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.
But many of the concerns driving opposition to MOOCs and other new forms of higher education aren't compelling.
One of the most common doubts about MOOCs in higher education, for example, is that some numbers suggest fewer than 10 percent of enrollees complete the classes (though figures vary widely for different MOOC models).
Well, so what? Most dieters quit; does this mean universities should abandon wellness education? Should they cut smoking cessation programs? Should rural schools in Pakistan be shuttered because many children in the area won’t or can’t walk four miles from home to learn?
Another common forecast from academics is that universities will use MOOCs to eliminate tenure-track positions, fire vulnerable adjuncts, and commodify higher education.
But wait, we were just told that only 10 percent of MOOC enrollees finish. Doesn’t that mean colleges and universities will still need professors in the flesh and brick facilities to educate people who don’t thrive in online classrooms? Yes, because online learning is just a natural component — not a replacement — of higher education in our age of screens.
The fear that MOOCs and other online teaching will whittle academic departments is overstated, but even if it isn’t, who are we trying to benefit here? If, say, a Yale University MOOC allows 200 students in Honduras and Hawaii to complete an Ivy League chemistry class, and the same MOOC results in the elimination of an adjunct position in Honolulu, I’m not sure I see a clearly defined catastrophe.
Philosophy faculty at San Jose State University recently sent an open letter to a Harvard MOOC professor, publicly refusing to use any of the academic’s MOOC in their curriculum. Now, is the decision to never use any of the Harvard MOOC, made available by a trial partnership between San Jose State and edX, the ideal verdict for every San Jose State student who ever takes philosophy? Doubtful.
There are far more students than professors in higher education, and the system is supposed to be set up for the aspirants, not the academics. I want universities to have robust, supported faculty, and I’m a professor myself, but MOOC-triggered alarms that that focus solely on faculty positions put the teacher first, learner last. Online learning (both MOOCs and other new models) should simply be viewed as another way to reach learners where they are, and as a way to acknowledge different learning styles.
The grandest warning against MOOCs is that the online courses will devastate in-person education as we know it, erasing all the dynamics of classrooms, the pheromones, and instantaneous feedback.
But forms of communication don’t die; devices do. The best way to teach will always be in person, but technologies can be utilized to also help those who can’t be in the room. Why does Eric Schmidt fly around the world to expand Google’s business? Why do tech elites at Apple still gather in meeting rooms like the cast of "Mad Men"? Because the best way to forge meaningful ties is face-to-face. We still need to seize online technologies, though, to connect more learners to teachers.
One of the more legitimate concerns regarding MOOCs and other new forms of online instruction involves intellectual property rights. Who retains copyright privileges for online courses that can cost a university a lot to produce, but are also the fruit of professors’ creativity?
Some MOOCs and other initiatives literally require hundreds of thousands of dollars to launch. With sunk costs like that, universities want to retain ownership of the course. Rightfully, though, professors want to be able to take their course material with them, say, if they leave one university for another, or, in the age of monetized curriculums, to earn fees from their courses promoted by for-profit companies.
But the intellectual property concern doesn’t make people want to eliminate MOOCs, and rather hinges on who will retain distribution and financial rights to an online course.
Professors who want to teach MOOCs, not those who fear them, raise copyright concerns. Professors, presidents and provosts must reach acceptable agreements on rights to the moolah, just as they do for other contentious issues.
Online education is happening and we're going to see more of it, and educators can't hide under the covers.
Northwestern University, where I teach, will begin in the fall a pilot year of "Semester Online," a consortium project in which Northwestern students can take and receive credit for online courses from schools like Boston College, the University of North Carolina at Chapel Hill, Emory University and elsewhere. Northwestern professors, likewise, may teach classes online to students at colleges in the consortium. Such expansive online offerings could be especially useful in the future to my students, as I teach in Northwestern's journalism program in Qatar, over 7,000 miles from Evanston, Ill.
And that's the idea: to give students more options while jealously guarding quality. Colleges in the consortium will not accept credit for a "Wayne's World" MOOC broadcast from a basement, but rather courses from faculty at proven universities. This is a much better approach than closing one's eyes and hoping online learning goes away.
