Instructional technology / distance education

California bill on third-party providers is bad policy (essay)

Despite the praise heaped on California Senate Bill 520 by Phil Hill and Dean Florez in a recent panegyric published in Inside Higher Ed, the bill was not the right answer for California’s higher education access woes, and it is a poor model for other states to emulate.

A bill that would open the door to for-profit companies -- including unaccredited “fly-by-night” ones -- to offer courses in the name of a state’s colleges and universities is fraught with danger. A bill that would require a state’s colleges and universities to outsource their core educational function is truly misguided, however well-intentioned the idea may have been. 

That’s the real reason for the huge uproar and the rare universal opposition to California’s SB 520 from those close to higher education -- both faculty groups and the universities themselves.

Let’s be clear about one thing that’s not acknowledged in Hill and Florez’s piece: colleges and universities around the country already allow transfer credit from other universities as long as those courses meet the quality control standards of the home institution. 

That tradition has been in place for a long time precisely to balance the needs of students who often take courses at more than one institution with the needs of the public to ensure quality control and the integrity of degrees from its taxpayer-funded institutions.  The people of California (including employers) need to know that a degree from the University of California, the California State University, or a state community college is just that -- and not something offered by an unknown entity. 

By mandating that state public colleges and universities begin a process of outsourcing its courses, SB 520 would have seriously weakened transparency and accountability in its institutions of higher learning. That’s one reason why the provosts of major universities in the Midwest have argued against similar schemes in their institutions. Alumni and trustees at Thunderbird Business School have also expressed serious concerns about how such a proposed relationship would threaten the reputation of that school and the value of its degrees for all students.

There is good reason for such concern, for cautionary tales about relying on for-profit companies to offer a college’s courses are unfolding right now around the country.  In a December 2012 court settlement, for instance, the New York Institute of Technology was found legally and financially liable for actions of its for-profit partner. More recently, Tiffin University has seen its accreditation threatened because of over-reliance on unaccredited for-profit companies to offer its courses. 

If SB 520 had passed, it would not have expanded meaningful access to quality higher education in the state. But it would have thrown open the door to massive profits for edu-businesses, who are accountable not to the people of California, but to investors and stockholders. No wonder so many CEOs were there to praise SB 520.

Florez and Hill labor mightily to make SB 520 sound bold and innovative, an effort to “wake up [California’s] higher education community,” they say.  What everyone, including the state’s elected leaders, really need to wake up to are the fundamental facts about higher education funding in California. 

According to a report published in February 2013 by Postsecondary Opportunity: The Pell Institute for the Study of Opportunity in Higher Education and titled “State Disinvestment in Higher Education FY1961 to FY2013,” California’s state fiscal support for higher education as a percentage of state personal income dropped by 58.2 percent (adjusted for inflation) between 1980 and 2013. The trajectory is clear: if the current long-term trend continues, California will reach zero in state funding for higher education in the year 2054. 

Unfortunately, as Postsecondary Opportunity’s research demonstrates, many other states are also in a “Race to Zero.”

SB 520 was no “wake-up call” for anyone.  It was, in fact, a dangerous diversion from the reality that there is simply no substitute for public investment in higher education, and there is no single cheaper teaching modality or low-cost “magic bullet” that will meet our need for qualified college graduates.

With all that is at stake for the futures of millions of students and for our country, we need to take a harder look at so-called “innovative” solutions that make the old promise of “something for nothing.”

This essay was written by the steering committee of the Campaign for the Future of Higher Education, a coalition of faculty groups.

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Essay on the impact of California's controversial bill on new forms of instruction

California’s controversial bill to allow third-party, online courses to count for credit at the three public systems of higher education has met an ignoble end. Or has it? On July 31, we learned that Senate Bill 520 (SB 520), authored by Senate President Pro Tempore Darrell Steinberg, is being moved to the two-year file, and will remain dormant for at least a year.

Is this a telling defeat for powerful state politicians who went too far in trying to advance online education options, or did the process of introducing the bill and debating it in public actually create the same goals and opportunities that drove the bill in the first place?

