What is the business model for online education? ? An und f?r sich

I should be clear: I believe that online education has only a very narrow ideal application (i.e., for literal shut-ins or for people stuck in Antarctica). There are more than enough classrooms and instructors to go around nearly everywhere in the US ? indeed, colleges are constantly building new satellite campuses to compete with each other. The only benefit is an economic one, namely to create economies of scale. Yet every single credible piece of evidence in higher education research strongly supports the (completely intuitive) idea that high-quality education simply cannot be ?scaled up.? Education is something that?s best carried out with some balance between small groups and one-on-one contact with an instructor.

Now it?s not as though most universities are following the ideal practice in any case. Large lecture classes are already essentially ?distance learning.? So just from a totally cynical standpoint, one could begin to discuss whether the economic gains are likely to be enough to make up for the loss in quality of an already low-quality model (i.e., the large lecture class that remains a staple of mainstream higher ed despite the overwhelming evidence against its efficacy).

Let?s begin by bracketing the question of whether the money saved is likely to be well-spent ? that?s pretty much a lost cause. But even if we start from the proposition that increasing revenue is an unalloyed good in itself, it?s still unclear how online education is supposed to do that. First, it requires significant outlays for both hardware and software ? and both are likely to undergo fast development (i.e., become obselete quickly). All that hardware and software requires more IT staff, and there?s going to be administrative overhead in terms of selecting which courses are going to be offered online and registering the new students (who will presumably have more unusual or difficult circumstances than the average student and will certainly demand ?flexibility? given that that?s one of the selling points of online ed).

The big savings sought are presumably in the area of direct teaching labor ? yet my experience also leads me to believe that a pedagogical relationship mediated entirely through online interactions is going to be more time-consuming than one that?s face-to-face, simply because students stress out easily and will do so even more in the absence of reassuring body language, etc. In order to maintain some plausible level of quality and ? importantly for accreditation reasons ? an acceptable completion rate, it will almost certainly be necessary to assign even more TAs to a given online section than to a similarly-sized real-life section.

And then we come to the lectures themselves. Let?s simplify the math and say we?re dealing with a 10-week term. That?s approximately 30 hours of footage for a 3-credit class. Presumably we aren?t going to get a high-quality performance on the first take of all 30 hours ? and there has to be a certain level of quality for people to tolerate paying tuition for all this. Multiple takes will add to the cost, as will the integration of special effects (Powerpoint slides or the kind of thing one would put on the board). And how often will they have to be updated? I suppose a course on The Odyssey could remain relatively unchanged for a long time, but that?s not the kind of thing that people are generally looking for with online ed ? they want things related to up-to-date job skills, and that means things are going to change frequently.

Further, let?s think about the audience here. I?m going to postulate that the number of people who genuinely cannot make it to a real-live classroom within a reasonable distance of their home is small. For most of the audience, I?m assuming that it?s a matter of convenience rather than real need ? and the question is how much quality they?re willing to sacrifice for convenience that in many cases is going to be a relatively marginal gain. The deciding factor here may well be prestige. It makes sense that someone would prefer to complete their BA through Northwestern rather than Podunk Satellite Campus or something. But what percentage of colleges really offer enough prestige to ?cover? the quality gap compared to simply rearranging one?s schedule sufficiently to pick up some credits at a local school?

This raises the question of competition. Flexible online offerings make education much more of a commodity. Currently a combination of unlimited federal support for student loans and a race to signal prestige has allowed higher education to escape from normal market forces in a lot of ways ? but the more strictly utilitarian the marketing is, the more inevitable it becomes that pricing competition will arise. What?s more, if I?m not really going to Northwestern and getting all the Northwestern amenities and really networking in real life with Northwestern students and faculty, then the content and delivery is going to have to be pretty damn good for me to be willing to pay Northwestern tuition ? not to mention the fact that the Northwestern brand itself becomes endangered if it becomes associated with a low-quality product and/or low-quality students. (I only choose Northwestern because I see a ton of ads on the L for their programs.) And as soon as any competitive pressures come into play, i.e., as soon as prestigious universities can?t simply name their own price, all the other cost factors become that much bigger of an issue.

Perhaps online education can really be a great revenue stream, but it?s hardly a slam dunk. I suspect that the only reason people have embraced it so enthusiastically is that higher ed administrators have bought into the common ideological notion that labor costs are always the problem ? so anything that promises to cut labor costs (even if implausibly, as I argue above) is a good thing. I also suspect that a big factor in the embrace of online education is the fact that it?s what donors are most interested in ? because donors always prefer capital-intensive products and because current trends in educational philanthropy are all focused on ways to cut labor costs (also known as ?running education like a business?). A final factor is the herd mentality and fatalism that is so prevalent in higher ed ? we must do online because online is the future and we will be left behind!

For a detached observer, though, it seems obvious that online higher education is no more inevitable than online medical treatment or online shoe repair. It also seems obvious that if it was genuinely obvious that online education was a good thing, it wouldn?t need to be constantly propagandized. The only way to make online education genuinely inevitable is to produce a self-fulfilling prophecy effect where everyone rushes to adopt online education lest others beat them to the punch.

Now as poorly as people have thought things through in terms of ?traditional? online education, the case is even worse for MOOCs. Now it is true that MOOCs increase ?access? to education in terms of content. Leaving aside the fact that essentially the whole of human knowledge is already available for free online, MOOCs are missing the really crucial factor of certification. I could start teaching college courses for free in my living room, but that wouldn?t really be increasing ?access? to higher education in the way that really counts ? not even if I printed off a certificate of completion for all successful graduates of Kotsko Kollege.

MOOCs ?work? because the institutions that do them are super-rich and are concerned with their public image. If MOOCs are going to be a vanity project for prestigious universities, I say more power to them ? and open up JSTOR to the general public while they?re at it. But if they are really going to ?change the face of education,? there needs to be some way of getting college credit for them. What employer is going to be enthusiastic about a potential employee who swears that they?ve watched a lot of videos online? Currently it seems like universities are creating a new form of pseudo-credit to certify completion of MOOCs, but if people are seriously going to be pursuing degrees, MOOCs will have to become more like ?traditional? online education, meaning that all the administrative overhead and all the questions surrounding tuition, prestige, etc., are going to come up.

Overall, I have a hard time seeing any outcome for the online trend other than reinforcing the competitive advantage of real-life prestigious colleges and thus perversely increasing their already robust pricing power. The net effect, it seems, will be to introduce yet another layer of ?fake college? in the hierarchy of higher ed, which may drag down the credibility of a lot of marginal institutions to the level of prestige currently enjoyed by the University of Phoenix. And of course it will create a lot of debt slaves out of all those hopeful people churning through the process. All this, with no real guarantee that the economic pay-off is forthcoming!

Imagine if we actually invested money in improving instruction rather than actively degrading it for the hope of greater efficiency! We might not wind up making more money or boosting economic growth or providing employers with free pre-trained workers ? but we?d at least educate people, right?

Source: https://itself.wordpress.com/2013/02/14/what-is-the-business-model-for-online-education/

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