Starting out new MOOC: Current / Future State of Higher Education

After my partial completion of the Coursera xMOOC – Internet History Technology and Security by Dr. Chuck – it’s time to directly try out a cMOOC. While I’m interested in the subject, I’m just as interested in the experience of both types of MOOCs.



Competency-Based Online Education: The Rising Tide of College Affordability

One of the interesting trends over the past year or two is the emergence of educational delivery models as a locus of innovation – with new business models, applications of technology, and tight integrations of educational content and delivery platforms. In part 1 of this series, I described a new landscape of educational delivery models. In part 2 I described the master course concept that is the basis for most scalable for-profit and not-for-profit online programs. In part 3 and part 4 I described the emergence of MOOCs as well as four barriers they must overcome to become self-sustaining. In this post, I’d like to focus on the less glamorous, but perhaps more significant, movement in self-paced and competency-based online education.

Consider that just two years ago Western Governors University stood almost alone as the competency-based model for higher education, but today we can add Southern New Hampshire University, the University of Wisconsin System, Northern Arizona University, StraighterLine and Excelsior College (a part of SUNY).

Let’s review some of the recent announcements of competency-based programs.

Western Governors University Celebrates 15th Anniversary

The most well-known example of competency-based education is Western Governors University (WGU), which celebrated its 15th anniversary this summer. WGU has formed partnerships with a statewide system to provide online education programs, and they have succeeded lately in becoming the partner to build or provide online programs for state systems in Indiana, Washington and Texas. The non-profit school now enrolls 33,000 students.

WGU received an special ruling from the Department of Education allowing for their courses to fit within the policies defining financial aid eligibility, but even then WGU chose not to use this new competency-based rule, as described at Inside Higher Ed.

While a 2005 law specifically designed for Western Governors created a way for it and other institutions to participate in federal financial aid programs by directly assessing how much students were learning, independent of how many course hours they took or how much time they spent in the classroom, few people in higher education seem to realize that WGU chose not to seek that authority (nor, seven years later, has any other college or university).

This is important to realize – competency models often operate in spite of accreditation and financial aid rules. Because of this allowance by exception, there are not clear definitions of what is and is not truly competency-based or competency-focused. I’ll use the terms competency-based and competency-focused interchangeably in this post, including self-paced programs whose intent is to move away from seat time towards demonstration of competencies.

Southern New Hampshire University 

Southern New Hampshire University has also been a leader in competency-based education, and their three-year bachelor’s program, which is significantly based on competency assessment, is fully accredited. An article last year in the Chronicle documented SNHU’s approach to online innovation.

Southern New Hampshire, which is showcased in Mr. Christensen’s new book, The Innovative University, offers a case study of what happens when a college leader adopts some of the Harvard Business School professor’s strategies for managing disruptive change. Southern New Hampshire’s deep dive into Web teaching raises many questions facing colleges migrating online: How big will e-learning get? What will that mean for campuses? How will it break apart the role of traditional professors?

“They’re one of the first private nonprofit institutions, with a traditional campus and traditional student body, that has really committed to scaling online,” says Richard Garrett, managing director at the consulting company Eduventures.

University of Wisconsin

In June, the state of Wisconsin announced a new initiative through the University of Wisconsin Extension.

The unique self-paced, competency-based model will allow students to start classes anytime and earn credit for what they already know. Students will be able to demonstrate college-level competencies based on material they already learned in school, on the job, or on their own, as soon as they can prove that they know it. By taking advantage of this high quality, flexibility model, and by utilizing a variety of resources to help pay for their education, students will have new tools to accelerate their careers. Working together, the UW System, the State of Wisconsin, and other partners can make a high-quality UW college degree significantly more affordable and accessible to substantially more people.

“This new model for delivering higher education will help us close the skills gap at an affordable price to get Wisconsin working again,” said Governor Walker. “As states across the country work to improve access and affordability in higher education, I am proud to support this exciting and innovative University of Wisconsin solution.”

The UW Extension has emphasized the homegrown nature of their program, contrasted with WGU partnerships, as described at Inside Higher Ed.