We believe that despite the tremendous and dramatic opposition and perceived defeat of SB 520, quite a lot has been accomplished as a direct result of the initial bill language. Despite spectacular headlines, the bill itself is not dead, but rather has simply been moved to the two-year file where it will be revived as needed.

How Did We Get Here?

As described in a position paper written by Phil Hill and Michael Feldstein for the 20 Million Minds Foundation, when the California Master Plan was adopted in 1960, the basic premise was to guarantee students a place within one of the three public systems based on their high school record. It was assumed that by having a place in a public institution, the student would have access to needed courses. As the state budget has crumbled, unemployment rates have skyrocketed and enrollment demand has surged without the resources to accommodate it, this assumption is no longer valid. Across the state, literally hundreds of thousands of students have been turned away from needed courses at the California Community Colleges (CCC), the California State University (CSU), and the University of California (UC).

In January of 2013, in an effort to address the growing public education access problem facing California, the 20 Million Minds Foundation brought together students, faculty, administrators, state leaders, and ed-tech pioneers for a one-day symposium. The "Re:Boot California Higher Education" conference promoted a robust discussion that examined not only the challenges, but also the potential technological solutions to the major issues facing California’s three segments of higher education. During his opening address to the Re:Boot participants, Senator Steinberg indicated:

[Online education] is a […] revolution and possibilities abound using technology in ways that not only equal or enhance quality but also reduce the cost of higher education for struggling students and their families.

Resistance

In March of this year, during an online press conference, Senator Steinberg unveiled Senate Bill 520, announcing the legislation that would “would reshape higher education, in partnership with technology we already use, to break bottlenecks that prevent students from completing education.”

The newfound involvement of state government officials in this level of higher education, and the nature of the bill itself, which proposed the heretofore unheard-of use of controversial, potentially disruptive, large-scale solutions such as MOOCs for credit, generated significant resistance from faculty groups and the systems themselves. In particular, a New York Times article "broke the news" that a powerful senate leader was going to challenge the status quo without getting agreement from faculty groups first, and this publicity helped rally vocal opposition to the bill. Of course, this level of resistance should not have surprised anyone involved in higher education in California.

The nature of government is that real legislative movement most often occurs for two reasons – bad press or a crisis. Senator Steinberg sees course access as a crisis for public higher education, and he introduced a bill designed to wake up the higher education community. The bill essentially sent the message that "we need to solve these problems of access whether our colleges and universities do it themselves or whether we need outside help." This challenge to go beyond the ordinary thoughts and discussions in public policy pushed the boundaries and made many groups quite uncomfortable.

In parallel, Governor Jerry Brown added fuel to the fire by proposing additional funding to the CCC, CSU, and UC with the caveat that certain conditions be tied to the funding. The language in the proposed budget obligated the funds "to increase the number of courses available to matriculated undergraduates through the use of technology, specifically those courses that have the highest demand, fill quickly, and are prerequisites for many different degrees.” This language was interpreted as telling the systems how to do their job. After CSU and UC indicated they would follow the same guidelines, but execute the solution their own way, Governor Brown used a line-item veto to remove his own proposed earmarks creating conditions for the additional funding.

The result of the intense opposition and debate during the legislative process led to significant amendments to SB 520. Originally envisioned as the gateway to public-private partnerships with a common pool of courses, the bill has been transformed into a grant program for each system to implement individually. Even with the passage of the amended bill in the Senate, the bill is currently on hold.

Movement From Systems

All three systems have proposed new programs that broadly meet the same goals outlined by SB 520, largely based on the additional funding for online initiatives, with the new emphasis being the introduction or expansion of online courses with cross-enrollment across each system.

The California Community Colleges currently enroll as much as 17 percent of their students in various types of online or distance education. The system is poised to continue to advance and expand its online programs with a strong focus on career technical education as well as workforce development programs as outlined in the CCC System Strategic Plan, updated in June of this year.

In July, the CSU introduced a new Intrasystem Concurrent Enrollment program, allowing students at each campus to sign up for one of 30 online courses offered in the program from other "host" campuses. Under the current plan, students will be limited to one course per semester.

In January, UC introduced the Innovative Learning Technology Initiative, updated in May, as "a direct response to the governor’s plan to earmark $10 million from UC’s FY 14 core budget to use technology to increase access to high-demand courses for UC matriculated students.”

