MOOCs: A slowly deflating “Bubble”?

According to Forbes’ John Tamny “Online education only offers learning that the markets don’t desire, and because it does, its presumed merits are greatly oversold. There’s your ‘bubble.’” He summarizes “Going to college is a status thing, not a learning thing. Kids go to college for the experience, not for what’s taught. And that’s why there’s no ‘bubble’ forming in the university world.”

Tamny’s opinion is both different from most business analysts and important. His conclusion discourages further investment in current and potential start-up enterprises. It also presents another perspective for institutional boards and governments seeking to better understand the role of education technology.

Joshua Kim, in his Inside Higher Ed blog “Learn,” (here and here) was frustrated by Tamny’s choice of the term “online education.” Kim correctly reports online education technology is heavily used in traditional classrooms as well. Tmany’s article divided higher education between colleges and universities offering classroom instruction and firms offering online education that lack contact with peers and faculty—the typical MOOC provider (Massive Open Online Course). These are two extremes of Kim’s spectrum of the use of “online” technology.  Tamny did not use the term “MOOC” itself.

John Tamny is a graduate in government from the University of Texas Austin and MBA from Vanderbilt University’s Owen Graduate School of Management, both traditional universities. He may also be viewing higher education from that perspective as well.

Education as an economic enterprise

An analysis of MOOC (Massive Open Online Course) data by e-Literate’s Phil Hill (here) provides evidence supporting Tamny’s conclusion if Tamny’s “online” education refers to MOOC course providers such as Coursera, Udacity, and edX. With 65-75% of MOOC students having a bachelor’s degree or higher, Hill concluded: “When combined with the fact that MOOCs to date have not been applied for academic credit, it is apparent that the primary usage of MOOCs has been for professional development or lifelong learning.” (His emphasis). Hill explains:

The data points to the need for targeting degree-seeking students in a more aggressive manner than the current “it’s open for all” approach while also finding more immediate methods for allowing MOOC students to earn academic credit. To allow for academic credit for MOOCs, the actual course designs and assessment have to satisfy accrediting bodies, and the credits have to be accepted by degree-granting institutions.

Providing online credit-bearing courses is a task that some accredited colleges and universities are doing well. The primary barrier to broader use appears to be additional investment at a time of financial exigency. Course materials and learning infrastructure, and providing both technical and tutorial support for online students is costly. For example, the cost of course materials by HarvardX is estimated to be $250,000. Experts estimated WGBH Sandel’s Justice lectures and student participation at $1 million.  (The video and supplementary course materials are distributed by PBS as a DVD). A typical college or university has between 1,000 and 2,000 courses, some taught infrequently. The potential investment, if borne by one institution, would be comparable to Open University UK’s 3-year undergraduate program cost of US$ 1billion. Publishers have made similar investments in their course materials and online learning services provided with textbooks. Offering a faculty member $500 to $5,000 to independently create such a course cannot be expected to achieve comparable quality.

Some colleges and universities are expecting faculty to independently create course materials (without permission or license copyright precludes use of video, audio, slide presentations, assessment items and readings and, often, online learning services access now included with a textbook). Some colleges and universities support a team that has all of the essential talent and subject matter expertise and facilities and equipment to develop a course or assemble a course from existing materials. They may have studio facilities with the latest technology and experienced talent. Expecting faculty themselves to produce comparable learning materials is unreasonable. A quality brand and faculty reputations imply sophisticated, comprehensive, and proven course materials.

Providing technical support and tutors for online courses requires an organization with skills and knowledge, and training to be effective tutors. This support does improve student performance and retention as well a student satisfaction.

Coursera changing course?

Tamar Lewin, The New York Times quotes Daphne Koller:

“Our first year, we were enamored with the possibilities of scale in MOOCs,” said Daphne Koller, one of the two Stanford computer science professors who founded Coursera. “Now we are thinking about how to use the materials on campus to move along the completion agenda and other challenges facing the largest public university systems.”

Coursera’s new market would be for-credit online courses for 1.25 million students at partnering public institutions.

