I log in to the corporate website, go to my Continuing Learning page, and at 8:50 a.m. I click on "take this course", put on my headphones (with microphone built in), and wait. A program called Centra opens up. There on the right side is my name along with the names of several other people. Filling up the rest of the screen is a blank window. At 9:00 on the dot, our professor for the day starts talking. The screen fills up with our professor's computer screen. Class begins. If we have a question, we click on the raised hand, and our name starts to flash, and the professor turns on our microphones, and we ask our questions. If necessary, the professor can switch from her desktop to one of the students' desktops, and everybody else can watch. And, naturally, the whole event is recorded for playback anytime you want forever and ever.
Having experienced this first hand, I'm not surprised to learn about the future of colleges: $99 per month for all the classes you want to take, as fast as you want to take them. There is something to be said for getting all your required English lit, history, science, math, and language classes out of the way on the cheap.
Eventually of course, people will start taking their 101 classes on the internet as well for $99 per month... and then their 201 classes... et cetera, et cetera. Eventually — within the next 10 years, say some — the first time a (non-elite, average) college campus will see a living person is when they come to drop off an application for a Masters Degree.
It may not be the most prestigious way to earn a Bachelors degree, but considering that you will save yourself $115,248 out of the $120,000 that you'd be spending on a 4-year private school with the $99 per month plan, I don't doubt that more than just a couple of students will be making the switch to doing their undergraduate degrees online.
Of course, this leaves colleges (who will probably be missing your $120,000 quite a bit) in a heck of a pickle. A newspaper-industry sized pickle.
To anyone who has watched the recent transformation of other information-based industries, the implications of all this are glaringly clear. Colleges charge students exorbitant sums partly because they can, but partly because they have to. Traditional universities are complex and expensive, providing a range of services from scientific research and graduate training to mass entertainment via loosely affiliated professional sports franchises. To fund these things, universities tap numerous streams of revenue: tuition, government funding, research grants, alumni and charitable donations. But the biggest cash cow is lower-division undergraduate education. Because introductory courses are cheap to offer, they’re enormously profitable. The math is simple: Add standard tuition rates and any government subsidies, and multiply that by several hundred freshmen in a big lecture hall. Subtract the cost of paying a beleaguered adjunct lecturer or graduate student to teach the course. There's a lot left over. That money is used to subsidize everything else.Of course, colleges are fighting back. They have refused to accept transfer credits from online companies like StaighterLine. (Some colleges have partnered with Straighterline though and are acting as "launderers" for these credits... transferring them in, and then allowing them to be transferred out.) But, the accreditation system is an artificial and procrustean barrier (accepting unknown credits from unknown community colleges while rejecting the same credits from online sources which, in some cases, might even be providing a better product) whose protections will not last forever.
But this arrangement, however beneficial to society as a whole, is not a particularly good deal for the freshman gutting through an excruciating fifty minutes in the back of a lecture hall. Given the choice between paying many thousands of dollars to a traditional university for the lecture and paying a few hundred to a company like StraighterLine for a service that is more convenient and responsive to their needs, a lot of students are likely to opt for the latter—and the university will have thousands of dollars less to pay for libraries, basketball teams, classical Chinese poetry experts, and everything else.
What happens when the number of students making that choice reaches a critical mass? Consider the fate of the newspaper industry over the last five years. Like universities, newspapers relied on financial cross-subsidization to stay afloat, using fat profits from local advertising and classifieds to prop up money-losing news bureaus. This worked perfectly well until two things happened: the Internet made opinion and news content from around the world available for nothing, and the free online classified clearinghouse Craigslist obliterated newspapers' bedrock revenue source, the want ads. Suddenly, people didn't need to buy a newspaper to read news, and the papers' ability to subsidize expensive reporting with ad revenue was crippled. The result: plummeting newspaper profits leading to a tidal wave of layoffs and bankruptcies, and the shuttering of bureaus in Washington and abroad.
Like Craigslist, StraighterLine threatens the most profitable piece of a conglomerate business: freshman lectures, higher education’s equivalent of the classified section. If enough students defect to companies like StraighterLine, the higher education industry faces the unbundling of the business model on which the current system is built. The consequences will be profound. Ivy League and other elite institutions will be relatively unaffected, because they’re selling a product that's always scarce and never cheap: prestige. Small liberal arts colleges will also endure, because the traditional model—teachers and students learning together in a four-year idyll—is still the best, and some people will always be willing and able to pay for it.