Despite the welcome news of these programs, we are already hearing widespread concerns over the pace and scale of implementation. Lieut. Governor Gavin Newsom, a noted supporter of more effective use of technology, following the online program presentation at the July meeting of the UC Regents, stated, "I don’t think we’re running at full speed here. We’re moving extraordinarily slowly…. Californians are looking to us" for progress in online education.

What to Expect Next

Students enrolled in California public colleges and universities should be guaranteed timely access to the core courses that they are required to take in order to graduate. Given that there are a variety of ways in which the institutions could meet this obligation, the state should avoid being overly prescriptive about the method. Rather, it should supply the mandate for educational access, support institutions in meeting this mandate, and provide a safety valve to ensure the mandate’s right is preserved.

                                          --From our position paper

The focus should remain on finding effective solutions to the course-access issue -- providing students with high-quality courses they need while reducing costs. Before this year, this was not happening for a variety of reasons, and it remains to be seen just how much the institutions will do without the pressure of earmarked funding in the state budget or pending legislation such as SB 520.

We believe the best outcomes for online education occur when faculty and institutions are motivated and supported to design high-quality options for students. Ideally, colleges and universities would craft solutions, but use third-party courses as safety valves to ensure students have access to necessary classes. The hope is that the three public systems will continue their progress, find real solutions to the course access problem, and not fall into the trap of doing the same old thing again, just with online options.

At this point, one might actually suggest that a welcome policy outcome has indeed been accomplished as a direct result of the initial language in SB 520. The bill is certainly not dead. The bill itself could now be thought of as a safety valve, providing an option in case the three systems fail to show real progress in meeting the challenge of course access. We are, however, cautiously optimistic that viable and effective change is, at least for now, in the formative stages.

Phil Hill is a consultant and industry analyst covering the educational technology market primarily for higher education. He is co-publisher of the e-Literate blog and co-founder of MindWires Consulting. Follow him on Twitter at @PhilOnEdTech.

Dean Florez is the former Senate majority leader of the California State Senate and the current president and CEO of the 20 Million Minds Foundation (@20MillionMinds). Follow him on Twitter at @DeanFlorez.

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The Pulse podcast: Using the iPad to flip classroom

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This month's edition of The Pulse podcast discusses (and shows) how educators can use an iPad and Apple TV to help flip their classrooms.

Essay calls for alternative to massive online learning

What an exciting year for distance learning! Cutting-edge communication systems allowed colleges to escape the tired confines of face-to-face education. Bold new technologies made it possible for thousands of geographically dispersed students to enroll in world-class courses. Innovative assessment mechanisms let professors supervise their pupils remotely.

All this progress was good for business, too. Private entrepreneurs leapt at the chance to compete in the new distance learning marketplace, while Ivy League universities bustled to keep pace. True, a few naysayers fretted about declining student attention spans and low course-completion rates. But who could object to the expansively democratic goal of bringing first-rate education to more people than ever before? The new pedagogical tools promised to be not only more affordable than traditional classes, but also more effective at measuring student progress.

In the words of one prominent expert, the average distance learner "knows more of the subject, and knows it better, than the student who has covered the same ground in the classroom." Indeed, "the day is coming when the work done [via distance learning] will be greater in amount than that done in the class-rooms of our colleges." The future of education was finally here.

2012, right? Think again: 1885. The commentator quoted above was Yale classicist (and future University of Chicago President) William Rainey Harper, evaluating correspondence courses. That’s right: you’ve got (snail) mail.  Journalist Nicholas Carr has chronicled the recurrent boosterism about mass mediated education over the last century: the phonograph, instructional radio, televised lectures. All were heralded as transformative educational tools in their day. This should give us pause as we consider the latest iteration of distance learning: massive open online courses (MOOCs).

In response to the "MOOC Moment," skeptical faculty have begun questioning venture capitalists eager for new markets and legislators eager to dismantle public funding for American higher education. To their credit, some people pushing for MOOCs speak from laudably egalitarian impulses to provide access for disadvantaged students. But to what are they being given access? Are broadcast lectures and online discussions the sum of an education? Or is an education something more than "content" delivery?