“The biggest difference is the name: ‘University of Wisconsin,’ ” said David Giroux, UW-system spokesman. About six or seven months ago, the system began discussing how to create a flexible degree program with Walker’s office. “He was very upbeat, very excited about the idea of a Wisconsin solution to a Wisconsin problem,” Giroux said. “This is a homegrown solution.”

Northern Arizona University

Meanwhile, Northern Arizona University is working with a different partner – Pearson – to develop a new competency-based program.

Northern Arizona University (NAU) and Pearson today announced a partnership to create the region’s first competency-based online learning degree programs, as part of NAU’s new Personalized Learning Division. Pearson will collaborate closely with NAU to design more than 90 completely online competency-based courses. The courses will be offered through the Pearson LearningStudio online learning platform. Course modules will include readiness assessment and remediation, and align with degree program competencies. The programs will be available in January 2013.

Personalized Learning at NAU allows students to jump-start certain bachelor’s degree programs by pre-testing to determine what they already know, allowing them to receive credits for prior learning and experience. The program then provides a variety of individualized academic resources to ensure steady progress, including extensive mentoring. Students work online at their own pace, receiving assistance based on frequent assessments of their needs and learning styles. Faculty will actively participate by advising and mentoring, using information gained from student tests and other inputs to offer customized strategies for success.


StraighterLine is a private startup that spun out from SmarterThinking in 2010, and this spring raised $10M in venture funding to expand their concept of affordable online education.

StraighterLine, too, is focused on bringing price transparency to online education, offering general ed courses that students generally take (and are often required) during their freshman and sophomore years, like Algebra, Biology, Calculus, U.S. History, and English Composition, to name a few — on the Web. If we say the average price for a private institution is about $32K per year, StraigherLine’s pricing compares favorably, with the option to pay $100 a month, plus $39 for each course started, $399 per course, or a full freshman year education for $1K.

Included in this pricing is free live, on-demand instruction, although if students choose to buy a textbook, they have to do so separately. But the cool part is that the startup’s courses are ACE Credit recommended and can be transferred for credit to a number of degree granting institutions. Over 25 grant credit today, with more than 200 universities across the U.S. having accepted post-review.

Excelsior College

Excelsior College is a member of the State University of New York (SUNY) system, and they have been a leader in competency-based online programs.

Excelsior has grown to include a student population of more than 33,000 distance learners, approximately 15,000 of whom are members of the military and veterans. The college now has more than 140,000 alumni worldwide.

Excelsior has the largest school of nursing in the U.S. and is also home to the only college-based credit-by-examination program in the nation.

Saylor Foundation – Free, OER-based Courses for Credit

This week the Saylor Foundation announced a partnership with StraighterLine and Excelsior College to provide a pathway for credit based on Saylor’s free, OER-based courses. As described in Inside Higher Ed:

Students have already started taking the classes, and can earn non-credit bearing certificates. But thanks to newly-forged agreements with Excelsior and StraighterLine, the foundation now provides an indirect route to college credit.

Excelsior is a private, nonprofit college that offers relatively inexpensive, online degree programs. The regionally-accredited college is also one of the first to have competency-based programs, where students can take Excelsior-developed examinations in a fairly broad range of subjects – earning credits without having to take classes. The exams are worth three to six credits, and typically cost $95.[snip]

StraighterLine has a similar partnership in place with Saylor, and, as of this week, with Excelsior. As a result, the group has created what is perhaps the lowest-cost set of credit-bearing courses on the Internet.

Economics of Online Education

What does this mean? I suspect the biggest impact will be pricing pressure for all online programs. Competency-based and competency-focused education is a growing model that directly takes aim at affordable access to education, and the changes from this model will go far beyond the new institutions. I suspect that the default assumptions about online education pricing are changing rapidly.

As documented in this recent WCET survey, only ~7% of online programs at traditional institutions are priced below the tuition of face-to-face programs*. With the rising tide of college affordability enabled by competency-based education (and even MOOCs) – with all models targeting affordable access – it will be increasingly difficult for traditional institutions and even for-profit institutions to justify not having reduced tuition for online courses and programs. Even with no other change, there will be tremendous price pressure for online program costs to drop.

