Much of the academic world still turns towards the American higher education system for leadership, with a few stellar institutions dominating annual rankings. There is a growing consensus, though, that the country took the wrong path a generation ago, and that its reputation for excellence cannot be sustained.

The brand name of American higher education relies heavily on a relatively small number of institutions that together enroll only a tiny fraction of all college students – “islands of excellence,” in the words of US Secretary of Education, Arne Duncan. Unlike their elite cousins, most American institutions of higher education languish in a system that is anything but excellent.

Here are but a few of the symptoms of a system that is heading for trouble. Firstly, it’s in financial disarray. Soaring debt and rising costs have pushed prices – at an average of $32,000 per year – far beyond the reach of average Americans. Secondly, it has performed poorly: many students graduate from college with grade-inflated degrees that are difficult to market, and many more fail to graduate at all. Half of graduates are unemployed or underemployed, while the dropout rate is 44%. Finally, public confidence in higher education is declining. The end result is a downward spiral in which institutions lose funding and then cut quality rather than jettisoning non-core activities, which leads to even poorer performance and further financial woes. For the majority of students, the system does not work very well.

Despite these shortcomings, a global homogenization of the world’s universities is under way that rewards organizations that simply imitate the American model. Many universities around the world are abandoning their local stakeholders in costly efforts to become more like highly ranked research universities. It is a strategy that draws resources away from the classroom to play in a global arena. Without disruption, the end result will be a global social divide between the few who can attend prestigious universities and those who receive inadequate instruction in inferior facilities. We need disruption.

Fortunately, innovators in Silicon Valley and elsewhere are already using technology to redefine the very idea of a university education. The not-for-profit Khan Academy offering classroom lectures in short, accessible videos, MIT’s decision to make its classroom content freely available, and last year’s explosion of Stanford-inspired Massive Open Online Courses (MOOCs) onto the higher education scene all pointed to a profound transformation in the nature of education.

A start-up culture has taken hold in higher education and it is leading to the kind of disruption that higher education has been waiting for. MOOCs started a global conversation about the nature and value of universities. Although I was one of the first to work with start-ups to roll out online courses, I was unprepared for the scale of the national and international interest in the phenomenon. MOOCs have been embraced by millions of new learners around the world. Publishers’ restrictive intellectual property regimes are crumbling, as the high costs of textbooks and journals clash with the open mentality of the movement. Hardly a day goes by without major media coverage of disruption in higher education.

In May, my university, Georgia Tech, announced a MOOC-based version of its popular MS in computer science. Its $7,000 tuition is a quarter of the normal cost and is expected to enroll upwards of 10,000 students. If successful, the degree will structurally alter the economics of graduate education.

Some critics have characterized the forces underlying these events as a (false) choice between traditional universities and an impersonal, corporate-sponsored, inferior approach to education. Many more have taken a more objective view of the developments.

Rather than forcing all institutions into a single mould, the so-called year of the MOOC has actually been an occasion for an accelerated pace of experimentation with what it means to be a university in the 21st century. New groups of learners are finding each other online and converging around courses and professors, bypassing the traditional institutions which had become accustomed to their gatekeeper role. Accreditors find themselves adrift in a world where students can assemble their own curricula and employers accept do-it-yourself credentials. The past few months alone have seen new start-ups that tap into artificial intelligence to create personalized education, use social networks to create communities of mentors, and data mine the billions of keystrokes and mouse clicks of new online students to discover better ways of teaching and learning. Higher education has suddenly begun to innovate at an amazing pace. This is just the beginning of a process that will encourage much-needed diversity, not conformity.

Author: Richard DeMillo is Distinguished Professor of Computing and Management, and Director of the Center for 21st Century Universities at Georgia Tech. He is a Lumina Foundation Fellow and is the author of Abelard to Apple: The Fate of American Colleges and Universities. He is also a member of the World Economic Forum’s Global Agenda Council on the Future of Universities. The Network of Global Agenda Council’s annual meeting, the Summit on the Global Agenda, is taking place in Abu Dhabi, 18-20 November. “Societies in Transformation” is one of its thematic pillars.

Image: A group of students celebrate after graduating from university REUTERS/Keith Bedford.