To state the obvious: there’s a living, human element to education. We who cherish in-person instruction would benefit from a pithy phrase to defend and promote this millennia-tested practice. I propose that we begin calling it "close learning." "Close learning" evokes the laborious, time-consuming, and costly but irreplaceable proximity between teacher and student. "Close learning" exposes the stark deficiencies of mass distance learning such as MOOCs, and its haste to reduce dynamism, responsiveness, presence.

Techno-utopians seem surprised that "blended" or "flipped" classrooms – combining online media with in-person discussions – are more effective than their online-only counterparts, or that one-on-one tutoring strengthens the utility of MOOCs. In spite of all the hype about interactivity, "lecturing" a la MOOCs merely extends the cliché of the static, one-sided lecture hall, where distance learning begins after the first row.

The old-fashioned Socratic seminar is where we actually find interactive learning and open-ended inquiry.  In the close learning of the live seminar, spontaneity rules. Both students and teachers are always at a crossroads, collaboratively deciding where to go and where to stop, how to navigate and how to detour, and how to close the distance between a topic and the people discussing it. For the seminar to work, certain limits are required (most centrally, a limit in size).  But these finite limits enable the infinity of questioning that is close learning. MOOCs claim to abolish those limits, while they paradoxically reinstate them. Their naïve model assumes that there is always total transparency, that passively seeing (watching a lecture, or a virtual simulation) is learning.

A Columbia University neuroscientist, Stuart Firestein, recently published a polemical book titled Ignorance: How It Drives Science. Discouraged by students regurgitating his lectures without internalizing the complexity of scientific inquiry, Firestein created a seminar to which he invited his colleagues to discuss what they don’t know. As Firestein repeatedly emphasizes, it is informed ignorance, not information, that is the genuine "engine" of knowledge.  His seminar demonstrates that mere data transmission from teacher to student doesn’t produce deep learning. It’s the ability to interact, to think hard thoughts alongside other people.

In a seminar, a student can ask for clarification, and challenge a teacher; a teacher can shift course when spirits are flagging; a stray thought can spark a new insight. Isn’t this the kind of nonconformist "thinking outside the box" that business leaders adore? So why is there such a rush to freeze knowledge and distribute it in a frozen form? Even Coursera co-founder Andrew Ng concedes that the real value of a college education "isn’t just the content.... The real value is the interactions with professors and other, equally bright students."

The corporate world recognizes the virtues of proximity in its own human resource management. Witness, for example, Yahoo’s recent decision to eliminate telecommuting and require employees to be present in the office. CEO Marissa Mayer’s memo reads as a mini-manifesto for close learning:

"To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side. That is why it is critical that we are all present in our offices. Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings. Speed and quality are often sacrificed when we work from home. We need to be one Yahoo!, and that starts with physically being together."

Why do boards of directors still go through the effort of convening in person? Why, in spite of all the fantasies about “working from anywhere,” are “creative classes” still concentrating in proximity to one another: the entertainment industry in LA, information technology in the Bay Area, financial capital in New York City? The powerful and the wealthy are well aware that computers can accelerate the exchange of information, and facilitate low-level "training." But not the development of knowledge, much less wisdom.

Close learning transcends disciplines. In every field, students must incline towards their subjects: leaning into a sentence, to craft it most persuasively. Leaning into an archival document, to determine an uncertain provenance. Leaning into a musical score, to poise the body for performance. Leaning into a data set, to discern emerging patterns. Leaning into a laboratory instrument, to interpret what is viewed. MOOCs, in contrast, encourage students and faculty to lean back, not to cultivate the disciplined attention necessary to engage fully in a complex task. Low completion rates for MOOCs (hovering around 10 percent) speak for themselves.

A devotion to close learning should not be mistaken for an anti-technology stance. (Contrary to a common misperception, the original Luddites simply wanted machines that made high-quality goods, run by trained workers who were adequately compensated.)  I teach Shakespeare, supposedly one of the mustiest of topics. Yet my students navigate the vast resources of the Internet; evaluate recorded performances; wrestle with facsimiles of original publications; listen to pertinent podcasts; survey decades of scholarship in digitized form; circulate their drafts electronically; explore the cultural topography of early modern London; and contemplate the historical richness of the English language. Close learning is entirely compatible with engaging in meaningful conversations outside the classroom; faculty can correspond regularly with students via e-mail, and keep in close contact via all kinds of new media.  But this is all in service of close learning, and the payoff comes in the classroom.