* 2/3 of institutions charge the same, and only 1/5 of the remaining 1/3 charge less for online courses or programs (0.2 * 0.33 = 0.066)

ER Article – Preview

A Recent History of Educational Delivery Models

Traditional education or online education. From roughly 1997 through 2010, we have seen online education, whether provided by the emerging for-profit sector or by non-profit institutions, as the primary alternative model to traditional, face-to-face education.

Fast forward to 2012. There is a new concept called Massive Open Online Courses (MOOCs) that is generating national interest in higher education circles, and significantly, it has opened up strategic discussions in traditional higher education cabinets and boardrooms about online education.

Stanford, MIT and Harvard have all thrown their support behind the transformative power of MOOCs and online education – in terms of investment,, resources and support from their presidents. National media outlets such as the Wall Street Journal, New York Times, the Atlantic and others are touting what David Brooks has called “the tsunami” of online education about to hit academia.

All too often, however, public discussion can still be stuck in a dichotomy – with many public discussions treating all online education as a similar approach. Most recently online education is characterized as equivalent to the Stanford branch of MOOCs.

What I believe we are seeing over the last year or two is a transition to an educational system no longer dominated by traditional education and one alternative model. As my colleague Molly Langstaff has described, educational technology along with new educational courses and programs are interacting to create new language and models for education.

There are now multiple models of how education can be effectively delivered, which is natural given the investment and interest in fixing or disrupting education (and yes, I know these terms are over-used and often ignore the innovations happening within traditional educational circles). Not all of these models will end up thriving in the long-term, but I do foresee that we are moving into a situation with multiple models of educational delivery, with fairly rapid changes in the models based on trial-and-error.

The interest in education and educational technology goes well beyond media interest, as there is a new wave of investment backing the new models. This investment comes from multiple sources – private equity, venture capital, corporate mergers and acquisition activity, and even institutional investment from elite universities.

A natural side effect of this new interest in education and educational technology is an increase in hype and often shallow descriptions of the potential for new educational models to replace the established system.

As we discuss affordability and new models, it would be useful to have a richer description of the changes we are already seeing. What does this emerging landscape of educational delivery models look like?

There are multiple forms of new educational delivery models, each with different characteristics and goals, but almost all of them have been strategically enabled by new forms or new uses of educational technology. As strategic decisions and plans are made relating to online education, the differences and basic understanding of the various models should be kept in mind.

While I do not claim to be able to solve this problem, I would like to offer a more descriptive view than the dichotomy of traditional and online education describes. The following description is not exhaustive, and the field is rapidly changing. The intention is to describe some of the primary models and hopefully reduce some of the confusion evident in public discussions.

A Brief History of Online Education

Although there has been a long history of distance education, the creation of online education occurred just 15 – 18 years ago – a relatively short time in academic terms. In the past 15 years, online education has slowly but steadily grown in popularity, to the point where in fall 2010 almost 1-in-3 US postsecondary students were taking at least one course online as described in the Babson Survey Research Group’s report “Going the Distance: Online Education in the United States 2011” (formerly known as the Sloan Online Survey).

Ad Hoc Online Courses and Programs

Given the faculty and department-driven nature of many US postsecondary institutions, there have been plenty of ad hoc online courses and programs – those not based on institutional policy and strategy – from the beginnings in the mid 1990s. Due to the ad hoc nature, there are a myriad of reasons for these online course and programs, ranging from individual faculty exploration of the new medium, to the specific needs of a particular programs.

Despite the skeptical view of most faculty members on the quality of online education (fully two-thirds of faculty members say that learning outcomes from online education are inferior compared to traditional courses based on a joint Inside Higher Ed / Babson report), many of the ad hoc courses are based on individual faculty member belief that they actually getting better results and learning outcomes using online tools. The report suggests the most exposure faculty have to online education, the less fear they have.

While ad hoc online courses and programs have blazed the trail in what is possible, they are not the primary source for the large growth in online education as seen in the Babson / Sloan surveys. Furthermore, ad hoc online courses and programs are typically not intended to scale in term of number of sections or students.