Justin D. Martin teaches journalism at Northwestern University in Qatar and serves on Northwestern’s Faculty Distance Learning Workgroup, though his views do not necessarily reflect the group’s perspectives. Follow him @Justin_D_Martin.
I admit it – from kindergarten on, I was teacher’s pet. I got an assignment. I labored over it, made it perfect, turned it in early, got the A.
Until now. Let me confess: I am a MOOC noncompleter. I had heard the hype that massive open online courses (MOOCs) are transforming higher education, and I wanted to see for myself.
I enrolled in the University of Edinburgh’s MOOC on e-learning and digital cultures, offered through Coursera. With enthusiasm I joined my 260,000 fellow students, whom I assumed shared my interest in a rigorous and rich college experience online.
On day one, I got a form e-mail welcoming me. I was to watch a few videos each week, do a few readings, and do my homework – maybe: "There are no weekly 'assignments,' although we do recommend trying at least two of the suggested activities. These are not assessed, but will help you to prepare for the final assignment."
I started out eagerly, watching the videos, skimming the readings, and participating in the online discussion forum. I could do this late at night at home or while traveling for my day job. But after two sessions, my interest waned. Maybe it was the lack of real-time interaction with classmates or professors. Maybe it was the lack of accountability. I soon wasn’t watching all the videos, and I certainly wasn’t doing the practice homework that no one would ever grade. Honestly, I felt more like an audience member than a student.
The final assignment would determine if I passed or failed, but I didn’t feel connected enough to the class to complete the project. And what would have been my reward? A noncredit statement of completion of truly questionable value.
My MOOC experience is pretty typical. Passing is about showing up, not doing the kind of quality work that meets any standards of academic rigor. Even with bare minimum standards for passing, classes have huge rates of attrition.
At the University of Southern California Rossier School of Education, we pride ourselves on delivering high-quality master's-level programs online. I don’t think the problem is with online learning. Rather, we should see MOOCs for what they are so far: an easy way to dabble in a subject, maybe learn new material, maybe not, and sometimes with highly respected faculty. In my MOOC, I never saw my professor live online.
We must do more than put a camera in a lecture hall and put professors in a loosely moderated discussion forum. We must offer real-time interaction between professors and students, and between classmates. There must be learning objectives, not just topics to be covered, so students know where they’re headed academically. We must require students to be accountable and expect them to show a mastery of a subject beyond a "showing up" standard.
Those of us who deliver a real college experience online for credit are happy to share the many lessons we’ve learned. Because nobody wants to be a noncompleter.
Karen Symms Gallagher is dean of the University of Southern California Rossier School of Education.
Two recent interventions in the ongoing conversation about massive open online courses (MOOCs) strike me as provocative, in very different ways – and also as curiously neglected, given the interest of what the authors have to say. Perhaps it is a sign of fatigue with the subject? Maybe, but the two articles in question, published a little over a month ago, take up the MOOC question in ways that haven’t previously come to the fore.
In calling them to readers’ attention, I don’t aim to influence anyone’s opinion of MOOCs. To attempt that, my own opinion would have to be settled, which it isn’t. There are compelling arguments for assessing them as the pedagogical wave of the future, bringing quality education to everyone, or as a passing fad, possibly in the nature of an economic bubble. I sometimes wonder whether MOOCs might not be the next step towards a dehumanized future in which we become the carbon-based batteries fueling our robot overlords, but have come, as yet, to no settled judgment. (Not that these are the only options, of course, but the topic does tend to elicit strong feelings.)
Wherever you fall in the spectrum of opinion, at least one of the two articles flagged here should be of some interest. They take perspectives not otherwise represented, to my knowledge, in the arguments of the past couple of years. That neither has raised any ruckus seems odd.
Visibility was certainly not the problem with “The Pedagogical Foundations of Massive Open Online Courses” by David George Glance, Martin Forsey, and Myles Riley. It ran in early May in First Monday, the peer-reviewed journal for research concerning the Internet. Hosted at the University of Chicago and now in its 18th year, First Monday is one of the more venerable open-access online publications.
