Online Learning and Higher Ed’s Future

The recent announcement of the merger of 2U, a publicly traded for-profit online program management company, and edX, a nonprofit online course provider started by Harvard and MIT, caused many in higher education to ponder, “What next?” One reason for wondering was the blurring of lines between for-profit and nonprofit. Another was the realization that 2U acquired the brand, about 3,500 digital courses, and 50 million learners from the nonprofit institution. Still, another reason was the competition of this new entity with Coursera, a major online course provider with a direct-to-consumer business consisting of 80 million learners and partnerships with over 200 universities. The Harvard-MIT nonprofit will retain Open edX and focus on reimaging how technology will support the future of lifelong learning.

According to an article in Harvard Business Review, alternative education providers have leveraged the progress in hardware, software, and communications technologies, their valuations have risen dramatically, and they have the funds for more acquisitions and growth. These developments make it possible not only for these and similar companies to expand in educational technology but also for nonprofit institutions to be even more innovative. They will be able to develop their own online platforms further for use in a totally online mode or in a hybrid mode; to partner with other nonprofit institutions to develop joint offerings; or to partner with a for-profit technology company with greater resources and reach.

There is great potential for online education in advancing the preparation and credentialing of people for economic mobility. We learned a great deal in the rapid shift to remote teaching and learning in 2020. However, the arguments in its favor should be convenience and accessibility, not tuition costs, poor return on investment, and student debt at traditional colleges and universities as some venture groups argue. See “The Depth Report – Online Education – Coursera (COUR) and 2U (TWOU)“.

The Price Tag
It is true that tuition and fees have increased the price tag for higher education beyond the reach of many families. Nevertheless, one must examine the increase in costs, and not simply follow the common line that the causes are climbing walls and administrative bloat. Yes, there are climbing walls and lazy rivers, but they are not as common as anecdotes would suggest. A bigger issue is deferred maintenance, which is a major, largely unaddressed capital budget challenge.

As for the increase in administrative costs, much of it can be explained by compliance requirements of state and government regulations; competition for students and the need for admissions recruiters; and the desire for grants and gifts to support academic programs and student scholarships. Unfortunately, many institutions reduced the number of full-time faculty to save money, thus decreasing the percentage of money spent on instruction.

Return on Investment
The arguments around return on investment are not persuasive analytically. The federal College Scorecard reports these data as submitted by colleges without considering the balance of majors chosen by students. If a large percentage of students are majoring in nursing or accounting, the average starting salary will be higher than if English and history are the most popular majors. Also, the data shown are for the second year after graduation. More helpful data would show the averages after five and ten years. The New York Times has a useful article on return on investment.

While it is true that employment prospects for college graduates were dim in 2020, as they were in 2008, due to economic turmoil, the long-term results show that college graduates experience less unemployment, better health outcomes, and more active community involvement. The benefits of a college education include flexibility and resilience.

Student Loan Debt
Yes, there is some $1.7 trillion in federal student loan debt, but it is important to know, who took those loans? According to a recent Brookings report, the majority of student loan debt is held in households that have higher earnings and a graduate degree. For example, 40 percent of households (those with incomes above $74,000) owe almost 60 percent of student loan debt. These borrowers make almost three-quarters of student loan payments. The lowest-income 40 percent of households hold just under 20 percent of student loans and make only 10 percent of the payments.

Brookings attributes this to two factors. First, people from higher-income households are more likely to go to college. Second, people with a college or graduate degree earn substantially more in the labor market than those who never went to college.

In 2019, households with graduate degrees owed 56 percent of the outstanding education debt, and the 3 percent of adults with a professional or doctorate degree held 20 percent of student loans. The median income in these households was twice as high as the overall median — $106,000 versus $47,000 in 2019.

Here is the breakdown of debt by degree level as reported by Brookings:

• No college degree: 8%
• Associate Degree: 7%
• Bachelor’s Degree: 29%
• Master’s Degree: 36%
• Professional/Doctoral: 20%

According to Credible, the average graduate student debt is as follows.

• Average MBA debt: $66,300
• Master of arts: $72,800
• Research doctorate: $108,400
• PhD in education: $111,900
• Average law school debt: $145,500
• Average medical school debt: $246,000

It also is important to know that students who attend for-profit schools and colleges are big borrowers. See this Century Foundation report on undergraduate, graduate, and professional degree programs at for-profits and student debt. These students account for 10 percent of all students enrolled in higher education but account for one-half of student loan defaults. Among bachelor’s degree completers, 86 percent of those who attended private for-profit institutions received federal loans; 66 percent of those who attended public institutions received federal loans; and 69 percent of those who attended private nonprofit institutions received loans. Students at for-profit colleges are again the fastest-growing segment of borrowers.

Remote Teaching and Learning
As many campuses demonstrated in 2020, when the pandemic required colleges to turn to remote teaching and learning, online instruction can work well when faculty are prepared for it and both institutions and students are equipped for it. Faculty needed to be trained, unless they already had experience in remote teaching; equipment needed to be upgraded and course design and graphics enhanced, unless the campus already had a robust online presence; and students had to have the equipment, broadband and web access, and a quiet place to study at a place other than the campus.

Online programming is not a panacea, as witnessed by Coursera’s switch from mostly degree courses to corporate training and professional certificates. The experience of companies offering MOOCs (Massive Open Online Courses) is also instructive. The courses require student discipline and attention, and hence a large number who registered did not finish.

A similar phenomenon occurs when online instruction is used for remedial education. As reported by Hechinger, those most in need of support lack the quiet study space and equipment needed for online learning. They often lack the maturity, motivation, and study skills needed to succeed in a remote teaching and learning environment.

Select Markets for Remote Teaching and Learning
Those to be served best by remote teaching and learning are the following:

1. Those who dropped out of college. There are some 36 million people in the U.S. with some college but no degree.
2. About 63 percent of the 3.2 million high school graduates aged 16-24 in 2019 were enrolled in higher education. This means that about 1.5 million high school graduates were not enrolled. Since high school graduation is a good indicator of academic potential, these students represent a sizable population of potential online students.
3. Students enrolled in college who want to “study,” even remotely, with a distinguished scientist, scholar, or artist.
4. Adults who did not start college but have a need or desire for continuing education at a convenient pace.
5. Adults, especially alumni who have an affiliation and whose profession requires continuing professional education.
6. Corporate continuing education and training programs.
7. Rural communities are a potential source of students. As reported by rootEd Alliance, 32 percent of high school students live in rural communities and small towns. Only 34 percent of rural youth aged 18-24 are enrolled in post-high school education, yet many are Pell-eligible. Less than 30 percent have an Associate degree or higher.

These same populations exist worldwide and represent substantial markets for remote teaching and learning.

All institutions of higher education have the potential to enter the online market either on their own or in partnership with another nonprofit institution or a corporate partner.

The history of higher education is one of evolution, and this is another period of evolution. Institutions change and die. Hundreds of colleges closed in the 19^th century, and more are closing now. However, it is equally true that new institutions and new models emerge. This is as true for the past 150 years, since the first Land Grant Act, as it is for the past 933 years, with the founding of the University in Bologna in 1088. In this vein, it is interesting to note that Oxford University, a scientific powerhouse in confronting the COVID-19 pandemic, was already 400 years old when Harvard was founded as the first college in the U.S., the evolution will continue.