Fully-Online for Scale and Access

For the past century in higher education, the core concept of course design is that an individual faculty member, or occasionally a small team of faculty members, designs and delivers each course. There may be some guidelines and policies from the institution, but after initial review of the course objectives and design, the course belongs to the faculty designing and teaching it. While there are many benefits to this model, there is a key challenge to consider.

How do you cost-effectively scale the course or program to provide greater access to more students given the explicit connection between course and faculty? With the rising number of students and the decreasing budgets, particularly since 2008, this question is central to the future of higher education.

In most traditional institutions, the typical answer to this question of scale has often been the use of graduate students to teach a faculty member’s course or the large lecture course with hundreds of students. This approach has proven inadequate, however, as a general solution to scale and access.

Given this context, how has online education approached this challenge of scale and access?

While there are plenty of examples of individual institutions creating online courses or programs, the biggest drivers of growth in online courses and enrollment have been fully-online programs from the for-profit sector and online-only organizations created by non-profit institutions. In both cases, these online programs are organized around a concept called the master course.

This concept of the master course changes the educational delivery methods of an institution, and, in my opinion, could be the biggest differentiator between traditional, for-profit, and even non-profit fully-online organizations.

A master course gets replicated into multiple, relatively consistent sections in a repeatable manner. In this approach, instructional design teams – typically including multi-media experts, quality assurance people and instructional designers – work with faculty members and / or subject matter experts to design a master course. Once designed, the master course is replicated in multiple sections that can be taught or facilitated by multiple instructors, typically adjunct faculty. The faculty members that are part of the design can also be instructors for a couple of sections, but by-and-large the sections are taught by instructors who were not part of the design team.

The master course concept changes the assumptions on who owns the course, and it leads to different processes to design, deliver and update courses that just don’t exist in traditional education. The implications of this approach or concept are significant. Because of these differences, there is in reality an institutional barrier that very few institutions can cross.

How do institutions that want to provide scale and access deal with this barrier? The most common method over the past decade or two has been for separate organizations to be created that will implement the master course concept.

The majority of for-profit organizations – at least the medium and large for-profits that operate at scale – are based on this concept, whether using online courses or blended / hybrid courses.

There are non-profit organizations that have delivered online programs at scale, of course, but these have tended to be entirely new organizations within a higher education system. These new online organizations fit within the overall system governance, but the operations, budgets and academic oversight are provided by these unique organizations. Examples include Rio Salado College, University of Maryland University College, Colorado Community College Online, and Penn State World Campus. These organizations often have more in common with their for-profit brethren than with the other institutions within their system.

Many of the failures of traditional institutions or statewide systems to successfully create, grow and sustain online programs can be traced to organizational resistance from the rest of the system to the separate online organization.

Online Education Service Providers (OESP)

Another approach to overcoming the barrier between traditional education and scalable online education is outsourcing to, or partnering with, an external company for online content, curriculum and / or student services. These companies bring experience and capabilities to help schools implement a master course concept and the associated operations, while providing these courses through the traditional institution.

There is also a burgeoning industry built around outsourced, for-profit service providers – companies that can outsource the curriculum and course development, as well as the operations, of an online program. This new category is alternately called School as a Service or Online Education Service Providers, and some market estimates indicate future compound annual growth rates of 30%. Pearson has entered this market based on the model used with Arizona State University online. There are several other providers, including Embanet / Compass, 2tor, and Academic Partnerships.

Partner Content and Curriculum

One promising approach that is not well known, yet already has shown real results, is for external organizations to provide portions of the online courses and communities of practice, including a network of peer instructors world-wide working in similar programs. The Cisco Networking Academy is a good example of this model, as their program has already have scaled to serve more than 1 million students, in 165 countries, through more than 10,000 partner institutions.

In this example, the educational institution offers the courses within their curriculum, allowing students to pursue industry-relevant certifications and even to use the courses as part of their degree programs. The schools must have or purchase lab equipment, but otherwise, the schools benefit from Cisco’s decade-plus investment in curriculum, technology platforms and growing experience with games and assessments.

