The growing use of digital credentials is enabling graduates and job seekers to make their credentials more accessible and portable in a fast-changing labor market. Governments and educational institutions should be moving to support interoperable versions of these digital credentials to give learners more control, which will ultimately lead to platforms and services that are more valuable for users.
Digital credentials are precisely what they sound like—the digital equivalent of a paper document, such as a transcript or certificate, that signifies the completion of an educational process. In addition to more traditional forms of education, such as a college degree, digital credentials can also capture micro-credentials including individual college courses, digital badges, or the mastery of specific skills and work-based learning competencies. Although adoption is highly uneven, many educational institutions—including colleges, technical and vocational programs, massive open online course platforms, and industry training programs—have adopted digital credentials in some form.
Today, digital credentials require attention because of a surge in interest from employers in skills-based hiring and the growing use of algorithms in the education and labor markets. Alone, digital credentials would simply be a more convenient format than a piece of paper by enabling easier verification by employers. Together with these two parallel shifts, digital credentials play a more fundamental role in the ongoing evolution of education and labor.
First, consider the trend toward shorter, skills-based credentials, and a simultaneous increase in skills-based hiring. The number of certificates shorter than a college degree (e.g., academic certificates and industry credentials) that are granted per year has increased by 80% in the past two decades. They now total over one million annually. A 2016 Department of Education survey found that 27% of adults have a non-degree certificate or credential. While the economic return on these credentials varies, a study from Kentucky found that certificate acquisition was associated with a 14% increase in earnings. Empirical studies of California and Virginia community colleges showed that earning several short (‘stackable’) credentials can improve wages and employment outcomes. And hiring has changed, too. In recent years, far fewer job postings have explicitly required a bachelor’s degree.
Second, the education and labor markets have seen the rise of major digital platforms and the use of algorithms. Digital credentialing, as with all digitalization, will further enable this automation. Whenever information is systematically standardized in a digital format, algorithmic processes become more common. Examples include targeted job advertisements on platforms like LinkedIn and more precise filtering of candidates through applicant tracking systems, which are now used by most large employers. Critically, these algorithmic processes depend on specific data about individuals’ educational and career paths. As digital credentials expand, so, too, will these algorithmic applications.
The optimistic case for this future is that candidates will be evaluated on what they know and can do, enabling them to find jobs that are a better fit. This may be an improvement over less precise signals, such as having attended a certain university, and could provide more accessible educational paths to economic mobility (aside from expensive and exclusive university degrees). Moreover, learners might be able to combine different credential programs to build specific skill sets that qualify them for bespoke career paths without extra coursework to meet traditional credit requirements.
Employers would benefit because digital credentials are easier and faster to verify than paper credentials. Further, they could use applicant tracking systems to select candidates based on skills demonstrated in digital credentials, which are more specific qualifications compared to a college degree.
Of course, there are serious potential downsides as well. As documented in prior Brookings research, many of the algorithms used for hiring are systemically biased against, for example, racial minorities and people with disabilities. Further, an education system and labor market algorithmically focused on specific skills also insinuates a systemic devaluation of learning about the broader societal context and analytical skills that come from the humanities.
The positive outcomes of competency-based education and hiring could be enhanced by digital credentials, but only under certain circumstances. Many of the potential benefits to learners and job applicants depend on whether they control their own digital credentials. There is a growing ecosystem of websites and apps that run on digital credential data. If learners fully control their digital credentials, they can easily transfer their data from one platform to another based on which suits them best. This choice increases competition between the platforms and should lead to better services than if learners were locked into specific digital services. Generally, the easier it is for learners to move their digital credentials between platforms—including online course platforms and job search websites—the better these services will be for learners.
Looking closely at digital credentials platforms—e.g., Accredible, Pearson’s Credly, Instructure’s Badgr, and Sertifier, among others—explains why learner control is critical. The leading players are catering to the needs of educational institutions, which are not always the same needs as learners. Their sales pitch is clearly aimed at convincing educational intuitions that their platforms can ease the process of designing, issuing, and managing credentials. That focus is apparent from these platforms’ public case studies, nearly all of which are framed as meeting the needs of an educational institution. New features tell the same story. For example, Accredible’s newest flagship feature enables paid targeted advertisements, powered by AI, to help institutions increase enrollment in specific courses or programs.
If learners have control over their digital credentials, they can freely choose between online services creating competition for their patronage. For example, digital wallets are an emerging family of online tools and smartphone applications that provide a user-interface for individuals to store, select, and share their qualifications (in the form of digital credentials) with prospective employers or educational institutions (note: digital wallets are not for holding currency, as the name might imply). If learners can easily move their digital credential data across platforms, providers of digital wallets would have to compete by creating better services for learners, for instance by offering better customizable privacy features.
