Communications of the ACM

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Degrees, Distance, and Dollars

By Marina Krakovsky
Communications of the ACM, September 2010, Vol. 53 No. 9, Pages 18-19
10.1145/1810891.1810899
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Podcasting, high-speed internet, email, message boards—the technology for distance learning has made it less and less necessary for students to go to college the old-fashioned way. Yet, the demand for higher education continues to rise at double-digit rates, boosting the number of students taking one or more online courses in the U.S. in the fall of 2008 to 2.4 million, up from 1.6 million in 2002, according to the most recent survey by the Sloan Consortium, an organization supporting online education.

These numbers do not include the free non-credit courses available through iTunes U, which offers 250,000 free lectures from more than 600 schools, including Yale and Massachusetts Institute of Technology. Yet while elite schools are reaching the masses as a philanthropic gesture, they tend to avoid granting more degrees. "Your Stanfords and Columbias and NYUs and Boston Colleges of the world—they have terrific incentives not to grow," says Guilbert C. Hentschke, a professor at the University of Southern California's (USC's) Rossier School of Education. That's because exclusive schools are, by definition, highly selective—and admitting more students would dilute their brands.

A similar dynamic works in other traditional universities, as well. A school's U.S. News & World Report annual ranking depends in part on teacher salaries and per-student spending, so going online and reducing costs can tarnish a school's image. If public universities graduate many students who have taken online courses, it's only because the schools are by far the largest sector in American higher education, Hentschke says. State funding has kept most of them from going online in a substantial way, though severe budget cuts in recent months are prompting the University of California, Berkeley and Rutgers University, among others, to consider online instruction to help fill budget gaps.

Even so, the biggest growth in online schooling has been among for-profit universities, which includes obscure institutions and more familiar names like Kaplan, DeVry University, and the biggest gorilla of all, the University of Phoenix, which currently has 455,600 students, more than half of whom take at least some courses online. As public community colleges turn away tens of thousands of students each year, they create a huge opportunity for for-profits offering associate degrees and higher. The online schools lure students with Internet ads touting instant enrollment and 24/7 access. And whereas traditional universities use tuition from large lecture classes to cover losses from costlier or undersubscribed programs, for-profits can aim precisely where the money is, focusing on degrees in computer science (especially IT), business, health care, education, and other marketable fields.

Most of the students who flock to online programs are nontraditional; their time and locale is constrained by jobs, military service, and dependent children. "Online education is not only more convenient, but for some students it's the only option they've got," says Hentschke.

Education in computer science is a case in point. The National Science Foundation wants to increase the number of advanced placement CS teachers to 10,000 by 2015, which is five times today's number. Current undergraduates alone aren't likely to meet that demand, but by taking online classes after work, other candidates, such as math teachers, can branch out into teaching CS, suggests Mark Guzdial, a professor at George Institute of Technology and expert in computer science education. Similarly, if female managers in tech firms hit the glass ceiling in part by not finding time to learn the latest tools, as an Anita Borg Institute study suggests, then being able to take classes from home should help close the gender gap in upper management. "These two audiences are poorly served by face-to-face CS courses, but may be well served by distance learning," Guzdial says.

Online education in computer science varies in quality, but the range of offerings is impressive, covering everything from introductory programming and Microsoft certification to graduate-level courses in database theory, network security, and human-computer interaction.

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Convenience at a Price

You might expect online courses to also be cheaper, but that is rarely the case. Although online students save time, living expenses, and transportation costs, they typically pay at least as much in tuition as they would for a traditional education. The University of Phoenix, for example, charges the same for both formats, and according to the College Board the average sticker price at a for-profit university is about $14,000 for the 2009–2010 academic year.

Why the high price even online? Some education experts contend that good instruction is always labor-intensive. "I could set up an online course and have a thousand students and teach it myself, but what's the quality going to be?" says Donald Heller, who directs the Center for the Study of Higher Education at Pennsylvania State University. It is true that technology enables a small team to design a course and a lower-paid army of instructors to deliver it, grade papers, and interact with students, but that is not very different from what traditional colleges have been doing for decades, Heller argues. Diane Harley, a University of California, Berkeley anthropologist who directs the university's Higher Education in the Digital Age research project, agrees. "It's not cheap to produce high-quality online courses from soup to nuts," she says, quoting the oft-cited $1 million per state-of-the-art course such as those produced by Carnegie Mellon University's Open Learning Initiative.