Teachers have always employed "technology" – including the book, one of the most flexible and dynamic learning technologies ever created. But let’s not fixate upon technology for technology’s sake, or delude ourselves into thinking that better technology overcomes bad teaching.  At no stage of education does technology, no matter how novel, ever replace human attention. Close learning can’t be automated, or scaled up.

As retrograde as it might sound, gathering humans in a room with real time for dialogue still matters. As educators, we must remind ourselves – not to mention our boards, our alumni, our students, and those students’ parents – of the inescapable fact that our "product" is close learning.  This is why savvy parents have always invested in intensive human interaction for their children. (Tellingly, parents from Silicon Valley deliberately restrict their children’s access to electronic distractions, so that they might experience the free play of mind essential to human development.) What remains to be seen is whether we value this kind of close learning at all levels of education, enough to defend it, and fund it, for a wider circle of Americans – or whether we will continue to permit the circle to contract, excluding a genuinely transformative educational experience from those without means.

Scott L. Newstok teaches in the English department at Rhodes College.

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University of Maryland University College wins defense department contract to teach troops in Europe

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University of Maryland University College wins $245 million Defense Department contract to teach military personnel at bases in Europe.

 

One MOOC professor won't let students know the right answers

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MOOCs are supposed to democratize education, but some students may never learn the right answers to questions on assignments that they get wrong.

After Pearson deal, leaders leaving Embanet

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Eight months after Pearson paid $650 million for EmbanetCompass, several of the smaller ed tech company's senior leaders have left or are leaving.

Survey: Online learners are starting to resemble on-campus learners

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Survey suggests growing segment of online degree-seekers prefer online to on-campus.

Faculty responsible for making online materials accessible for disabled students

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Lawyers and a disability rights advocate stressed that faculty members must be proactive rather than reactive in making sure their online courses and materials are accessible for students with disabilities.

Essay sees missing savings in Georgia Tech's much discussed MOOC-based program

Love MOOCs or hate them, there’s something to disappoint everyone in the Udacity/Georgia Tech services contract amendments that Inside Higher Ed’s Ry Rivard obtained through a public records request.

Although MOOCs have monopolized definitions of higher education reform for nearly two years now, some academic managers have wondered whether they shouldn’t extend online instruction on the base of their existing online programs, rather than partnering with an MOOC platform like Udacity.  A consortium of Midwestern research universities recently took a major step in this direction in suggesting that their members might evolve their own "coordinated platform for the development and delivery of online or blended courses” for the whole consortium’s use.

In contrast, the strongest argument to skip internal development and hire MOOC companies has been the companies' claim to bring revolutionary cost savings to colleges and their students with their revolutionary technology. Unfortunately for all concerned, there is no sign in the Udacity spreadsheets of massive online cost-cutting services. Nor can the savings that do appear be traced directly to the Udacity platform.

The contract, between Udacity and the Georgia Tech Research Corporation (GTRC), aims to create a MOOC master’s degree in computer science — described as "the first professional online master of science degree in computer science (OMS CS) that can be earned completely through the ‘massive online’ format." The hook is the low low price -- $6,630, according to Rivard, or one-seventh of the $40,000-plus price of a face-to-face computer science M.S. at the same institution.

But when we look for massive cost savings in the Georgia Tech-Udacity spreadsheets, what do we find?  In Year 1 (Exhibit H), things don’t look so cheap. The two entities together will spend about $3.1 million running a program for an estimated 200 students in the first semester. This comes to around $15,700 per year per enrolled student. The figure is close to what the University of California Office of the President says it spends educating all UC students averaged together (Display 6). In Year 1, Udacity-Georgia Tech costs look like those of a good, conventional public university program.

But wouldn’t Semester 1 naturally be burdened by start-up costs and a steep learning curve? Yes, were Georgia Tech designing the platform from scratch.  But Udacity is supposed to have already solved higher education’s "cost disease" with its technology. We’ll note that Year 1 is not plug-and-play. Years 2 and 3, when student volume increases, feature courses that are in the can, and low marginal costs of instruction could kick in.