The unsigned Coursera agreement with the University of Kentucky requires course materials to be provided by the University based on Coursera’s model of instruction. Courses are offered under the “brand” of the offering college or university.

The capability to transfer course materials from one learning system to another is key to low unit costs per student enrollment by increasing the number of students who are benefiting from the investment. Recent start-ups, including Coursera, have not publicly made commitment to the standards needed for interoperability. (Coursera does have options that permit the course to be offered to others for delivery to their students and to license courses to others for use with Coursera-compliant software).

The U.S. Department of Defense sought similar unit cost benefits; the SCORM (Shareable Content Object Reference Model) specification was implemented by most open source and commercial learning systems for higher education and by textbook publishers. Though dated and limited, this standard continues to serve its purpose. A new version based on real-time exchanges of data (CMI-5) has been incorporated in several commercial systems.

A combination of current and new providers of online courses, sharing course materials and courses, could scale faster if all parties agreed to follow standards.

Online with support?

The data Phil Hill cites also suggests a third level—professional development and personal interest with tutorial support. This is the online “continuing education” option. These courses have value for students and their employers. Both students and employers have a history of paying for these courses.

Three business models have been tested: The MOOC providers have tested offering courses for free.

A variant of the first, fees for additional services. Now MOOC providers are implementing fees for security and identity management, for certificates of completion and for course credit recommendations. These fees are nearing the $100 per enrolled student that may make open courses economically viable. “Advertising” was implicit in the “free” open course offerings. The online experience could encourage a student to enroll in other offering college or university. There is limited early opinion suggesting this may be the case.

Second, Courses for professional development and personal interest instruction. “Great Courses” has developed the DVD/CD-ROM market. With 350 courses The Teaching Company appears to be profitable. (It is a private company). College and universities continuing education often is successful with a similar model. With support, the MOOC providers could charge an additional or higher fee for this service. Hill’s professional development model suggests this model.

Third, the online courses offered for credit by accredited colleges and universities, or on their behalf as Coursera is now offering for public university systems.

Accreditation, course or institution or both

Thursday Kevin Carey, director of the education policy program at the New America Foundation, “urged a new system of course-level accreditation that would make those courses eligible for federal financial aid” and presumably could be used to supplement course offerings of the California public colleges and universities to increase capacity for enrollments. In his testimony before the House Committee on Education and the Workforce’s subcommittee on higher education and workforce training, Carey wrote:

[C]olleges are free to define their own standards of academic success, which accreditors must accept. Unsurprisingly, nearly all colleges believe they are successful.

He continued,

Accreditation involves no legitimate investigation of how much students are learning or what kind of academic standards, if any, are enforced. The existing accreditation process simply does not allow for such questions to be asked, or answered. That is why standards have fallen so far under the aegis of accreditation.

He concluded:

The accreditation process is also a major barrier to innovation. Accreditation is a club, and if you want to join the club, or be allowed to stay in the club, you have to show that you’re like the other members. This all but eliminates the possibility of price competition from new entrants to the higher-education market, which is the only thing that will solve the nation’s college cost problem in the long run.

Barriers to success

The data Phil Hill cites and John Tamny’s observation does not say online education as practiced by MOOC providers is not viable, but rather there are separate markets with different needs at different prices. Other data shows student performance online is comparable to lecture, especially in engineering, mathematics and science courses. It also shows introducing online materials as part of a course permits faculty to be more productive and students to learn more and retain it longer.

Data does not support that all of the learning experiences in an undergraduate residential college environment can be reproduced through online learning; John Tamny believes employers value residential education. Hence his conclusion: traditional colleges and universities will continue to be viable, but online providers—in the narrow sense—are doomed to failure. His inference is motivation for a thorough discussion of costs and benefits of employing different methods of instruction.

The opinion of employers of online education is conflicting and largely unknown. Course accreditation remains unresolved.

Higher education is a long-term and complex process in a changing economic and political environment. John Tamny, Phil Hill and Joshua Kim have contributed to an important conversation that should broadly continue.