students. And they asked me the question of how, what is the future of you people? And I said then, and I think that the answer is good now as well. We'll continue to grow to serve more and more students until one day we'll wake up and realize that all the students in the world are being served. At that point probably we'll go back to sleep and wake up with another dream. But, until then, we have a long way to go. So we will continue growing, we will continue serving other people, and more and more people and hopefully others will replicate what we do. So we don't need to educate the entire world.
Alex Usher: Shai Reshef, thank you so much for being with us today.
Shai Reshef: Thank you very much for this interview. It was fascinating. Thank you.
Alex Usher: And it just remains for me to thank our excellent producers, Tiffany MacLennan, Sam Pufek, and you, our viewers, listeners, and readers for joining us. If you have any questions about this podcast or suggestions for future episodes, please don't hesitate to get in touch at podcast@higheredstrategy.com. Quick request from us. Go to our YouTube page, subscribe to Higher Education's Strategy Associates page. Never miss an episode of the World of Higher Education.
Join us next week when our, my guests will be John Stackhouse. He's the Senior Vice President at the World Bank in Canada, and former editor in Chief of the Globe Mail in Toronto. He'll be with me to talk about a new post-secondary education program that RBC is undertaking, along with the Business Higher Education Roundtable, and us at Higher Education Strategy Associates. I'll be asking in particular about the future of Canadian higher education and how better links can be forged between the university and private sectors.
See you then.