Nonetheless, because schools can add students without erecting new buildings, a school's costs for each additional student can be quite small—low enough that a company called Straighterline profitably sells basics on algebra and English composition for just $99 per month, plus $39 per course. Although it doesn't grant degrees, Straighterline grades coursework and issues transcripts that students can turn into credits at the colleges where they are enrolled.

But this low-priced model remains the exception in online education, where for a host of reasons schools have not passed their savings on to students. In fact, sometimes an online degree costs more than its brick-and-mortar equivalent—a price premium not just for convenience, but for hassle-free admissions, suggests Vicky Phillips, founder and chief analyst of GetEducated.com, a watchdog group for online learning. "People research schools with online MBA programs and find out that Indiana University has a price that's one-third of the University of Phoenix's price, and then they find out they have to take the GRE and GMAT and 12 prerequisite courses [for Indiana University]. Welcome to the age of 'I'm not going to do it.'"

The ease of enrolling with little more than a credit card may bring to mind diploma mills and doubts about credibility with employers, but that is less a concern for many of the students who seek their education online. "If I grew up in southern rural Indiana, if I say, 'I have an MBA,' I'm going to blow people away. They don't care where that degree came from," says Phillips. And in a market where objective measures of educational quality are hard to come by, consumers look to price as a signal of quality.

High prices, oddly enough, also keep students enrolled. "If it's too cheap, the school risks losing its accreditation," says Eric Bettinger, associate professor of economics and education at Stanford University's Graduate School of Business. That's because low prices make it more tempting for students to drop out, and high drop-out rates are a red flag to regional accrediting bodies. Some experts believe that Pell Grants, military subsidies, and other federal student aid, all of which for-profit schools urge students to pursue, have also inflated the price of online schooling.

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The Future of Higher Ed

Despite their rapid growth, the for-profits are not giving traditional universities a run for their money just yet. Most students still prefer face-to-face contact and a well-recognized credential. Unlike print newspapers, whose survival the Internet has helped endanger, traditional colleges offer much more than information. The schools that are not secure have more impetus to go online, says GetEducated.com's Phillips, is "this vast wasteland of private mediocre schools." She cites schools like Michigan's Baker College, which has historically catered to the auto industry. With this local customer base eroding, Baker needed to extend its geographic reach to stay in business. But, as Phillips puts it, "the problem with the Internet is the whole world is your marketplace—and it's also your competition."

Specialization can make it easier to compete. By offering classes online, USC's School of Gerontology, for example, can attract a large number of students even to a niche program for managers of nursing homes. Similarly, Penn State Online offers a master's degree in homeland security. Indeed, whereas only about 33% of providers of bachelor's degree programs surveyed by the Sloan Consortium said that online education is critical to their school's long-term strategy, nearly two-thirds of master's, doctoral, and specialized programs said so. All that shows the Long Tail is at work in higher education, and, says Hentschke, that tail will only get longer. "The model of the 18- to 22-year-old going to a residential campus like USC and watching football games and that kind of stuff will be around for along time," he says, "but the demand for other models is coming from lots of other areas and demographics."

 Further Reading

Allen, E. and Seaman, J.
Learning on Demand: Online Education in the United States, 2009. Babson College and The Sloan Consortium, 2009.

Bramble, W.J. and Panda, S.K.
Economics of Distance and Online Learning: Theory, Practice, and Research. Routledge, New York, NY, 2008.

Carey, K.
College for $99 a month, Washington Monthly, September/October 2009.

Kumar, A.N.
The effect of using problem-solving software tutors on the self-confidence of female students, Proceedings of the Thirty-Ninth Special Interest Group on Computer Science Education, March 12–15, 2008, Portland, OR.

Tierney, W.G. and Hentschke, G.C.
New Players, Different Game: Understanding the Rise of For-profit Colleges and Universities. Johns Hopkins University Press, Baltimore, MD, 2007.

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The Digital Library is published by the Association for Computing Machinery. Copyright © 2010 ACM, Inc.

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