Computing Applications Technology strategy and management

MOOCs Revisited, With Some Policy Suggestions

Assessing the rapidly evolving realm of massive open online courses.
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  4. Footnotes
MOOCs Revisited, illustration

It is approximately one year since I wrote a column on massive open online courses (see "Are the Costs of ‘Free’ Too High in Online Education?" Communications, April 2013). Since then, we have seen many more analyses on the subject.a I also received several responses to my column, from positive to negative,3,5 and served this past year on an MIT task force examining the future of education (see http://future.mit.edu/).

Probably the most disturbing response to my column came from a professor in the U.S. who had decided to teach his course on one of the major MOOC platforms. He thought MOOCs would be the future and did not want to be left behind. Yet, he confessed regret that he might be contributing to the "tragedy of the commons": He feared his individual decision would not be good in the long run for his university or for the education profession. The image that came immediately to my mind was of the natives on Easter Island who cut down the last tree. They got fuel for another day but eventually their civilization collapsed. Did they know what they were doing?

The breadth of MOOC offerings is growing but also leaves considerable room for traditional university education.

I expressed two main concerns in my April 2013 column:

  • Free online courses might set a threshold price of "zero" for college education and seriously undermine the economic models of private colleges and universities that rely on tuition. The scenario in my mind was what happened to other industries affected by platform dynamics and the Internet, such as newspapers, magazines, books, music, video, and software products. These digital goods have close to a marginal cost of zero for reproduction and distribution but this does not mean that they have a zero cost of production or zero value.
  • Many colleges and universities would offer online courses but eventually find it difficult to subsidize free education, as MIT has already experienced with Open Courseware. Then, we might be left with only a few wealthy universities and MOOC platforms dominating the online education industry.

With regard to my first concern—threats to the economics of tuition-dependent educational institutions—it is still much too early to gauge the impact of MOOCs or digital technologies more broadly. Nonetheless, university administrators seem to understand the economic challenges very clearly and are already making some adaptations to the free MOOCs model. For example, MIT and Harvard jointly launched EdX in 2012 after providing $60 million in funding. The courses currently remain free, though some courses charge a fee for an ID-certified certificate. EdX in the future is likely to charge for credentials such as certificates of completion. Some of these courses may be eligible for degree credit at some institutions, though EdX does not at present offer transcripts. EdX is also licensing some materials for a fee to other institutions. Coursera is heading down a similar path, that is, to charge for credentials or grading. Udacity already charges for grading. In other words, a business model is emerging.

A business model is critical because education always costs something to produce. In the residential world, the most elite institutions, which include MOOC pioneers such as MIT, Harvard, Stanford, Princeton, and the University of Pennsylvania, set the price for tuition. Today this is over $50,000 per year. These prices are then copied by other institutions. However, only the elite schools have large enough endowments and diverse sources of revenue that allow them to give significant financial aid to needy students as well as to subsidize experiments such as free MOOCs. The average MIT student, for example, pays only half the nominal tuition rate. Moreover, net tuition has not exceeded more than 15% of MIT’s revenues in recent decades; we rely much more heavily on research funding as well as endowment income.4 Another economic challenge is that MOOCs are more expensive to create and produce. They resemble movie productions far more than traditional college classes, especially if they require small armies of teaching assistants to be effective.

With regard to my second concern—that a few Web platforms, led by the most elite institutions, would dominate the MOOCs movement—this does seem to have occurred. Again, however, we see some adaptations. There are three main MOOC platforms: EdX, which is non-profit, as well as the for-profit Coursera (founded by two Stanford professors in 2012, with $85 million in venture capital) and the for-profit Udacity (established in 2012 by Sebastian Thrun, a formerly tenured professor at Stanford and Google Fellow, and two other partners, with substantial venture funding). However, many universities and colleges now contribute content to the two main platforms. As of early 2014, EdX counted 27 institutions among its members and Coursera 108 (see https://www.edx.org/ and https://www.coursera.org/).

Enthusiasm for MOOCs one year later also seems dimmer because data so far suggests they are unlikely to replace in-person education anytime soon. For example, the New York Times recently gave front-page coverage to a University of Pennsylvania Graduate School of Education report involving a million students. Only about 4% of those who registered completed a MOOC. Half of the registered students never even viewed a lecture. In addition, MOOCs do not seem to be educating the impoverished third-world masses; rather, they are providing continuing education to relatively wealthy students of working age, some 80% of whom already have college degrees.2 Other experiments, such as between Udacity and San Jose State in small classes of 100 students, found the online students did much more poorly than regular students, even with teaching assistants. (EdX also did an experiment with San Jose State and got somewhat better results, supporting the argument that MOOCs can work well when combined with live instruction in a "blended" education model.b) Udacity is now trying to work with companies to offer vocational training rather than college classes. In particular, it has partnered with AT&T and Georgia Tech to offer a three-semester master’s degree in computer science for $6,600—one-seventh the tuition rate for out-of-state students.1

