Southern New Hampshire University is probably the fastest-growing nonprofit institution in the country, driven by the expansion of our longstanding online program. When it comes to large-scale online programs, for-profit colleges dominate the list, which includes only a handful of national nonprofit players.
That may change soon. Eduventures, the marketing research firm, predicts that hundreds of nonprofits will seek to move online more aggressively. A good number of them have been visiting us.
From small private tuition-dependent colleges to flagship public universities to elite high-brand schools, we have hosted institutions that are exploring how they might enter the online education market or expand their existing programs. It’s not as easy as it was even just a few years ago, and with some frequency they ask if we might contract with them to help them grow their online programs.
We thought about offering such a “services business” and partnering with these institutions to provide everything from marketing expertise to call center support to advising to course development and more, but discovered that we can’t. U.S. Department of Education rules prohibit one institution from offering “bundled services” to another for a share of tuition revenue (the only sensible way to be paid since services contract and expand with enrollments). Ironically, while the rule was designed to thwart for-profits institutions trying to circumvent prohibitions on incentive compensation for enrollment activities, it inadvertently keeps nonprofits from working together while protecting that market for a new breed of for-profit players.
While Southern New Hampshire has abandoned the idea of creating a services business, we learned in investigating it that major for-profit companies are rushing into the breach, claiming millions of tuition dollars, and blurring the boundaries between them and their nonprofit partners.
Though for-profit colleges themselves are reeling and seeing steep declines in enrollment, bundled services providers, as I call these entities, represent a new for-profit sector quietly gaining substantial ground in higher education. Because this sector is doing so in willing partnership with nonprofit institutions, its presence is largely unrecognized and poorly understood.
A new generation of owners and shareholders is being enriched with tuition dollars, and the nonprofit higher education sector may well be compromising its integrity and values. This major new for-profit presence is now becoming established, is a magnet for investors, and in many ways raises more difficult questions for higher education and for regulators than did the for-profit institutions that have been so often vilified.
Bundled services providers are for-profit companies that help institutions establish and grow online programs. While they can help with course development and conversion, platform and IT needs, compliance and reporting, their real added value is marketing and student recruitment. As more and more nonprofits look to expanded online programs as a way of extending their reach and offsetting loss of other revenues (state support for publics, shrinking net student revenue for privates), the BSP industry has heated up.
Publishing behemoth Pearson acquired EmbanetCompass for $650 million. John Wiley & Sons acquired Deltek, another BSP, for $220 million. A number of new BSPs have entered the market place in the last few years -- companies like 2U, Learning House, and Academic Partnerships -- joining longer-term players such as Bisk; heavyweights like Blackboard have announced plans to jump in.
For-profit institutions also have a stake in this business, with Kaplan owning Colloquy and Ivy Bridge College being owned in part by Altius. Udacity, best known for MOOCs, recently announced a partnership with Georgia Tech that really looks like a bundled services deal if you read who will provide what, based on details provided in this recent Inside Higher Ed article.Coursera this week unveiled partnerships with nine state university systems and flagship campuses in which it will provide a suite of services and products including its MOOC platform, entire courses, technical assistance consulting, and analytics – in short, bundled services.
While for-profit institutions have yet to earn much respect from traditional higher education, the BSPs are working with scores of highly reputable nonprofits. EmbanetCompass works with Boston University, Deltak with Purdue, 2U with the University of Southern California and Georgetown, Pearson with Arizona State University, Bisk with Notre Dame -- and the list goes on.
Eduventures estimates that about 200 nonprofits have partnerships with BSPs and another 500 will entertain such partnerships in the next 12 to 24 months. BSPs generally take 50 percent of all tuition revenues for their services, so this is a very lucrative market.
How lucrative? According to the Texas Observer, Academic Partnerships collects 70 percent of the tuition revenue from partner Lamar University, the third-fastest growing university in Texas (it started at 80 percent), more than $33 million in fiscal 2012.
