Published on 2013/06/06

Technological Growth Opening Market for Educational Providers to Flourish

AUDIO | Technological Growth Opening Market for Educational Providers to Flourish
As new technologies begin to make high-quality, lecture-based online education accessible on a global scale at an extremely low cost, traditional institutions must adapt themselves to the new marketplace.

The following interview is with Bryan Alexander, senior fellow with the National Institute for Technology in Liberal Education. Alexander has a great deal of experience analyzing the impacts and potential impacts of technology in the higher education space, and in this interview discusses what has caused the recent growth of providers in the higher education sector and how this explosion of players in the field has reshaped the industry.

1. What do people mean when they talk about the ‘ed boom’ in today’s higher education marketplace?

They usually talk about several things. One is the boom of innovation, development and new ideas in higher education. And we can see this in the rapid expansion of the for-profit sector, for example, which has had some problems, ranging from financing problems, reputational problems, but still educates a pretty high proportion of American higher education. …

We also have developments in technology — most recently from open education, which has led to a series of different developments on the small side, from Khan Academy, to the large side of various kinds of Massively Open Online Courses (MOOCs), and these are really presenting some new twists on older distance learning and they may offer a new way for students to learn and for institutions to develop curriculum.

On top of all this, there’s the general sense … that higher education is in a crisis, it’s in a kind of bind. On one hand, the anxiety about costs and about student-loan debt, in particular, have never been higher. Meanwhile suspicion, skepticism, even, doubt about the value of higher education, have also been growing. So there’s the various people, like Peter Thiel asking students to forget college. There’s the recent two-year crisis of enrollment stabilizing, if not dropping slightly. Higher education is both very popular and not very popular at the same time, which is giving rise to all kinds of new ideas and developments. …

2. How is this technological proliferation affecting higher education institutions from a business standpoint?

Several ways and, keep in mind, … a lot of digital technology isn’t new. I mean, email and the Internet dates back to the ’60s, but a lot of the developments in this are pretty fresh and they are changing rapidly.

Here’s one: [learners have] access to high-quality lecture content online, such as the content available from MOOCs or from the rest of open education. I mean, MOOCs have gotten a lot of the spotlight for open education but, really, there are a lot more things going on in open education besides MOOCs. There’s all kinds of open classes — Yale University, for example, has the Open Yale initiative; there’s the Open Learning Initiative from Carnegie Mellon [University], which has terrific online tutorials in the sciences — so there’s a lot of this content that’s available.

So, if that’s all available, what does this do to the business of higher education? … Why should you pay a certain fee to go to a campus and listen to a series of lectures when you can get that same content for free? … If we would automate the lecture experience in a way that is satisfying for learners, then that threatens, in many ways, the offering. And it’s a kind of classic digital disruption of people now having access to roughly the same kind of content, but for a lower price or no price at all; zero.

Now, one spin on this is that we might see not exactly a competition, but an alternative. So, the experience of being in a classroom with a gifted teacher and a small classroom — with fewer than 20 students — we can’t really replicate that online. We’ve come close, and I think multi-point video conferencing such as Google Hangout is where we’re starting to come close to it, but generally speaking, we can’t. And most of the MOOCs are nowhere near that. But instead they offer a lower-quality experience for a far cheaper price. San Jose State [University], for example, has this interesting experiment where learners … have a choice. They can take basic math classes … for a certain fee from instructors or they can take the same classes off of Coursera in MOOC format for far less. This is something similar with [Georgia Institute of Technology], which is offering a computer science master’s program at roughly one-sixth of the cost than a face-to-face program.