Glance, Forsey, and Riley (the first two associate professors at the University of West Australia, the third a research assistant there) are in effect addressing the question posed in the title of John F. Ebersole’s article here at IHE, a couple of days ago: “Where’s the Evidence?” Their paper is a review of empirical studies of the components of MOOC instruction – short videos, frequent quizzes, peer- and self-assessment, and online forums where students discuss course material. The authors located and synthesized 138 relevant papers. Very little of the literature specifically focused on MOOCs themselves; they are still too recent a development for much research to have been done. But, the authors maintain, MOOCs share enough features with other forms of instruction (both online and face-to-face) to make studies of their common features pertinent.
“A common format for MOOCs,” the paper notes, “is the short video interspersed or associated with multiple-choice quizzes.” The combination “emulates one-on-one tutoring” and enables the student “to control the pace, pause, rewind, explore, and return to the content,” unlike with “standard lectures or with video recordings which may be one to two hours long.” Self-pacing enables the student to “achieve mastery of a concept before moving on the next” -- a pedagogical process known as “mastery learning,” for which there is much evidence of efficacy: “A meta-analysis of 108 controlled evaluations,” reported in a paper in 1990, “showed mastery learning programs to have positive effects on examination performances of students in university, high school, and upper grades of primary school.”
Frequent assessment via multiple-choice tests (which have the obvious advantage of being scored by computer and giving the student almost instantaneous feedback) means that students have “an opportunity for retrieval learning” through a practice that “enhance[es] long-term memory of facts through recalling information from short-term memory.” The authors cite a number of studies indicating that retrieval practice improves long-term retention, and note that some research suggests that it can have deeper effects: “Every time we retrieve knowledge, that knowledge is altered, and the ability to reconstruct that knowledge again in the future is strengthened. Recent studies have shown retrieval practice to also enhance meaningful learning (producing organised, coherent, and integrated mental models that allow people to make inferences and apply knowledge)….”
There’s more, though that much should suffice for present purposes. The gist of it is that the “pedagogical foundations” of MOOC instruction are at least as firm as those beneath the traditional classroom “and may actually improve learning outcomes.” This is, again, an extrapolation from work done (most of it) before the advent of MOOCs. The latter are treated, in effect, as just online education on steroids. The authors acknowledge, in passing, that the “massive” side of the phenomenon may have the undesirable effect of fostering social isolation, and note that they have not addressed “the larger questions around whether taking a collection of MOOCs could replace obtaining an education on campus at a university in all of its facets of personal development and education.”
In other words, more research remains to be done -- and the three authors seem to be in a position to undertake some of it: earlier this year, the University of West Australia began offering its first set of MOOCs.
Why stop at offering courses? Why not massive open online degrees, as well? While looking around for discussions of “The Pedagogical Foundations” – and there was precious little, apart from the thread following this summary by one of the authors – I came across a blog post with a subject line reading
which I bookmarked as something to revisit as a diversion. You might reasonably assume that it is a satirical piece -- or at least I did.
Except it isn’t. The author, Jon Dron, is an associate professor of computing and information systems at Athabasca University, in Alberta, Canada. He has “had peripheral involvement with a support network for students investigating learning analytics,” he writes, and “helped to set up a site to provide resources for graduate students and their supervisors.” His remarks framing the possibility of massive open online doctoral studies are sober and completely uncontaminated by irony.
Dron brainstormed the idea with a couple of colleagues, and the very concept sounds like work in progress. The MOO doctoral candidate “would accrue a body of research publications that could be used as evidence of a sustained research journey, and a set of skills that would prepare them for viva voces and other more formal assessment methods. This would be good for universities as they would be able to award more Ph.D.s without the immense resources that are normally needed, and good for students who would need to invest less money (and maybe be surrounded by a bigger learning community).”
Much could be said about the whole idea -- let alone about how desirable its outcomes might be -- though I will forebear. But if the plan is ever realized, we must at least draw a line at the massive open online MD program. That would be just a little too much like Hollywood Upstairs Medical College.