In its partnership with Arizona State, Academic Partnerships collected just short of $4 million or 50 percent of tuition, over $10 million in its partnership with Florida International University, and $18 million, or 50 percent of tuition, for Ohio University’s nursing program. With hundreds of nonprofits hoping to grow online programming and finally shaking off their hesitancy about online education (the real gift of elites offering MOOCs), the bundled services market stands to outgrow the for-profit higher education sector over time. In short, it could be huge.
Why do nonprofits turn to BSPs for help and thereby surrender huge amounts of tuition revenue (and effectively pass through to the for-profit world federal and state financial aid dollars)? There are three primary reasons:
They have tried to launch online programs and had limited success, or they have never done an online program, so they know there is a lot they do not know;
They do not have the internal capacity, whether it be the right people (often the case), technology, systems, data analytics, or processes;
They do not have the financial resources to build capacity and support a necessary marketing effort.
So while the prospect of giving up so much of their tuition revenue is not attractive, these institutions have little other recourse. The BSPs, on the other hand, recognize that they will make major investments to launch and grow these online programs and that over time the institutions will learn from them, so they insist on long-term contracts. Ten years is not uncommon.
Outsourcing parts of what we do is not new to nonprofit higher education. We often outsource food service, bookstores, and maintenance. We increasingly outsource IT, or portions of it anyway. Outside vendors often create our marketing materials. We may outsource some HR functions, such as payroll.
There is little tradition of outsourcing core academic functions and the key engagement with students that begins with recruitment/admissions and extends through the learning experience and advising. Yet nonprofits are increasingly doing just that in their partnerships with BSPs.
I have elsewhere written about the disaggregation currently under way in higher education and could argue that this is the best example of the phenomenon. Essentially, BSPs do the marketing, student recruitment, data analytics, course conversion, and other functional processes far better than most nonprofits can. Disaggregating those functions and paying an entity more expert than you to do them makes a lot of sense, and I could argue that doing so provides access to more students, strengthens the participating institutions by building enrollments and increasing revenues (even if they give up a good portion of them), and ostensibly allows the institution to stay focused on what it does best: develop intellectual assets that the BSPs then help to extend to the world.
Yet, the rise of the BSP industry raises a number of important questions that invite exploration by policy makers, higher education leadership, reporters, and others. To my mind, they are as follows:
Are for-profit companies in the process of claiming another large portion of the higher education pie and doing so largely under the radar screen?
Are BSPs important enablers that will allow nonprofit higher education to reclaim the online marketplace from the huge for-profits, or we trading one kind of for-profit – institutions that are easy to recognize and understand - - for another that is more insidiously embedded within our sector?
What does it mean for any institution to give over so many of its activities to a third-party provider?
How will accreditors and regulators come to think about these disaggregated structures given that the regulatory environment is largely built on the notion of the integrated institution?
Are institutions that enter into BSP contracts sufficiently safeguarding their authority over key functions and decisions and against the recruitment abuses that plagued so much of for-profit higher education?
Are we comfortable with so much tuition revenue leaving our institutions to enrich shareholders and owners of for-profit companies? Put another way, how much do we give away to for-profits before our institutions lose their standing as nonprofits and become fronts for what in reality become much more mixed entities?
BSPs make their profits and meet shareholder expectations by driving growth, and one could argue that when an institution contracts with a BSP there is a perfect alignment of goals: both want to see more enrollments and more tuition revenue. If the BSP is making a lot of money, so too is the institution: an ostensible win-win. Conversely, when a BSP so entirely takes over the management of a nonprofit’s program, how much nonprofit is left?
If non-profit Institution X contracts for a BSP to:
convert its courses for online delivery;
provide all learning materials;
market and recruit students;
process admissions files;
hire faculty and oversee the teaching of the courses; and
what is then left for Institution X to provide? Its name, accreditation, Title IV approval, and intellectual property in the form of the syllabuses and program. Is that not then a kind of franchising in which the student largely engages with the for-profit side of the partnership and very little with the nonprofit? Is such an effective hybrid program truly nonprofit?