But that terrifically expensive model is not what most of today's college students are getting. Instead, they tend to enroll in relatively anonymous two- or four-year public institutions and major in a job-oriented field like business, teaching, nursing, or engineering. They all take the same introductory courses: statistics, accounting, Econ 101. Teaching in those courses is often poor—adjunct-staffed lecture halls can be educational dead zones—but until recently students didn't have any other choice. Regional public universities and nonelite private colleges are most at risk from the likes of StraighterLine. They could go the way of the local newspaper, fatally shackled to geography, conglomeration, and an expensive labor structure, too dependent on revenues that vanish and never return.
By itself, the loss of profitable freshman courses would be devastating. And in the long run, Web-based higher education may not stop there. Companies like StraighterLine have the hallmarks of what Harvard Business School Professor Clayton Christensen and entrepreneur Michael Horn describe as "disruptive innovation." Such services tend to start small and cheap, targeting a sector of the market that established players don't care much about—like tutoring in introductory courses. "This allows them to take root in simple undemanding applications," Christensen and Horn write. "Little by little, the disruption predictably improves… And at some point, disruptive innovations become good enough to handle more complicated problems and take over, and the once-leading companies with old-line products go out of business."
Read the whole article.
But neither the regulatory nor the psychological obstacles match the evolving new reality. Consumers will become more sophisticated, not less. The accreditation wall will crumble, as most artificial barriers do. All it takes is for one generation of college students to see online courses as no more or less legitimate than any other — and a whole lot cheaper in the bargain — for the consensus of consumer taste to rapidly change. The odds of this happening quickly are greatly enhanced by the endless spiral of steep annual tuition hikes, which are forcing more students to go deep into debt to pay for college while driving low-income students out altogether. If Burck Smith doesn’t bring extremely cheap college courses to the masses, somebody else will.Obviously, colleges and universities and the accompanying research facilities will never completely disappear, but I do think that a big adjustment is on the way... especially in terms of prices for undergraduate degrees. College lectures, just like I am seeing happen in the medical transcription industry, can be outsourced for a fraction of the price.
Which means the day is coming — sooner than many people think — when a great deal of money is going to abruptly melt out of the higher education system, just as it has in scores of other industries that traffic in information that is now far cheaper and more easily accessible than it has ever been before. Much of that money will end up in the pockets of students in the form of lower prices, a boon and a necessity in a time when higher education is the key to prosperity. Colleges will specialize where they have comparative advantage, rather than trying to be all things to all people. A lot of silly, too-expensive things — vainglorious building projects, money-sucking sports programs, tenured professors who contribute little in the way of teaching or research — will fade from memory, and won’t be missed.
But other parts of those institutions will be threatened too — vital parts that support local communities and legitimate scholarship, that make the world a more enlightened, richer place to live. Just as the world needs the foreign bureaus that newspapers are rapidly shutting down, it needs quirky small university presses, Mughal textile historians, and people who are paid to think deep, economically unproductive thoughts. Rather than hiding within the conglomerate, each unbundled part of the university will have to find new ways to stand alone. There is an unstable, treacherous future ahead for institutions that have been comfortable for a long time. Like it or not, that's the higher education world to come.
UPDATE:
By the way, I really think that this is one of the greatest threats to human progress ever, and I'm not trying to be hyperbolic or anything. Think about how much innovation, discovery, and progress comes out of the research of Universities in every field of human endeavor. Now, cut that research by 50% or more. Who is going to pick up that slack? The governments of the world? (Yes: Probably governments... but it won't be enough.)
Granted, the largest Universities may be able to withstand some downturn, but all of the less-important stuff — the local ecological studies, the small inquisitions into minor fields that lead to bigger and bolder questions by bigger and bolder researchers — those will all be in danger.
Humanity may have a great tradition of the "garage inventions", and corporate R&D is always bringing us new and exciting things, but those are for profit; when it comes to finding things out for no other reason than "I want to know", universities are the foundation of human curiosity. We will never get as far without them and without the dreamers and visionaries who are employed by them to pursue knowledge purely for knowledge's sake.
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