Here’s where things get disappointing.

First of all, the budgets don’t fit with the enrollment plan. Each student takes "6 credit hours (2 courses) per semester" in a 12-course master's. The enrollment forecast "assumes 200 pending full standing (degree-seeking) students begin the program each semester and all 200 in semester 1 become full-standing students .... in semester 2." So in semester 6, the enrollment forecast has semester 1 students in their final term, and five more semesters of 200 new students apiece, for a total of 1,200 students. That is a lot of growth in the existing program that now admits 150 new students a year (page 2). But on the spreadsheet, year 3 revenues have increased nearly 14-fold, to over $19 million. This income requires over 2,800 student FTE in Year 3 (based on Year 1 per-student revenues), which is more than double the enrollment forecast found in the footnotes.

But in fact, the partnership is not collecting $6,630 per year but per degree, and the degree is estimated to take three years. So the typical student in any given year is paying $2,210 in tuition. At that annual price, $19 million of Year 3 revenue requires 8,700 paying student FTE. This figure is larger than the total number of computer science master’s degrees granted in 2009-10 in the United States (Table 4).  Even after noting an untapped global market, this Year 3 number is not credible for degree program enrollment.

At least two conflicting enrollment scenarios are supported by different parts of these documents: (1) growth to 1,200 in Semester 6, and (2) growth to 8,700 in Year 3. (1) fits with reasonable estimates of the time it takes to design and produce new classes, hire and train many "course assistants" (CAs), solve infrastructure issues, and so on, while abiding by the Georgia Tech faculty’s desire to enforce the institution’s high academic standards.

Scenario (2), however, fits with MOOC hype about the "digital revolution" cracking open closed universities to massive global markets by teaching at "effectively zero dollars marginal cost per additional student," in the words of Coursera's co-founder, Daphne Koller. With $14.4 million in expenses in Year 3, a OMS CS with an implausible enrollment of 8,700 students would spend about $1,655 per year per student, or under $5,000 per degree. The cost is ultra-low for a master’s degree, or for any other kind.

How would the OMS CS get to this cost?  The simple answer is that it wouldn’t. The faculty working group expected a 30:1 student:TA ratio. The contract says 1 contact hour per student credit hour, or 104,400 contact hours per year for 8,700 students, each of whom gets a total of 12 hours of personal attention in that time, or 36 hours over the 3-year program. At the same time, the first-year co-sponsor, AT&T, expects 100 percent online instruction, which is cheap only when stripped of personal attention (whether online, via Skype, or in person).  There is a big difference between 290 CAs with the 30:1 ratio, the 87 who at 40 hours a week could deliver 12 hours per student per year, and zero for the online model that eliminates personal attention.  (The budget for student support suggests something close to 87.) With this slippage, Udacity can appeal to the corporate belief that the future of teaching is no teachers, while hiring quasi-teachers to suppress that belief’s results.

Let’s turn from price to cost. Regardless of real enrollment growth, the spreadsheets undermine two key assumptions about commercial MOOCs. The first is that MOOCs offer an automation of teaching that will allow the elimination and/or the cheapening of most teaching staff. This is how Taylorism worked in assembly-line industrialization, and how robotics has worked in manufacturing.

But in the budget, the category of "student support" grows in lockstep with revenue (up 13.8x and 13.9x respectively). One simple reason is that the Georgia Tech faculty wants the OMS CS to have "world-class quality," and that means "blended" or "hybrid" courses. Fully online courses are cheaper, but they generate the highest attrition rates in the history of higher education. Quality MOOCs are always blended MOOCs, and blended MOOCs have lots of CAs (coming mostly from Udacity), which means they aren’t actually MOOCs in the sense of the imagined near-zero personnel costs that has set the business and policy worlds on fire.

This is an important admission that a MOOC is "as good or better" than hands-on instruction only through much hands-on instruction. (Coursera’s recent announcement of 10 public university partnerships also focuses on blended services.) This blocks online’s alleged cost revolution — although online support for instruction obviously helps with costs.