On the other hand, many nonprofits have little alternative. They lack the combination of know-how, capital, and infrastructure they need and a BSP contract gets them in the game and generates new tuition revenues. While the contracts may be lengthy, the arrangements give them time to learn what they need and to eventually take back some or all of that for which they contract. There is an alternative.
I propose a BSP cooperative, a nonprofit entity in which nonprofit institutions can be owner/members. From such an entity an institution could buy all the services it needs at a lower cost with a number of benefits:
Because it is a co-op it would have to distribute any “profits” back to the members, thus keeping all tuition dollars within the nonprofit sector;
Institutions would have not have to surrender such large portions of their tuition revenues and, by extension, federal financial aid dollars would stay within the nonprofit sector;
All co-op “profits” could be funneled back into institutions as need-based scholarship support.
Because all members are owners, the earlier cited Department of Education bundled service affiliate rule would prohibit a co-op as just outlined, but I think the idea is compelling enough that (a) the department should find a way to make such a co-op possible and (b) institutions would readily sign on if they could. In the end, a partnership of accredited nonprofit institutions might not address all the boundary and definitional questions that the new for-profit BSP sector raises, but I would find such a partnership more reassuring than our current state of affairs.
Paul LeBlanc is president of Southern New Hampshire University.
Rising tuition, declining government subsidies, stagnant endowments, and increased competition are challenging higher education like never before. College and university leaders are struggling to understand where these changes will lead and how they can make higher education more affordable, more accessible, and of greater quality for an increasingly diverse and aspiring student. Based on our interaction with university leaders and policy makers, we believe that the timeline for transformational change has shortened to five years. During this time, higher education will have moved from a provider-driven model to a consumer-driven one and, in so doing, upend a system that had endured for centuries.
Half a decade from now, almost all universities will offer their students the option of undertaking their coursework in high-demand degree programs online. However, online offerings will no longer be the competitive advantage they are today. Most online enrollment will be open or provisional and more than 80 percent of professional degree programs, such as MBA, RN-to-BSN, and M.Ed., will be earned online. Additionally, by 2018, new types of widely accepted degrees will have emerged that are less time-consuming, less expensive, and more relevant to 21st century jobs.
The vast majority of on-campus students will be enrolled in some online courses, a movement already afoot, with the Sloan Consortium’s 2012 Survey of Online Learning finding that approximately a third of all U.S. college students took at least one online course during the fall 2011 term. The increase of nearly 10 percent in online enrollments over the previous year is particularly meaningful given that overall enrollment declined in the United States for the first time in 15 years, and continued its decline across the developed world.
Foreign universities with growing stature and competitive pricing will be aggressively recruiting U.S. students for their online programs. With thousands of universities in the United States and around the world online, students will have more choices in higher education than in any other consumer category. This unprecedented competition and the availability of many high-quality, low-priced options will have caused the tuition bubble to burst and the cost of attending college to tumble, putting even greater pressure on institutional budgets.
While the relative cost of instruction will have declined due to increased scale, the incomes of many professors providing online instruction will have risen sharply. Some of these professors will have become the free agents of academe, with their courses widely accepted at both public and private universities around the world.
While some international students will continue to come to the United States to study, we expect that almost all enrollment growth at U.S. universities will come from international students enrolled in online programs. Some public and private universities will have reached iconic status, ushering in a new breed of multinational educational organizations. These large multinational universities will provide curriculum and instruction in multiple languages and offer competitive pricing designed to suit local markets. Capitalizing on their reputations, they will have become leading global brands with student bodies well in excess of 100,000 choosing from many newly added degree programs designed to meet demand in Africa, Asia, Latin America, and India.
As a result of greater use of technology in the delivery of higher education, construction of new buildings on the campuses of tax-supported institutions will have slowed significantly. At the same time, we expect that over the next five years university systems will be consolidating campuses at an increasing rate as trustees and legislators come to understand the economics of online learning and how vastly it can expand the reach of an institution. Companies like ours — Academic Partnerships — are helping universities respond to this transformative moment in higher education.