As widely reported, five massive open online courses have been deemed worthy of an academic credit recommendation by the American Council on Education. The announcement by ACE has been greeted with equal parts acclaim and concern. Many see this step as a new day for increased access and reduced cost for those working toward a degree. Content costing thousands of dollars on campus may now be available for free and in the comfort of one’s own home. Others, especially in academe, continue to express concern about the nature of MOOCs and their ability to produce learning.
While no one questions the quality of instruction, it remains unclear as to how student learning by MOOC is to be measured. Yes, there has been discussion in the media about the use of proctored exams. Yet, a poor assessment securely administered is still a problem. Are examinations being developed from publisher test banks, or are they akin to the psychometrically validated, field tested exams that have been long used to measure other forms of non-collegiate learning? Are question banks sufficiently deep to ensure assessment variation and integrity? And, are security measures in place to minimize the likelihood of the type of cheating that has compromised other large scale testing programs (the TOEFL experience in Asia a few years ago comes to mind)?
At a time when evidence of learning is increasingly demanded by accreditors and the federal government, a determination of equivalency in instruction alone is no longer sufficient. Valid, secure learning outcome assessment must now be part of the equation as well.
Yes, the MOOCs produced by Udacity and Coursera feature some of our finest instructors from prestigious institutions. We must remember, however, that this instruction comes from outside the academy. MOOCs are not subjected to the same reviews that are part of the accreditation process for other instruction at colleges and universities. And, as we have seen, more thought must be given to the assessment process and its validity.
Would this also be the case for a course coming from within the academy? One would hope not. A higher standard is mandated when measuring the ability of non-collegiate instruction to produce meaningful outcomes. Consider that it has been standard practice for individual military students, independent study students, and those taking courses through open educational resources, as well as other forms of prior learning, to prove their mastery of specific subject matter through psychometrically validated, ACE reviewed and approved examinations. These exams are prepared by Ph.D. psychometricians, in tandem with panels of nationally prominent content specialists. They are field tested for reliability and predictability. In the case of exams at my institution, Excelsior College,, they are also nationally normed to establish "cut scores" for the assignment of letter grades. The academic community broadly has been accepting of this type of learning validation because of the understood rigor and credibility of the methodology.
No similar attention to rigor, validity and security is seen in the MOOCs offered to date. This is especially important as we struggle to understand why only a small percentage of students (less than 10 percent by most accounts and usually from abroad), actually complete the MOOC experience.
And yet, massive open online "courses" (doubt still exists as to whether this is what they truly are) do appear to have real value. It can be argued that they are well-suited (and likely sustainable over the long term) as vehicles for:
1. Delivering cutting-edge continuing education, where credit is secondary to relevance for technical professionals striving to remain current and competitive.
2. Building faculty reputations through what some see as "21st-century interactive, textbooks." It is a rare professor who can boast of hundreds of thousands of "students" when preparing for a promotion or tenure review, especially at a time when traditional texts typically sell fewer than a thousand copies.
3. Creating greater institutional brand awareness. By being seen in the company of "giants," other research universities enhance their visibility overseas, which is where the majority of MOOC participants are located. (This is inexpensive PR in the eyes of many and explains the unseemly rush by some institutions to get on board).
4. Offering "free samples" of a program that will later involve real dollars. Berklee School of Music, for example, is offering an introductory guitar class to tens of thousands of interested individuals. In so doing, the prospective student can try before buying. Even if only a small number complete the course per usual, Berklee will have a greater number of potential enrollees than is typically the case with other forms of student recruitment.
With all of these promising applications, where MOOCs have yet to prove themselves remains in the area of degree completion, or even completion of enough learning to justify the awarding of credit. Traditional students (ages 18-24) and those adults who question their ability to succeed as returning students often need to interact with an instructor. Mentoring, teaching and building self-confidence are not attributes of the current MOOC. Until there is evidence of real learning here, institutions may wish to move with caution in the extension of credit toward degree requirements As the executive director of a regional accrediting body recently stated, "We will be very interested [in our visits] to learn of the basis for such decisions [by the accepting institution]."
John F. Ebersole is president of Excelsior College.
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.
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.