Cisco Networking Academy is the company’s “largest and longest running corporate social responsibility program”, meaning that there is no charge for public and non-profit institutions. Despite the program’s size, the nature of the Networking Academy is often misunderstood – is not a corporate training program, but rather a non-profit educational program.

Self-Paced & Competency-Based Education

One of the keys to potential innovation within higher education circles is to move from credit hours to competency assessment as the key definition of whether a course has been completed.

The primary goal of competency-based education is to lower cost and degree-completion time, allowing learners to get credit for courses where they can demonstrate they have the required skills and knowledge of the competencies that make up the curriculum. Recently there has been significant progress in competency-based education, despite the challenges of dealing with accreditation agencies and federal financial aid regulations, both of which traditionally focus on credit hours.

The most well-known example of competency-based education is Western Governors University (WGU), which received an exemption from the Department of Education allowing for their courses to fit within the policies defining financial aid eligibility. Typically, WGU will form a partnership with a statewide system to provide online education programs, and they have succeeded lately in becoming the partner to build or provide online programs for state systems in Indiana, Washington and Texas.

The institution that has made the greatest progress in competency-based education is Southern New Hampshire University has also been a leader in competency-based education. Their three-year bachelor’s program, which is significantly based on competency assessment, is fully accredited.

Not all self-paced courses and programs are competency-based, however. The broader space of self-paced education includes StraighterLine, which offers courses that can transfer into multiple colleges based on formal agreements. The strategic importance of this model is the use of online education to lower costs, as the self-paced courses can be delivered at far lower costs and can fit a student’s schedule.

In June 2012, the University of Wisconsin system worked with the governor’s office to create a new, competency-based program that will begin in Fall 2012.

Blended / Hybrid & Flipped Classroom

Blended or hybrid courses are those that combine online and face-to-face class time in a structured manner. While there are varying mixtures of content delivery and interactive activities, the logical extension of this approach is called the Flipped Classroom.

Flipped classrooms involve courses that move the traditional lecture, or content dissemination, away from face-to-face hours and into online delivery outside of class time. The face-to-face class time is used for practice and actual application, as opposed to introducing the content being studied. The instructor then has time to help students face-to-face with specific problems. Flipped classrooms been in existence since around 2000, but have recently gained popularity both in higher education and K-12 institutions.

Khan Academy, now with over 3,200 videos covering multiple subjects, has been a leading force in the popularization of the flipped classroom concept. Although the Khan Academy videos are free and available to anyone, the most common usage within education circles is for the videos to form much of the online lecture or content dissemination portion of a course, either replacing or augmenting material from the course instructor. Although Khan Academy videos have mainly targeted K-12 math content in the past, new investment is leading to expanding content outside of mathematics and even into postsecondary-level content.

There are many other examples of blended / hybrid approaches, but the common theme is to make face-to-face class time more effective, using it to provide much of the instructor feedback and interactive skills portion of a class, while pushing content delivery into more efficient online tools.

New Model – MOOCs

In most fully online programs as described above and as used over the past decade in higher education, the approach to scale and access is the duplication of course sections. But are there other methods to achieve scale (and therefore access) without duplicating sections?

Perhaps the alternate approach that is generating the most interest lately has been the Massively Openly Online Course (MOOC). In a MOOC, the course itself is scaled to enable an essentially unlimited number of students to take the course from the faculty members who both design and lead the course (in several examples over 100,000 students registered and started a single course). This design process replaces the master course concept and leverages the natural scaling power of online tools. In other words, this approach provides the scale and access without resorting to a master course concept.

With all of the recent interest in Massive Open Online Courses (MOOCs), it would be worth summarizing the two branches of MOOCs.