Critics of the current university ranking system abound — and rightfully so. With metrics such as class size and alumni giving determining a university’s placement, these rankings will become even more antiquated amidst the fundamental changes we are now observing. By 2018, we expect that the university ranking system will focus on consumer choice vis-a-vis growth as a key criterion, along with completion rates, the employability of a university’s graduates, and their subsequent job performance.
Universities will have become more transparent, publishing meaningful standardized metrics that permit consumers to better assess which university is right for them. The relationship between universities and employers will have changed as well, with these groups routinely working together to develop content for degree programs that is aligned with specific jobs and career-related competencies.
At the same time, we expect that a majority of college-bound students will graduate high school with some college credits and that several states will have converted the last year of high school to the first year of college. Entering college with a head start on credit hours and exposure to online programs, by 2018 most full-time students will be completing a four-year degree program in four years, compared to just 60 percent of students who do so today in six years.
We believe that public universities that have moved with urgency to embrace this new reality will thrive. And so, too, will the students they serve. By 2018, higher education will be truly globalized and we will see greatly expanded access, reduced costs, more virtual campuses, and, most important of all, the increased competitiveness of our universities and our students. That’s a future we should all embrace.
Randy Best is chairman of Academic Partnerships. Jeb Bush, the former governor of Florida, is a senior adviser to Academic Partnerships.
Coursera and edX, the two major providers of massive open online courses, continue to partner with more institutions. On Tuesday, edX, a nonprofit started with money from Harvard University and the Massachusetts Institute of Technology, announced it has 15 new partners, including a half dozen in Asia. Both edX and Coursera, a Silicon Valley-based company, have recently touted the global nature of their efforts. Coursera last week gained a prestigious domestic partner: Yale University, which had been taking its time to reflect.
This month's edition of the Pulse podcast features an interview with Max James, national sales manager for education at Citrix, which provides GoToMeeting, GoToWebinar, and other web conferencing tools.
This being spring conference season, I’ve attended a number of higher education events in recent weeks, as well as a number of smaller gatherings where higher education leaders have congregated to reflect on the present moment and what it might mean for the future of our colleges and universities. Needless to say, many of the discussions at these various meetings have featured liberal use of the word “innovation.”
Indeed, as keynotes drifted from one into the other, as PowerPoint slides clicked by with dizzying speed – chock-full of numbers presented in just such a way as to persuade us that a vast and disparate array of trends pointed pretty much down one path (the inevitable road to innovation) – and as numerous hallway conversations, tote bags emblazoned with seemingly hopeful messages about “disruption,” and yet another banquet chicken came and went, I began to wonder what we really talk about when we talk about innovation.
Is innovation, I wondered, just a euphemism for anxiety?
In one small-group conversation I sat in on recently, for example, a colleague observed that when she arrived at her new institution, a meeting was called summoning all those individuals on campus who, like her, possessed the word innovation in their job titles – 90 people attended the meeting, she said.
That’s a lot of innovation. Or is it something else?
The contemporary moment poses many questions about the future of our industry (if I may call it that). Should higher education be free? That’s a fairly big one for a start, and yet we find ourselves asking it at a moment when public contributions to our colleges and universities seem bent on an ineluctable downward slide.
Can students learn without the direct assistance of faculty? Another fairly challenging brain teaser, particularly as we explore the potential for artificial intelligence, machine learning, personalized learning, adaptive learning, and so on, to – at the very least – “flip” the classroom. And what about the near cousins of this question: Are peer grading and computer grading as effective as traditional models of assessment? At one event I attended recently, Bill Bowen, the former president of Princeton University and a trustee of the research organization Ithaka, bluntly observed, "the faculty governance model is not well suited to online learning." Little surprise, then, that faculty organizations have met recent legislative proposals suggesting that selected MOOCs be judged credit worthy in California and Florida with strongly worded counter arguments.
Will the federal government award Title IV funding for direct assessment? Yes, it turns out. And thus guaranteed student loans are officially untethered from the credit hour. How long before other seemingly unshakeable barriers crumble? The recently proposed bill in Florida, for example, recommends that unaccredited organizations be considered among those that might deliver these credit-bearing online courses. It almost makes you wonder which state will be the first to declare that higher education can be undertaken entirely without the aid of an institution higher education.