The breadth of MOOC offerings is growing but also leaves considerable room for traditional university education. The first MOOCs were based on large undergraduate introductory lectures. Putting these types of courses online has many advantages: Students can learn at their own pace, there is no need to keep giving the same lectures year after year, students can view the lectures from different locations or institutions, among other benefits. Yet having access to live instructors also helps students learn, as the San Jose State experiments suggest. It is possible to have interactive Web classes (the online and for-profit University of Phoenix has done this for years), but these become increasingly difficult as the number of students rise. In addition, many advanced classes and seminars do not adapt well to the MOOCs format.

In short, we have made considerable progress finding ways to balance laudable educational goals and technological progress with economic and pedagogical realities. Nonetheless, there remain several questions we still need to resolve. I have been taking notes the past year and consulting with my task force colleagues, and this is my current list:

  • Should MOOCS aimed at general education remain free? I think this is possible and desirable. They will require subsidies to produce and deliver, and salaries for the faculty and teaching assistants. However, the high-traffic MOOC platforms can generate indirect revenue to offset some costs, such as by selling ads or lists of CVs, or licensing content. Wealthy universities and colleges as well as foundations and governments also can contribute some funding. Venture capitalists are involved as well, though it is anyone’s guess whether their investments will pay off.
  • Should MOOCs with a credential, grade, or credit toward a college degree be free? I think not because I still believe "free" in the long run will damage the economic model of the many non-profit educational institutions that rely on tuition. There is another purpose as well to setting a price on these courses. If there are even very modest charges, it is likely the number of students who register for MOOCs will drop dramatically. However, the number of students who complete the courses should also rise dramatically. We need to run more experiments. I would try to set the price of a credentialed or graded MOOC to balance these two goals—providing education to people who cannot come to a college campus versus making enough money to cover costs plus some excess to invest (such as in new course development or infrastructure).
  • What about institutions or individual faculty that want to emphasize MOOCs’ philanthropic potential? Surely, we can still offer education for free or at very low cost to many students around the world through scholarships or tuition waivers, just as we already do for traditional students.
  • How should institutions treat MOOCs in terms of degree credit, apart from tuition charges? Some schools recognize courses taken at other schools in order to waive requirements but not to accelerate completion of a degree; other schools accept transfer credit toward a degree but with some limits. I would treat internal MOOCs as regular classes and external MOOCs from accredited institutions, as long as they come with grades and credit, like any other college classes where a student applies for transfer credit.
  • Should a student be able to get a college degree solely through taking MOOCs? I think the answer here is a qualified yes, but I would treat the degrees more like we currently treat extension school degrees—give them a specific designation. It is already possible for students to get regular college and advanced degrees (even Ph.D.’s!) fully online from some institutions, with or without MOOCs. The big question for me is whether a student who only takes, say, EdX or Coursera classes, should get the identical degree as a student who physically attended Harvard, Stanford, MIT, Berkeley, Princeton, Penn, Michigan, or other universities where only a fraction of the applicants are admitted? At present, there is too much variance in the quality of the students and the educational experience is not the same. They should not get the same degrees. Nonetheless, EdX, Coursera, and other MOOC platforms may themselves evolve into degree-granting institutions.

These are brief policy suggestions for some difficult questions. When it comes to education, there are also larger issues at stake, as reflected in another email message I received from a former business school dean. He too worried about the threat MOOCs might have on the business models of tuition-dependent universities. More than this, though, he worried about the need to threaten institutions such as his. He thought the faculty union at his school had grown too powerful over the years and used its influence to resist curriculum innovations as well as to undermine the tenure process by limiting outside evaluations, which focused on research quality. Ultimately, he saw student education as suffering. So, whatever else they may do, MOOCs can be a useful "kick in the pants." They can persuade complacent professors and institutions to improve their educational product lest we be replaced by online videos and grading software.

My greatest concern at this point is clarity in mission. Should universities and colleges focus on educating their local tuition-paying students or on educating the world? Many professors do both, such as by writing mass-market books and articles, and they do research. But it is very difficult to do everything well. Creating and running a successful MOOC seems to be extraordinarily difficult and time consuming, and not what professors are usually trained to do. So what is the first priority? Too much attention on how to better disseminate existing knowledge may ultimately weaken our ability to create new knowledge. It would indeed be a "tragedy of the commons" if the fascination with online courses diminishes the time and commitment of our best faculty to do world-class research, which we need to create the MOOCs as well as the conventional classes of the future.

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