How the CEO of Chegg believes COVID-19 will change higher education for good

Ten years ago, Dan Rosensweig made a bet on higher education and the Internet. The whole college system, he decided, was ridiculously outdated. Universities would have to modernize and embrace online teaching sooner or later. The former COO of Yahoo and CEO of Guitar Hero took on the role of CEO and president of Chegg, an online tutoring and student services company. 

In 2010, he expected to see gradual growth in the sector. Never in his wildest dreams did he imagine the explosion and panic of the COVID-19 pandemic would be what triggered nearly every college in the country to rapidly embrace online education a decade later. Still, he was poised to help. Rosensweig now consults with state education systems facing unprecedented challenges, members of Congress who want to help forlorn students, and indebted former college students who find themselves among the tens of millions of newly unemployed Americans. 

Fortune met with Rosensweig in early April to discuss how the college system, both private and public, will permanently change because of the virus and economic crisis, how college students and those who are still in debt should address the system, and why COVID-19 might bring about more equality to the higher education landscape. 

The conversation below has been edited for brevity and clarity. 

Tell me about what drew you to Chegg. 

I realized that like every other institution, the college system is organized to protect the institution and not serve its primary constituents. Education was never designed for the student: It was too expensive; it was too complicated; it was too long. Teachers didn’t have to teach many hours. You aren’t even guaranteed to get into your classes. On top of that, costs have never lowered because the government will give you a loan to go to school no matter how much the cost. So they ended up creating this situation that had to collapse. Everything is about extracting money from the student, and nothing is about preparing the student for the world outside of education. 

Then we realized that the average college student isn’t what you might think. If a student graduates at all, it takes them six years on average—and they’re increasingly from single-family homes, from homes where everybody works. Many students come from situations where they’re choosing between eating and reading. They have to decide: If my job is at 9 a.m. and my class is at 9 a.m. which one do I do? 

What are the lasting implications of the COVID-19-necessitated pivot to online courses?

According to our data, 20% percent of students are already questioning whether or not they plan to go to school in the fall as a result of this pandemic, and students are 25% more likely to go to a school that has a strong online program now than they were just 90 days ago. Schools finally have to acknowledge that they’re ill-prepared for this, but they better get prepared because significant numbers of schools are going to go out of business if they don’t. 

We suddenly find ourselves in conversations with entire state school systems about whether or not Chegg can provide that necessary support because education is going to have to be on demand, meaning it can’t only be at a scheduled time. People’s lives don’t work that way anymore, particularly now when they might have lost their jobs and may have to start working part-time or in the gig economy. College also has to be way more affordable, and it has to be accessible. Colleges can’t just broadcast lectures, they have to be interactive. The professor needs to understand the technology and how to utilize it. Schools need to look at data—they need to see which students are engaged and how they’re engaged. And there have to be online support systems to enable people to learn. The way this ends positively is if major state universities and community colleges realize that students ought to be able to choose between in-person and online classes or a hybrid of both. Students should be allowed to binge their education. The number one reason other than money that people don’t get educated is the time that it takes. And the reason it takes so much time is because 95% of a college student’s time on campus is spent outside of the classroom. 

We binge-watch our favorite shows, right? Why can’t we binge chemistry or geometry?

But do you retain information as well if you binge it? Students are always told not to cram.

Different students learn differently. On Chegg, we allow you to watch a video if you want or we let you do a step-by-step solution if you want. We let you ask any question. 

You said you’ve been having conversations with state education systems that are unsure of what to do right now. What specific fears are they expressing?

Look, even nonprofit schools are businesses, and they have a motivation to generate more revenue than their costs. How could Stanford have a $27 billion endowment and cut the salaries of professors? That’s just crazy. What is that money for, if not for getting through times like this?

The thing is that these schools recognize that students are often ill-prepared for their college education. Schools have been allowing people in because they want the revenue, whether or not that student is prepared. You’re seeing now certain states getting rid of the ACT and SAT [requirements] during this crisis—that’s just an excuse to let more people in without a barrier because they want the revenue.

About 43% of students don’t graduate. Let me just do the economics and math for you: If a student comes to a school, fills a seat, and then next year doesn’t fill that seat, that’s lost revenue. That’s one of the reasons the cost of education keeps going up. [Chegg] is able to help schools keep retention higher and graduation rates higher because students are able to consume their education at whatever time they want with live help. We teach them better because they can depend on us, because we’re exceptionally affordable, and really comprehensive.

You mentioned that 20% of students are considering not going back to school next year. Is that specifically because of this current crisis?

Yes, that’s specifically because of the COVID-19 crisis. It is a large number, but, first of all, people are scared as all hell right now, and they don’t know what the fall looks like. The second thing is a lot of these people come from families that likely lost their jobs, and so they have to think about whether they can afford college. The third thing is that because of the pandemic, foreign students may not be able to come back. Foreigners represent over 10% of full-paying students in the country, so we’re going to see institutions in desperate need.

What will happen to those schools?