Maybe all of this talk about innovation is, in part, an effort to domesticate and tame these challenging and threatening questions. But what if masking our fears with more positivist rhetoric about innovation actually narrows our options and leads us to make false choices – between “freemium” and premium pricing models, between faculty-led and faculty-free instructional models, between academic institutions having the authority to award degrees and almost anyone?
As we sip conference wine and watch the sun stretch out across the close-cropped lawns at golf resorts, we may feel like we’ve got a good seat on the innovation bandwagon, and we might very well be enjoying the ride. But in the end, we may come to realize that we’ve been following rather than leading, and copying rather than innovating, and pretty much just hoping for the best – until the bandwagon hits a ditch.
Perhaps the next time we find ourselves at one of these conferences, mingling at one of those receptions, having one of these conversations about innovation, we should ask ourselves: Are we really talking about our anxieties? That might help to bring some of these conversations back down to earth a bit, away from the atmospheric fizz of so many PowerPoint slides racing by, and away from the blurry feeling that change is inevitable so any change will do. That can’t be right when the stakes are so high. Innovation is one thing, after all, but anxiety is something else.
Peter Stokes is executive director of postsecondary innovation in the College of Professional Studies at Northeastern University, and author of the Peripheral Vision column.
What is the future of MOOCs and how will they blend into the higher education landscape — specifically, into the community college landscape?
The "deMOOCratization" of higher education content, making courses readily available to millions of individuals who can sign up for courses online, developed and taught by faculty from the most elite institutions – Harvard University, the University of Michigan and Massachusetts Institute of Technology, just to name a few -- is now a reality. And no "entry" requirements needed. It is not difficult to understand the appeal. Now anyone can participate in education proffered by a name-brand university.
While it is too early to measure the long-term potential of these cyborg courses, MOOCs already have reignited conversations around student access, content, the delivery of content, and student learning outcomes. In some instances, policy makers and educators are looking to MOOCs to fill gaps resulting from the scaling back of course offerings due to budget cuts and high student demand driven by the last economic recession, enrollment growth and accelerating demographic shifts. California is a case in point. Governor Jerry Brown has shown strong interest in MOOCs and online learning as potential stopgaps against enrollment strain and course shortages plaguing California’s community colleges and students.
But do MOOCs represent a panacea for community colleges? Data from the Community College Research Center (CCRC) at Teachers College, Columbia University offer a cautionary tale about traditional online courses now being used at community colleges.
The result of a longitudinal study of students in the Washington Community and Technical Colleges dating back to 2004, the CCRC study raises serious questions about the efficacy of online learning — and by implication, MOOCs — for community college students.
The CCRC study found that community college students enrolled in online courses were more likely to drop out of or fail those courses. Researchers controlled for the customary factors that can predict success, but the fact remains that students struggling academically in college are most at risk for failure in online courses. While many other factors influence success in online learning, a fundamental question remains: can such courses replicate the enduring effects of student and faculty interaction — particularly in the many special circumstances typical of community colleges?
And in regard to community colleges’ greatest challenge – remedial education – MOOCs with their high-powered instruction and fast-paced delivery, but devoid of real-time faculty-student interaction, appear to offer little if any promise in helping students with the greatest needs overcome their academic deficits.
At this point, we have more questions than answers, including those related to the very nature of MOOCs. What exactly are they? It is difficult to quantify the seemingly eclectic collection of courses into a program of study, assess their relationship to quality, and most important, their impact on student learning. More vexing perhaps, what is the relationship between MOOCs and student success and completion? Already, significant numbers of students who sign up for MOOCs fail to complete them. The latter question is of particular concern to community colleges, but also to higher education in general because of the new imperative to increase educational attainment rates in America.
While MOOCs have garnered considerable attention in the media and within higher education, it is premature to draw any conclusions about their eventual landing place in the community college ecosystem. But thanks to the extraordinary work of the Liberal Learning & America’s Promise initiative by the American Association of Colleges and Universities, we would do well to refresh our memory banks about the hallmark practices that result in student success and achievement.
