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Future of Online Education, Part One

While I am a proponent of online education, some "market realities" are starting to concern me.

Education is unlike most products in several ways, but it is still a service-based product. Let me first explore the traditional higher education markets, the rising "Big Box" market, and the current challenges. Then, I will explain how I see the future and why bookstores and computer shops offer some warnings.

What is the traditional "market" for higher education? There are at least four major, and countless minor, markets. The following are the four major traditional higher educations markets:

1. The "nearby and affordable" model of most state colleges and universities. For most students, these institutions were chosen based on price and location. As with grocery stores, discount retailers, and other commoditized goods, price and location become the primary criteria for selection for a significant percentage of consumers.

My wife and I completed courses at the local community college in California. We could commute from home, it was affordable, and the quality of general education at two-year colleges is often good or even great. Community colleges, especially in this economy, are a good model for many students to consider. Both of us also remained in California as undergraduates and attended great universities. The location was important, as were the costs. We could be near home and save some money.

Online Complication and Struggles Ahead
What the regionals offer is a campus with an identity. Going online, that advantage is lost. The campus environment, the sense of community, is difficult or impossible to recreate online.

While many of the "nearby and local" campuses are offering online courses for reasonable fees, the location stops mattering. The cost savings offered to state residents seems artificial, at best, in an online setting. As I'll ask later, what makes the virtual campus unique? Why not shop merely on price as long as the units are transferable and accredited?

The regional schools are going to lose some students to cheap, mediocre online programs. Campuses will have to be that much better or suffer losses.

2. The "exclusive club" model (though some are rather large). Students elect to attend an exclusive campus based on its reputation for excellence. These campuses are not going to go away; they have financial endowments and loyal alumni. I do not believe the elites offer the best undergraduate educations; they excel at the graduate level, however. What they offer is image and standing.

Undergraduates enter the exclusive club institutions directly from high school. These are, at least according to our standardized metrics, the best of the best students. Getting into a university is a status symbol, as much as it is a promise of social standing.

Online Powers to Be?
When the exclusives go online, they have marketing muscle thanks to brand awareness. The online programs at these institutions can remain selective and expensive, with little risk of cannibalizing their traditional programs. If Yale, Harvard, MIT, or Stanford offer online courses, they can still enroll an elite set of non-traditional students.

Many elite schools already offer low-residency programs in business, creative writing, and other fields that attract adults with existing degrees. An "executive MBA" is not cheap from these institutions, costing $150,000 or more, and not everyone is able to fly to campus for a few weeks each year. The online components of these programs allow the elite institutions to increase their reach without much risk.

I don't foresee the elites lowering admission requirements or their fees. Online programs will simply allow them to expand numbers of alumni incrementally.

The elites are already posting their lectures and materials online, for free. However, this is as much about marketing and pride as it is about helping people learn. If you want to earn a degree, you still have to enroll in courses and pay a lot of money. "Free" courses improve the image of an institution, at little expense. Don't expect Yale or Oxford to do away with their gatekeepers ("admissions officers") any time soon.

3. The "shared values" private model. There are institutions that will always appeal to special groups. These campuses focus on "shared values" ranging from religion to a passion for student-directed learning. If you want to attend a Catholic university, that identity is foremost in the decision process.
The United States has many wonderful values-based institutions. While most are Christian, there are also values-based liberal arts colleges that focus on civic responsibility. Our historically black colleges are often values-based, with great programs supported by liberal arts educations.

Online Values?
Yes, that's a cheap pun. While some religiously and philosophically based institutions exist online, they are not the best academically. That might seem harsh, but my experience is that online religious universities are selling a promise that isn't fully realized.

The good and great values-based campuses are not threatened by the rise of online programs that often have minimal admissions requirements and care more about numbers of students than quality of instruction. Online programs in this niché will appeal to non-traditional students and those, to be blunt, not quite prepared for the most demanding institutions.

4. The "second chance" model of education. If a student isn't ready for a demanding university, maybe he or she will try a private, often for-profit, university with relaxed admissions requirements. For adults, the second chance and non-traditional models have offered a variety of approaches to degree completion. The problem is that employers and other academic institutions have generally sneered at the second chance colleges and universities.

Online, the New Big Box Model
While the second-chance programs have been dismissed by some employers and the graduates of other institutions, the reality is that the second-chance programs are becoming the "Big Box Retailers" within higher education, especially online. The names are familiar and these institutions advertise relentlessly to adults seeking better career paths and more options.

The "nearby and affordable" model I first discussed are at significant risk if the online Big Box Retail model expands by pursuing the mid-tier and near-upper-tier students. The for-profits have lots of money and technical expertise. It wouldn't be difficult to imagine students opting for an online "community college" instead of the local campus.

In my next post, I'll explore why the mid-tier is at risk and what this means to smaller, regional institutions. The question to consider: what makes one online classroom more compelling to students than another? Students don't always realize how different institutions and their motives might be.

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