Two Branches of MOOCs

MOOCs originated in 2008 with individual courses based on connectivist educational concept. The first MOOC (a name credited to Bryan Alexander and Dave Cormier) was the CCK08 course led by Stephen Downes and George Siemens. As described by Downes in an interview documented in his blog:

Many of the ideas that go into a MOOC were around before CCK08 but that course marks the first time the format came together. In particular, we would point to David Wiley’s Introduction to Open Education course, which was offered as an open wiki (later called the Wiley Wiki – see—mooc-basics ) and Alec Couros’s open course ECI831 – Social Media and Open Education (see ). These two courses were of course influenced by other work in the field – the concept of open education, in which Wiley was a pioneer, with a license preceeding the Creative Commons licenses, the open wiki, which of course was made famous by Wikipedia, and more. 

What makes the MOOC offered by George Siemens and myself different was that it was a distributed course [sic]. This is what enabled the ‘massive’ part of ‘Massive Open Online Course’. The software developed to support the course – called gRSShopper, written by myself – was designed to enable the use of open educational resources (OERs) and to aggregate student contributions written using their own weblog environment (and later, discussion boards, Twitter, Facebook, Delicious, and more). [snip] 

What made CCK08 a watershed moment was the realization that the use of distributed open resources would support – with ease – an attendance in the thousands. We weren’t expecting 2200 people in CCK08; George Siemens has quipped that we were expecting about 24 people, if we were lucky. After all, the course was devoted to a pretty obscure topic – the theory of Connectivism, a pedagogical theory articulated by George and myself. And the software and course design were the first to explictly invoke the theory, and to focus on connections rather than content, which suggested the distributed and connected approach.

The most press recently, however, has been based on the Stanford branch of MOOCs, started with the Artificial Intelligence course in 2011. In this brach of MOOCs, which are really quite distinct from the original connectivist MOOCs, the educational technology is used to mostly replicate a typical face-to-face classroom experience online, at scale. The Stanford branch of MOOCs includes a course web home, typically on a homegrown customized Learning Management System, hosting course lectures, homework and assessments.

Much of the innovation in the technology is to allow traditional educational components such as quizzes and tests to be hosted and provided by online tools, including machine-based grading of assignments, or “robo-grading”.

Future of MOOCs

Traditional, new and social media has been awash in articles and discussions about Massive Open Online Courses (MOOCs), often describing their potential to disrupt or transform higher education. These discussions proliferate despite the lack of revenue plans and the low course completion rates. In fact, early demographic data indicate that the majority of students in MOOCs are professionals in the software industry – hardly the target audience for those seeking a change in how we education degree-seeking, postsecondary students.

While these limitations of MOOCs might suggest that the movement is an overhyped fad that will fail to deliver the changes hoped for or feared by observers, I think we just observed the most significant effect of MOOCs this past weekend.

To understand the future of MOOCs, I think it’s important to consider these two observations.

  • The two current branches of MOOCs are different and will not merge – despite the common name, they have different aims and methods. It is a mistake, in my opinion, to overlook the differences.
  • Both branches are early prototypes or pilots. The future of MOOCs will be based on further developing the concepts and techniques – we should not expect massive adoption until future generations of MOOCs evolve. As George Siemens stated:

It is important to realize that MOOCs are not (yet) an answer to any particular problem. They are an open and ongoing experiment. They are an attempt to play with models of teaching and learning that are in synch with the spirit of the internet. As with any research project, it is unlikely that they will be adopted wholesale in traditional universities. Most likely, bits and pieces will be adopted into different teaching models.

The quick emergence of the MOOC concept is quite significant for educational technology. In less than 5 years, and entirely new approach to provide cost-effective scale and access has emerged, and the next generation or two of MOOCs could lead to significant new options in higher education.

What are the barriers that must be overcome for the MOOC concept (in future generations) to solve real educational problems? The most obvious barriers are:

  • Developing revenue models to make the concept self-sustaining;
  • Delivering valuable signifiers of completion such as credentials, badges or acceptance into accredited programs;
  • Providing an experience and perceived value that enables higher course completion rates (most today have less than 10% of registered students actually completing the course); and
  • Authenticating students in a manner to satisfy accrediting institutions or hiring companies that the student identify is actually known.

