‘We prioritize public benefits over profitability,’ Nexford University Founder says

Nexford University Founder & CEO Fadl Al Tarzi joins Yahoo Finance Live to discuss affordable education, non-traditional university models, profit, national accreditation, partnering with Microsoft and IBM, bridging the skills gap, and the outlook for higher education.

Video Transcript

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RACHELLE AKUFFO: Students are transitioning into the workforce with extremely high levels of debt. A temporary moratorium on the federal student payments is helping ease the burden of inflation for some post grads. Still, the high costs are now encouraging new degree seekers to explore non-traditional university models.

Here to discuss is Nexford University Founder and CEO Fadl Al Tarzi. Thank you for joining me in this morning, Fadl. So first, I want to talk about your national accreditation in the US that you received. What does this mean, when you think about the conversation that you're having with students and affordability in this space?

FADL AL TARZI: Thank you for having me. I mean, what we stand for really is being able to combine I think three things. Affordable education, with relevant skills and flexibility, so we can meet people where they are. So national accreditation just enables us to fulfill our mission more effectively, whether in the US or elsewhere.

RACHELLE AKUFFO: And I want to talk about the pricing model, because I know that Nexford adjusts fees depending on local affordability, the local economy and such. But on average, on your website, costs $5,040 to get an online MBA, or about $280 a month. Talk about the business model that allows you to keep costs and tuition that low.

FADL AL TARZI: Sure. The business model I would say is a, first, it's a mission-driven organization. And so we prioritize public benefit over profitability. But second is, it's a technology-enabled university, so what we've done from the very beginning, is try to strip out all of the bells and whistles that don't actually offer core value to learners. And obviously, strip out all of the physical infrastructure as well, because we operate 100% online.

But fundamentally, it boils down to us being able to offer a highly efficient operating model where we staff based on the skills required to accomplish a task, and we use technology where technology can be more effective than humans. That's really how the whole business model operates. And again, it's one that's mission-driven, so we aim to achieve profitability over a longer period in order to benefit public interest ahead of profitability.

RACHELLE AKUFFO: And obviously, you have things like economic downturns and inflation as well. How does that affect the sort of demand that you're seeing? What are some of the countries or the regions that are having the most demand for your services?

FADL AL TARZI: I mean, we see a huge amount of demand from emerging markets, including Africa, Southeast Asia, but also from groups across the US that are significantly underserved. And over the past decades, when you look at how much, past one or two decades, if you look at how much the average American tuition has increased compared to the increase in wages, there's just a very significant mismatch.

Tuition has increased maybe over tenfold, whereas wages haven't. So learners all across the world are really questioning more and more this concept of the return on investment on your education. And that's really what we try to deliver is an actual positive return on the education investment you're making.

If I'm going to invest $5,000 in a degree, the return I'm going to expect is going to be very different from someone else investing in $50,000. So again, the demand I would say is really quite global. Only difference is, in the US, doesn't have a supply, demand shortage, whereas places like Africa and Asia actually have a supply and demand shortage as a result of a huge increase in youth population not met by a proportionate increase in higher education capacity.

RACHELLE AKUFFO: And obviously, when it's an online university, there are some things that you don't get to have as much. Perhaps some in-person collaboration. A lot of businesses founded by a lot of founders who met at university. Talk about what your university does to really improve the collaboration on that and really support some of these remote learners.

FADL AL TARZI: Yeah, that's an interesting point. As you can imagine, one that comes up quite frequently. We view ourselves as an enabler of that sort of social interaction across our community. So when you think about the reality of the matter is, today, the mass majority of communications and interaction taking place is actually happening online.

So across social media and elsewhere. So the irony is, while people want communication and want interaction, they actually increasingly want that to happen online in itself, rather than having to go to a physical classroom to interact there. The interaction that happens on campuses is happening outside of the classrooms.

So if you were to think about it, we enable the same thing. So we enable our learners to get together, we co-host what we call [INAUDIBLE] socials, which are they can be dinners or just simple gatherings in a location. But really thinking about Nexford as a platform as opposed to a campus where people need to go to work. A platform that enables folks to get together, whether physically or online at the time of their choosing, at the place of their choosing. So just with a much larger degree of flexibility than a traditional campus.

RACHELLE AKUFFO: And so then this really speaks to the conversation of how some of these traditional brick and mortar universities are going to be able to keep sort of justifying the price, when you do have these hybrid and emerging models. And also in terms of meeting the gap, the skills gap that a lot of these companies have need for, that they don't seem to be getting met. How do you see Nexford positioning itself here?

FADL AL TARZI: We see ourselves following a purposeful design model, or essentially a backwards design model that specifically prioritizes learner outcomes over anything else. What that means practically speaking is, we start with the end in mind. So we analyze what employers are looking for, what are the skills, the tools, the technologies that they need people to know.

And then we backwards design our curriculum to actually deliver on those skills. So there's much less theory and a lot more skills. So it's really a balance between teaching people how to learn, so they develop these so-called soft skills that will benefit them for life, but also, having practical skills that they can apply right away.

And that's why what we offer is a competency-based model. And the simplest way to think about it is our philosophy is learner, employers care more about what you know how to do, as opposed to just what you know. So they want an applied knowledge, and that's really what we focus on.

RACHELLE AKUFFO: And it does seem to make you more nimble. I saw on the website you could start your courses on the first of any month. There's not really a semester starting point. So a lot of flexibility there as well. Nexford University Founder and CEO, Fadl Al Tarzi, thank you so much for joining me this morning.