The ongoing debate over MOOCs is a microcosm of America’s higher education industry, which is now at an Internet-created crossroads. Across the country, online learning allows schools to expand their reach, but it is also threatening the traditional business model of how to deliver knowledge and also how much to charge for it.

Across all sectors of the industry – public, private, and for-profit – there is the sense that online learning offers the greatest opportunity for future growth. For-profit universities such as the University of Phoenix and Strayer University were the first to truly embrace online education, and their revenues soared as a result. Between 1998 and 2008, enrollment in U.S. for-profit colleges jumped by 236 percent, according to the independent advocacy group Education Trust.

Tailored for adults

Aside from their early mastery of the online platform, the for-profits excelled at marketing to adult, nontraditional students, as well as tailoring the educational experience to their unique needs. The University of Phoenix, for example, compressed its classes into five- or six-week mini-semesters, with the idea that it’s easier for busy adults to absorb one fast-paced class than to juggle four classes in a full-length college semester.

More recently, though, for-profits have been criticized for using overly-aggressive, car-salesman-like selling tactics to recruit students. The schools often charge higher tuition than public colleges, and the student loan default rates at for-profit schools are dramatically higher than at other types of colleges.

At the same time that for-profits have struggled, traditional public and private colleges have aggressively expanded their menu of fully online degree programs.

But some schools, such as the University of Miami, have been hesitant to join the mad dash toward offering fully online degrees. UF has a staggering array of graduate-level online degrees – 70 in all.

Ray Schroeder, director of the Center for Online Learning, Research and Service at the University of Illinois-Springfield, says universities are now facing the same decisions that confronted the music and newspaper industries years ago when the Internet turned their whole operating structure upside down.

“Colleges and universities should be excited – this is an important change and movement in higher education,” Schroeder said, although he warned that online learning means colleges will face increased, and tougher, competition. Schroeder noted that well-known Harvard business professor Clayton Christensen predicts that about half of U.S. colleges and universities will go bankrupt during the next 15 years.

“There certainly will be a shakeout,” Schroeder said.


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