Learner control over digital credentials would also create more competition between e-learning platforms that recommend further educational paths, such as Coursera, Udemy, Udacity, and EdX. In the multi-billion-dollar industry of online courses, these firms will compete over how well their algorithms suggest compelling course pathways to their users. Further, these companies may even use the data to design better educational offerings, much like how Netflix has taken to producing and not just hosting movies and TV shows.
Similarly, job search websites, including LinkedIn, Indeed, and ZipRecruiter, build algorithms to suggest open jobs to their users. A savvy job candidate may want to try several different websites, to see which one suggests the most appealing and pertinent job postings. This comparison shopping will be far easier for the job seeker if they can instantly move their digital credentials data between the different platforms.
Learner control of digital credentials requires two underlying conditions: data interoperability and functional interoperability.
First, the data that underlies the digital credential must be in a consistent format, making it interoperable. Many companies and issuers of digital credentials, although not all, have chosen to comply with the World Wide Web Consortium’s (W3C) Verifiable Credentials Data Model, which enables this interoperability. Most major digital credential platforms use a data format, called the Open Badges specification, which is moving toward this open and interoperable data standard. Broadly speaking, the adoption of interoperable data standards in the field is encouraging. However, while this technical interoperability is necessary for easy movement of digital credentials, it is not sufficient on its own.
In addition to data interoperability, digital credentials must also be functionally interoperable, meaning the learner can easily move the digital credentials between different platforms and services. The key idea is that even if digital credentials have interoperable data formats, if the digital services and platforms make it very difficult to transfer that data, the benefits of interoperability will be lost.
In the best technology markets, companies are actively cooperative in making their data and systems interoperable. A classic example of cooperative interoperability is the Bluetooth short-range wireless standard. By conforming to consistent Bluetooth standards, a smartphone manufacturer knows that there are many other products (such as headphones or speakers) that can be used with that smartphone, increasing the value of the smartphone to consumers.
However, this is not always the case. Many companies, such as online platforms as well as medical records vendors, have actively resisted functional interoperability. While digital credentials platforms have embraced technical interoperability, it is not clear if they will make it easy for learners to take their data and go elsewhere. As with other platforms, especially social media, the business incentives are to hold learner data close, thereby encouraging learners to stay within an ecosystem of services controlled by the digital credentialing platform. Conversely, when functional interoperability thrives, it helps prevent market concentration, easing the creation of small business with innovative services.
Governments and educational institutions can consider an assortment of interventions to nudge the digital credentials market toward technical and functional interoperability for everyday learners. In choosing digital credentialing platforms, educational institutions wield tremendous market power and should be cognizant of this influence on behalf of learners. Rather than simply chasing features that help them grow enrollment, states and educational institutions should also require that the digital credential providers that they choose ensure both technical and functional interoperability. The U.S. Department of Education, along with state agencies, could also issue guidance that encourages the adoption of interoperable digital credentials, especially by public four-year universities and two-year colleges. This would not be entirely unprecedented, as previous U.S. Department of Education programs that funded short-term job training have required them to result in interoperable digital credentials.
Governments might also consider building or funding the technology that makes this possible. The European Union’s Europass is a free set of tools for learners and workers, which includes a digital credentials format, as well as an app with a digital wallet, that works across the 27 member nations. This presents one model of government support of interoperability, although governments could also provide grant funding for existing efforts, such as the Digital Credentials Consortium (DCC). Government funding might also support further creation of these technical standards and provide technical support for educational institutions to adopt these standards.
In the United States, there is a promising voluntary effort to get digital credential platforms to adopt fully interoperable credentials. However, if that does not persuade the industry, governments might also consider imposing interoperability. If digital credential providers make it difficult to transfer digital credentials between services, Congress could mandate that digital credential platforms enable users to move their data between services with relative ease. This approach has been used by the United Kingdom and the European Union in order to open financial digital services, where banks had long prevented users from easily moving their data.
Digital credentials may play an important role in the emerging skills-based education and labor market. At their best, they can provide a more comprehensive and easily accessible record of the skills and knowledge that learners accrue over a lifetime, particularly for the many Americans without a college degree, or those who pursued shorter-term credentials, served in the military, or learned skills on-the-job. While there are other daunting steps between now and then—such as standardizing the descriptive language of skills—it is clear that a brighter future is possible when digital credentials are fully interoperable and enable learner control. Policymakers and educational institutions should take heed and look to encourage that interoperability as the digital credential market matures.