Legitimacy of Online Education

To highlight how far online education has come in strategic discussions, in early summer 2012, it appears that the president of the University of Virginia was forced to resign at least partially due to the legitimacy and new interest in online education as represented by MOOCs. While the board’s decision-process and communications were flawed and the president eventually reinstated, this article from the NY Times is telling.

In the end, it seems, the fundamental disagreement at the University of Virginia concerned the approach to change that the president should take — either incremental, with buy-in from each of the constituencies, or more radical, imposed from the top.

Ms. Dragas has displayed a sense of urgency about pushing the university to find new revenue sources.

She has been especially concerned about pushing ahead in online learning, to keep up with Stanford, M.I.T. and other universities that have, just in the last year, begun to offer “massive open online courses,” or MOOCs, free to anyone with an Internet connection, carving out new territory in an area that most universities are just beginning to explore.

The relevant issue to higher education leaders might not be the existence of MOOCs or other forms of online education. The relevant issue, undeserved or not, is the legitimacy of online delivery among elite institutions by the very public and financial support of MOOCs and open education in general. Consider that the presidents of Stanford, MIT and Harvard have all come out publicly and forcefully declaring the value and potential of online education. The new president of MIT led the development of the MITx project. The president of Stanford has publicly supported the “flipped classroom” and described the tsunami of new educational models that will hit higher education. The president of Harvard described how edX ”will enable us to advance both those purposes [increase access to education and to strengthen teaching and learning] in ways we could not previously have imagined.”

In a joint discussion of EdX by Harvard and MIT officials, the edX president stated:

“Together, MIT and Harvard are tackling the educational issue of our time: exploring how technology can really improve learning, and at the same time expand access to education around the world. [snip]

The courses we offer on edX are going to be Harvard hard, MIT hard,” he said. “They’re going to mean something.”

Prior to 6 months ago, the biggest and easiest argument against the power of online education was that it would never provide the quality of face-to-face education. This line or argument, self-reinforced by traditional institutions, kept many collegiate presidents and boards from considering whether major changes were necessary or feasible in higher education. Now that the elite of the elite – Stanford, MIT and Harvard – are publicly extolling the value and quality potential of online education, and are willing to invest tens of millions of dollars, this argument has been de-legitimized. The easy fallback position is gone, and now presidents and boards are forced to encourage or lead “a much faster pace of change”.

Is Online Education the answer to change in higher education? No, there is no single answer and online education is not appropriate for all situations. But MOOCs have changed the assumptions and discussions at the executive and board level, and complacency or even gradual change is no longer acceptable. That is the real transformative power of the current generation of open education.

What Does This Mean for Traditional Institutions?

Despite the growth in online education, the majority of traditional institutions of higher education do not include online education as a component of their strategic plans. Often, there is a continuing education department serving a different set of students.

What does this growth in online education and the emergence of new educational delivery models mean for traditional institutions? What are the key lessons for them to learn from these recent developments?

Understanding the Different Models

First and foremost, it is important to understand that there are now multiple educational delivery models for online education, each with its own set of characteristics and goals. It is easy to get caught up in the media hype and put all online education into the same bucket. The choices that higher education policy and decision makers face require an understanding of the potential educational delivery models.

While the Stanford branch of MOOCs are the version of online education receiving the most media interest lately, as we have seen they are but one of the most recent approaches to online education, joining competency-based and self-paced education, fully-online programs from for-profits and even non-profits, partnership programs, and blended / hybrid education.

Online technology and its associated delivery models will continue to evolve at an accelerated pace, at least compared to our experience in the past decade. A basic awareness and understanding of the models and technology trends – not just for today but for the near future – is important for any real benefit to accrue to traditional institutions.

It can be good news that more policy and decision-making groups are focused on the higher education challenges. However, this new interest brings the additional risk that various groups without a deep understanding of online education – including various models, technology, and pedagogical usage – will make decisions based on a surface-level of understanding. It is beyond the scope of this article to describe methods to mitigate this risk, other than to say that there will be greater need increased visibility and discussion with faculty, staff and other stakeholders that have this knowledge and can contribute to effective strategic decisions.