Through AAC&U efforts, we can revisit those timeless values that undergird effective student learning, dating at least as far back as Socrates and the Socratic method of inquiry. These values include hands-on, rigorous learning opportunities, programs with purpose and cumulative by design, a learning-centric community and emphasis on mentoring, and student/faculty interaction and feedback. We in the community college sector have embraced these same values while at the same time recommitting to fostering student success and completion.
It is important to demystify MOOCs, to separate the wheat from the chaff; that will happen, but we aren’t there yet. In the meantime, most community colleges are already offering online education, which has proven, even when combined with traditional resources like staffing, tutoring and faculty interaction, not to work well for low-income and educationally disadvantaged students. It’s as though we’ve forgotten the digital divide still exists, and nowhere more so than for community college students.
The CCRC data suggest that MOOCs cannot simply be substituted for more traditional courses, regardless of credit-worthiness, when our goal as educational institutions is increased student performance and academic progression through community colleges and not simply ticking requirements off a list regardless of outcome.
Moreover, what’s fundamentally different about MOOCs is that their content is developed by faculty and experts who are external to the "home" institution. As a result, while anyone can sign up to take a MOOC, no credit is given unless the MOOC is recognized by some credit-granting entity. That’s where the American Council on Education has jumped in.
ACE has thus far approved a number of MOOCs offered through Coursera for college credit. This is one step toward an answer of whether a student will be able to apply credit earned through MOOCs to specific college degree programs where a student is matriculated. This raises larger, yet unresolved credit transfer issues and articulation agreements, issues we in the community college sector are seeking to address through the Voluntary Framework for Accountability. The fundamental question for MOOCs is how they will be integrated into community college curriculums and degree programs. And, who will determine their quality and "fit" vis-à-vis with community college curriculums?
Returning to California again, Senate President Pro Tem Darrell Steinberg introduced legislation to create a process for awarding credit for online courses. Senator Steinberg’s legislation, Senate Bill 520, would create a "statewide network of faculty-approved online college courses for credit." The stated goal is to supplement the current shortage of classroom seats with online learning opportunities to allow more students, and in particular community college students, to further their studies. The legislation has ignited a controversy around the mechanism for approving courses for credit. Specifically, a nine-member appointed faculty council would review and approve the courses for credit under the proposal.
Senator Steinberg’s legislation is the latest flashpoint in the current debate surrounding MOOCs — namely, who decides the quality and applicability of the content relative to a college’s curriculum and its faculty? The resolution of this issue leads directly to questions of institutional governance, accreditation, accountability, faculty roles and responsibilities, and ultimately to institutional autonomy. There are good reasons for having institutional faculty involved in the review of curricular content, which has been the model in higher education since its inception.
Democratic learning is central to the community college mission — access to higher education has always been the unique hallmark of community colleges. If the MOOC revolution turns out to be more than a "DeMOOCrazy" experiment with technology, then community college governing boards will need to weigh in on MOOCs — and the sooner the better. The discussions won’t be easy, and even coming up with the best questions to ask at this point is a challenge. But when community college trustees delve into this new world, I hope that they balance issues of demand and expediency with those relating to quality, accountability, institutional autonomy, and above everything else, student success and completion.
J. Noah Brown is president and CEO of the Association of Community College Trustees and author of First in the World: Community Colleges and America’s Future.
Inside Higher Ed is today releasing a free compilation of articles -- in print-on-demand format -- about massive open online courses, or MOOCs. The articles aren't today's breaking news, but reflect long-term trends and some of the forward-looking thinking of experts on how MOOCs may change higher education. The idea is to provide these materials (both news articles and opinion essays) in one easy-to-read place. Inside Higher Ed will be releasing more such compilations in the months ahead, on a range of topics.
You can find "The MOOC Moment," the debut in this series, here.
And we invite you to participate in a free webinar with Inside Higher Ed's editors to talk about the issues raised in the articles and the latest developments involving MOOCs on Thursday, May 30, at 2 p.m. Eastern. To register, please click here.