I think we’re going to see a whole lot of underfunded private schools merge or fold. I think you’re going to see a lot of them try to copy the model and go hybrid or go completely online like Southern New Hampshire University has done. I think you’re going to see an increased amount of curriculum aimed toward the workforce and not necessarily just for academics, because that’s where the funding is going to go. And whether that funding comes from corporations in your state or whether it comes from the government, it’s going to be about making people employable. 

What schools will fold?

The low-funded, middle-tier private schools are going to go away, and what will happen is that the better schools with the better brands will take all of their full-pay students. I see these schools taking on more students online. Yale just put one of its most popular programs online. 

Here’s the evolution of what I’ve witnessed over my last 10 years: Everybody said online sucks because the for-profits were bad actors. But here’s what we know is inevitable in the education system: We know the cost has to come down; we know the curriculum has to expand to be both academic and workforce-oriented; and we know that schools are going to have to use the Internet to become more accessible. So yes, just because for-profit schools didn’t do online education well doesn’t mean that we can’t get it right. Now, every school has been forced to go online because they’re not giving back the money they’ve collected this year. And what are they going to do if the fall is the same? They’re going to have to generate more undergraduate revenue in new ways without raising prices and without charging people to be on campus. I think the only way to do it is to expand the curriculum and the opportunity online. The business dynamics will force the smarter schools to do that, including the Ivy Leagues. Look, I would like America to be able to lower the cost, have on-demand, online, high-quality content relevant to an individual’s needs for education, and you cannot do that in person. 

I can imagine a scenario in which wealthy Americans go to college campuses and everyone else takes classes online, creating a new inequality.

There are more people of lower-income and of color going to college than ever before, but they’re not graduating. They’re not getting a degree, but they are getting debt and putting themselves into a worse situation. The problem continues to be the affordability, availability, and the relevance. That’s where online education can work to the advantage of getting rid of income inequality. 

Yes, there are always going to be people with more money who can buy a better experience. But I think you’re going to find in most cases that when you really make a commitment to going online and doing things right, it makes college more available, more accessible, more relevant, lower cost, and can serve people of every conceivable background. 

And why can’t we make it cheaper? I mean the content is written once and it’s used many times. Income inequality can be positively affected by the better institutions and better professors making themselves more accessible online at more hours of the day with good technology.

Did you get everything that you wanted from this third stimulus bill?

I believe in stimulus bill four or five, the government is probably going to have to forgive some loans. You’ve got $1.6 trillion in student debt with 44 million Americans in debt—40% of whom are already behind in their payments.

Tell me about the Education for Equity program.

We decided as a board to put our money where our mouth is. We’re here advocating on behalf of students, and student debt is their biggest crisis. 

The hopelessness of debt, you know, is you’ll never get out of, right? So we decided to put together a pool, without charging our shareholders, to create something that pays off all of our employees’ college debt over time. Lower-paid employees get $5,000 a year, and higher-paid employees get $3,000 a year. That’s more than they would pay on their own in a year, so we can help them pay down their principal. From there we learned that the benefit is actually taxable to our employees, which is ridiculous.

We realized that most larger companies have had the ability to pay for continuing education, and so we said: If we’re going to pay for them to get more education, why aren’t we willing to pay for the education they got that made them employable? We got involved with Ashton Kutcher to change the rules and hired a consultant that worked with the Obama administration, and we went and lobbied on the Hill to change those rules. Unfortunately, the only two things that got in the last stimulus were a two-month delay on student loans with no interest, and that corporations can pay up to $5,250 and not have the employee taxed. What I think we’ll get later on is a $10,000 forgiveness on student debt. 

You think $10,000 in student-loan forgiveness will be included in the fourth stimulus bill?

It was included in the third and got knocked out. I think everybody is going to realize how much is at stake when people won’t be able to get educated and won’t be able to pay back their debt. I think they’ll see that the best stimulus bill in the world is putting money back in young people’s pockets to buy things. 

So what should someone do if they’re in student debt right now?

The stimulus bill can’t delay payments for people who got their loans from private institutions. But the overwhelming majority of loans are backed by the government, and all of those people are eligible. Chegg has been working on a project called Chegg Money, which stems from the fact that we had asked college students what were the things they wish they had learned in college that they didn’t, and the number one thing was personal finance, so we’re building a site to answer those questions. How do I get unemployment? What do I do with my student loans? What am I eligible for and how do I sign up? We’re going to try to answer any question people in student debt may have. 

But what advice do you have for students in debt?

Here’s what I would say to anyone who asks me personally: Your primary goal should be to make sure you’re sheltered and fed and healthy, and any money you have after that should be used to try to mitigate any one of the loans you have. The most expensive loan you have should be paid off first because you want to get rid of anything with a high interest rate. That’s going to kill you more than anything else. You can now delay your student loan with no interest accrued for at least two months, and I do believe it’s going to be extended, so put those on your back burner if you have to. Get rid of every credit card expense that you possibly can, because credit card companies are not your friends. The only benefit of paying student-loan debt now is that you pay principal only and no interest, but you should only do that if you have the financial flexibility, and most students don’t.

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—WATCH: Why the banks were ready for the financial impact of coronavirus

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