AI makes knowledge cheap: what universities still sell
In a paper posted to SSRN titled "The University after AI," Alfaisal University economics professor Jason Potts argues that universities never really sold knowledge — they sell matching and verification, and AI is the first information technology to hit both at once. Data cited in the piece puts the US college wage premium at about 87% in 2022 falling to about 78% in 2026, while a Harvard Business School and Burning Glass Institute study of 11,300 roles found that dropping degree requirements raised actual hiring of non-degree holders by only about 3.5%, with roughly 97,000 Americans gaining jobs that way in 2023. The article also covers responses such as revived oral exams and separating teaching from certification, and notes that China's publicly funded universities have more of a buffer even as a projected 12.7 million graduates in 2026 face a further diluted degree signal.
It turns the intuition that AI is eroding the degree signal into trackable data and an economic model, raising the question of how hiring and universities can rebuild credible verification.