Next, there’s an unpleasant surprise in the equally relentless growth of "Operations, Materials, & Supplies." This is where Udacity’s proprietary technology was supposed to rescue teaching budgets from the medieval methods that currently bloat them. In fact, looking at the budget, its platform does nothing to cut operating costs. The cost of examinations is particularly large. The big savings, ironically, come by squeezing innovation — payments to course creators flatten out — and by leveraging overhead. But there’s nothing novel in these practices. It’s easy to reduce expenses by giving the same lecture over and over, which is what existing online courses are designed to do. The same goes for running more volume on the same equipment, which is another time-honored university tactic.

The Udacity-GTRC contract raises the question of what exactly Udacity brings to the table. First, it brings its platform. Yet its platform is not transformative — not visibly better, faster, or cheaper than what Georgia Tech’s computer science department has already created or could create with new resources for this purpose.

Second, there are some net revenues. With a profit of $1,665 per degree, the program would earn $14.5 million on the untenable 8,700 graduates, or about $4.8 million per year. Sixty percent of this total (or $2.9 million) would go to GTRC. This amounts to a bit over 1 percent of GTRC’s annual research revenues, even with this high number of enrollments. On top of this, GTRC would get 20 percent of gross revenues and 20 percent of gross profits for non-OMS students that use Georgia Tech courses through Udacity. But these are MOOC students who will in general not pay anything. Georgia Tech probably has better margins on its existing extension programs, and could also support its institutional needs with new, smaller programs that it runs on its own.

What Udacity does bring to the table is platform branding. The company has positioned itself as a first mover and dominant player in what it describes as a new global market. Its founder is high-status, famous, and influential. Sebastian Thrun is associated with Google’s driverless car and with Stanford’s artificial intelligence program. He co-signed a deal to provide three entry-level courses to San Jose State University in the presence of the governor of California.

A similar story of brand dominance can be told about Coursera and its co-founder Daphne Koller, whose access to decision makers extends to the World Economic Forum conference at Davos. The three main MOOC companies have had the clout to sign deals directly with a given institution’s senior managers, over the heads of the university faculty. Since Internet and communications technologies seem always to lead to oligarchy (Google/Bing/Yahoo) or duopoly (Apple OS /Microsoft Windows), Udacity can pitch its platform as one of the very few ways for universities to stay in a global online game.

In exchange for presenting itself as an oligarch in waiting, Udacity extracts quite a bit from Georgia Tech. Udacity gets the intellectual content for a master’s program of 20 courses at an upfront cost of $400,000. It borrows Georgia Tech’s reputation as its own, at a huge discount (no training of graduate students, no support for labs, no decades of accumulated know-how through which Georgia Tech earned its reputation).  It acquires these courses for a proprietary platform: Georgia Tech cannot offer these OMS CS courses, created by its own faculty, to a competing distributor.

Udacity expects Georgia Tech faculty members to maintain and update course material, and can use their latest version. While requiring that Georgia Tech not compete with it, it can take Georgia Tech-created courses and offer them to tens or hundreds of thousands of non-registered students — and sell a program certificate for those courses. These courses will differ from Georgia Tech’s in being "minimally staffed to rely on course assistants only for student assessment," but will use Georgia Tech’s content to compete with Georgia Tech’s and all other masters’ programs.  With these courses, Udacity enters the master's certification business, selling a complete degree program without a degree’s intellectual ecology, physical infrastructure, interpersonal venues, and sunk costs.

Udacity’s business model requires that it become a dominant platform. With a series of Georgia Tech-style deals for entire degree programs, it could leverage university content — with sustained free-riding -- to appear to the public as a global university.

For two years, claims about the cheapness of the MOOC format overcame widespread doubts about their educational and social effects. During this time, the main MOOC companies did not release specific financial projections.  Now we finally have two spreadsheets, and their claims to cheapness are not confirmed.

If these costs are typical, it will be more efficient for universities to partner directly with other universities to develop online instruction for underserved students -- and avoid taking on yet another middleman to do one of their two basic jobs.

Christopher Newfield is professor of English at the University of California at Santa Barbara, author of Unmaking the Public University (Harvard University Press) and co-editor of Remaking the University blog.

 

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