How online education could stop the higher-ed bubble from bursting

There could be 25 million online college students by 2015, according to research.

Low-cost online courses could help higher education from becoming the next economic bubble that bursts and inflicts fiscal pain on institutions, investors, and students, said educational technology experts who want more inexpensive options for those seeking a college degree.

Economists and financial analysts first warned about the growing higher-education bubble in 2009. The bubble, they said, is fed by rising tuition, increasing enrollments, and crushing school debt that often can’t be paid by recent graduates who can’t find a good-paying job in a down economy.

And just as Americans were urged to invest in tech companies before the dot-com crash of 2000, or to buy property while housing prices skyrocketed in the mid-2000s, Americans are encouraged today – by everyone from family members to lawmakers – to sign up for college classes, even if it requires massive loans.

For-profit colleges’ expansion of online education has helped feed the sector’s massive growth, but it might be web-based education that prevents the disastrous effects of a burst economic bubble, educational technologists said.

Students could earn degrees for a fraction of the current costs if more than just a handful of colleges and universities embraced free open-source educational material and created web-based classes that didn’t include the technological bells and whistles that cost so much, said Shai Reshef, founder of University of the People, a free online school launched in 2009.

“Universities are conservative,” said Reshef, whose university has enrolled 900 students in 115 countries. “They’re not very open to new methods of delivery … and they too often feel they should have best-looking technology, filled with interactivity and multimedia options and other [features].”

University of the People, for instance, uses the open-source Moodle platform favored by many school technologists who have criticized high-priced learning management systems (LMS) such as Blackboard.

The online school, which isn’t yet accredited, doesn’t have audio or visual components to its curriculum, Reshef said, but student satisfaction remains high: More than 90 percent of University of the People students said in a recent survey that they would recommend the school to a friend or family member.

“There’s a strong pressure to lower cost of higher education, and this pressure will just get stronger and stronger as time goes on because people understand that [education] can be way cheaper than it is,” he said. “But the most important thing remains delivering results, and you can do that with [less expensive] technology.”

Today’s high unemployment and the rising cost of college shouldn’t discourage Americans from attending college right out of high school or returning to campus after many years in the workforce, said Dallas Stout, a faculty member at the University of the Rockies, a private for-profit institution operated by Bridgepoint Education, Inc., one of the largest for-profit education companies.

Avoiding higher education – the online or traditional versions – doesn’t make sense for students who can secure school loans, Stout said, since college degrees have proven to “increase one’s lifetime earning potential.”

“That doesn’t mean I think students don’t need to worry about their educational debts,” he said. “I just think people need to be responsible in their choices and take a long term view. Educational debt continues, in my opinion, to be one of the few good debts for the overwhelming majority of people.”

Degree holders have fared better in the current economy when compared to the general working population.

The unemployment rate among those with a bachelor’s degree was 5.2 percent in 2009, according to federal statistics. That number jumped to nearly 10 percent among high school graduates, and 14.6 percent among Americans with less than a high school education.

Among those who have earned a Master’s degree, unemployment was less than 4 percent.

Stout said colleges and universities are unlikely to cut the price of higher education during tough economic times, which usually translate to a college enrollment boom while out-of-work Americans hope to boost their credentials with a degree.

“If cost cutting were to occur, it would likely happen after the economy recovers,” he said, adding that web-based schools shouldn’t shoulder the blame for the creation of an economic bubble. “If I were to believe a bubble existed, I would tend to think the issue was with a proliferation of colleges and universities in general as opposed to singling out online programs as the culprit.”

The role of online education in the creation of the higher-education bubble can be seen in the skyrocketing enrollment among for-profit colleges like the University of Phoenix and Kaplan University.

There were 1.8 million students enrolled in for-profit schools in 2008, more than triple the 500,000 students enrolled in 1998, according to industry statistics.

The number of college students taking traditional face-to-face classes will plummet from 14.4 million in 2010 to 4.1 million in 2015, according to a report from research market firm Ambient Insight. And with the population of only-online students expected to triple during that time, so-called traditional learning will be level with online learning.

The research firm said the five-year spike in online college courses would owe, in part, “to the proliferation and success of for-profit online schools” such as the University of Phoenix and Kaplan University, which draw millions of students with flexible internet-based class schedules.

Even after the growth of online learning, some educators said even the emergence of an inexpensive online model wouldn’t be the solution to a higher education bubble fueled largely by high student debt.

“I don’t think you can beat the basic classroom and the interactions between professors and students,” said Betsy Sigman, a professor at Georgetown University’s McDonough School of Business. Face-to-face interaction between students and their professors is “important to the learning process and something that you just don’t get from an online situation.”

Traditional education will continue to draw students despite the proliferation of online options or the lingering concern that the job market isn’t friendly to recent graduates looking for their first job, Sigman said.

“You hear people say that their college years were the best of their lives, and you’re just not going to hear that from someone who spent four years in front of a computer,” she said.

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