Earlier quoted context omitted.
They may if they face competition form Lambda School style ISAs (not necessarily just ISAs generally, but ones that are actually good for the student). As a bonus this would make universities better at education since the incentives would be aligned with the students. It would be helped though if the easily available government loans were not available, though with the generally bad politics from both sides on this,…
You're assuming a lot of faith in market forces. In reality, the incentives should already be aligned with student interest: All of the information for it is already available. Retention & graduation rates are public knowledge, and you can easily find out if a school has job placement (and their rates) or merely a "career services" area that will help you write a resume and point you at some other resources. The fact…
If student failure to succeed in the market led to university failure we'd see a lot different behavior from universities.
I don't think the universities are currently selling education, they're selling prestige and network access via credentials with some education on the side at inflated rates from easy access to government non-defaultable loans.
This leads to weird behavior like all majors being the same cost and the same length along with lots of people employed by the university that don't know anything (career services where I went to school was a good example of this). There's also a lot of spending on facilities to lure students that is unrelated to education or success afterwards (since they have to compete with other universities for all of the free government loan money).
If this free money was not available there would be a check on people getting loans for majors that are not economically viable. If school's offered ISAs then the school's would provide the check. As it is currently, the student carries the burden of evaluating all of this - it's not a surprise a lot of people fail this at 16.
This incentive alignment issue is why people come out of universities and get destroyed by technical interviews, why a large amount of CS majors can't solve fizzbuzz and why people pay a lot for ultimately worthless degrees. I don't disagree with the cultural problems you describe, but I think if there's an ISA option vs. 100k in debt option more people will take the ISA option if the education actually works (and it will have to for ISA providers to survive).
There's a way to fix the systemic incentive issues and place the burden of evaluating economic viability on systems better able to handle it. This would fix a lot of the problems, but it's hard to change from within the system with the current broken incentive structure. That's why I'm excited about the Lambda School approach - I don't think universities can dig themselves out of this and I don't think the necessary changes to government loans is politically viable.
This is also why I think 'free college' is bad policy, it further prevents Lambda School like ISA approaches and cements in the current broken incentive structure.