New Legitimacy

A second lesson to learn is that the game has changed – primarily due to the new legitimacy of online education, traditional institution cabinets and boards are actively discussing the role of online education in a strategic sense. The barriers we have had in the past to prevent online education from having a major impact within traditional institutions is crumbling.

As we have seen with the forced resignation of the president of the University of Virginia in June 2012 (now reversed), there can even be significant pressure from boards for the institution to develop a cohesive strategy based on the online models. For many schools, it is no longer acceptable to just leave the decision up to individual faculty members or departments of what, how and when online courses and programs are development. Online education should now be a considered part of any institution’s strategic planning process, even if the decision is to not offer online education.

Most institutions will need to determine how online education does or does not – and based on which models – serve their specific mission and needs. Institutions should avoid the trap of viewing online as merely a short-term revenue opportunity with little real investment or decision-making.

Online Education Should Lower, Not Raise Student Costs

A third lesson is that most of the new educational delivery models are targeted at increased access to education at reduced costs, even at elite institutions. Burck Smith, the CEO of StraighterLine, wrote an article for the Pope Center for Higher Education Policy, that explains some of the changes going on in higher education in regards to receiving credentials, especially in regards to online courses. Traditional universities are no longer the sole, or even majority, provider of credits going towards degrees in many cases.  Despite this obvious shift in educational trends, it is not becoming easier to combine all credits acquired into one, defining degree.  Due to many factors, the college that grants a student their degree is not necessarily the institution in which they earned the majority of their credits.  It is simply a place that accepts the “public” system of credentialing, which is set outside of its own walls.

There are profits to be gained from this swing in trends.  Online courses, which logically should be offered at a price substantially lower than that of a face-to-face course, are often used to increase revenue for the school, including to subsidize the face-to-face courses and programs.  The cost of actually delivering the material is low in comparison to a traditional classroom setting, but the colleges charge students rates similar to face-to-face courses, which leads to an imbalance that favors the college.  The college system feels no pressure to change, as they are not been sufficiently pressured by a competitive marketplace setting. There needs to be a way to protect the students from universities only looking for profits.

As documented in this recent WCET survey referenced in the article, over 93% of online programs at traditional institutions are priced at or above the tuition of face-to-face programs. Online education should create lower cost structures, and the new educational delivery models universally offer this opportunity. It will be increasingly difficult for traditional institutions to justify not having reduced tuition for online courses and programs. Even with no other change, there will be tremendous price pressure for online program costs to drop. In the long run, these pricing models could become untenable for all but the most selective universities.

Online Education Will Increase Competition

Online education and the associated educational technology has the potential to play an important role in many traditional institutions that have previously avoided this field. However, online education also increases the ability for institutions to compete with one another and can even help create new institutions.

The Minerva Project was funded in 2012 to create a new for-profit university. The concept is to use online education to provide an elite university targeting students who have the ability to enter Ivy League or comparable schools but could not gain admission. As highlighted in an Economist article:

[Minerva], which plans to welcome its first class of students in September 2014, to the tune of $25m—one of the biggest seed investments of a leading Silicon Valley venture firm ever. What is more, the new university’s advisory board will be chaired by Larry Summers, a former president of Harvard University, and count among its members Bob Kerrey, a former senator and head of the New School in New York, and Pat Harker, president of the University of Delaware and a former dean of the Wharton School.

While community colleges and others have had competition for students from the for-profit sector, elite research universities and liberal arts colleges have previously not faced the same pressures. We should expect to see more, not less, examples of new institutions or new online programs from existing institutions that increases competition for traditional higher education.

Expect a Bumpy Ride

A fourth lesson is that this will be a bumpy ride for traditional institutions over the coming 5 – 10 years.

The investment community, particularly venture capital and corporate mergers & acquisitions, have a built-in trial-and-error approach. There will be successes, and there will be failures. Failures are to be expected, and one attribute of investment-based new models is quick failure and quick adaptation.

Higher education as a system is not structured for rapid change, and there is a battle of cultures as investment-backed educational technology intersect with slow-paced, conservative educational structures. Traditional institutions will likely see more turmoil, failure, change and even successes than they are used to in a short period of time.

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