Why does this matter? Well, it may be that, instead of seeing a single price point, that now we have two different categories. Call it, perhaps, the Mercedes Benz versus the Chevy model, or think of it as Haagen-Dazs versus Wal-Mart [branded ice cream]. It might be that people still prefer to have the [Mercedes] or the Haagen-Dazs version but they aren’t going to be able to afford it, especially in this economy. It may be that they think it’s a desirable thing but just not what they have in mind right now. They may find the Wal-Mart experience sufficient. So, we may see a new competition between higher education and this new online alternative. And, through the mechanism of competition, perhaps we’ll see the market bifurcate and we’ll have two different roads. Perhaps we’ll see the price of higher education begin to come down. Now, I’m saying price of higher education, not the net costs — that’s a different issue — I’m talking about sticker price. …

Most students, when they go to higher education, and they go to an institution of higher education, of college or even university, there’s a sticker price that they’re assessed. But then they have available a series of ways of reducing that price through scholarships, through grants, through merit pay — all kinds of ways. And so, we often speak of the net price of an institution: that’s the average price that students pay. … The net price is trickier because it’s so unpredictable and it’s usually not publicly visible whereas the actual tuition price, the sticker price, is publicly available. You can find that easily throughout the Web.

3. When we’re talking about bringing MOOCs into the traditional institution, into the classroom, are you finding that Institutions are sacrificing quality for price?

That’s a great way of putting it. And that’s often a charge that can be leveled against online learning in general. Not just MOOCs, but you can think about online institutions like University of Phoenix, Western Governors [University], or the Southern New Hampshire [University] project. … It may be that the reduction experience is worthwhile, much like some people like to see matinees at a movie theater and save 50 percent of cost and miss out on the delightful experience of being in the throng of people in the night, but it’s okay; they prefer to save the price and have the slightly inferior experience.

That said, it’s possible that … the online experience, while not as good as the face-to-face experience, nevertheless develops more quickly; they are able to iterate much more rapidly. It’s easier to collect data on how people actually use it and, digital materials being what they are, they’re easier to redesign, refurbish and republish so you can improve the experience more quickly. Plus, we have the enormous ongoing transformation in digital technology constantly providing new tools, new techniques, new data. The face-to-face environment in higher education just simply doesn’t develop that quickly for a lot of reasons: the nature of analog life, but also the relative conservatism of higher education. Plus, we don’t have really good networking … for teaching and learning. A lot of teaching and learning development — not all, but a lot of it — is a product of individuals or the best individual departments. It doesn’t scale well. It doesn’t get lots of publicity. It’s not what scholars are rewarded for when they behave as scholars or professionals. So, it may be that while the digital world, in short, is inferior in quality, it’s catching up.

Will it ultimately catch up? That’s a different question. But let me footnote one about what I just said. I was opposing the online world to the face-to-face in higher education; that’s an artificial opposition that doesn’t completely hold and the reason is, in higher education, we also speak of blended learning, which is simply the combination of face-to-face, bricks-and-mortar classroom experience with online experience. And blended learning can be as simple as a professor having web content for the class which the students can access. I think when we speak of blended learning, we also tend to downplay the fact that students … are accustomed to going online to find this material anyway. …

Now, a lot of campuses are thinking about this strategically. They like to claim blended learning as a way of redefining the education they offer. So, as opposed to being wholly online, these institutions can now claim to be doing an ideal form of blended learning that combines the best of both online and offline; curated digital content, perhaps leavened with a dash of digital literacy, combined with what face-to-face can offer: the high intensity interaction, the rich promotional bandwidth that comes from being in the room with somebody else. So, when we oppose MOOCs to brick-and-mortar classes, I think it’s important to realize that we’re, in a sense, talking about different points of a continuum of digital engagement, call it distance learning versus blended learning.

4. Can technology “save” traditional colleges and universities from becoming obsolete or untenable in today’s higher education marketplace?

Well, it could save higher education, it could destroy higher education, but more likely something in the middle, some kind of transformation that would be painful and provocative. So, I’ll go back to the lecture experience. It’s pretty much a staple that lectures, especially long lectures, are horrendous pedagogical tools. I mean, there are gifted lecturers; we know this. It’s possible to teach people to become excellent lecturers. We know how to structure lectures to really maximize what others get out of it. But, generally speaking, they are not our best environment. They can’t really compare to the learning that comes from problem-based learning, from hands-on learning, from small group discussion. And it’s possible that institutions that rely on this will find themselves outflanked by better alternatives.

It’s possible that instead, they will find a way to complement it. So, for example, if you think about a class that is, say, two hours of lecture and then two hours of discussion every week, why not remove those two hours of lecture, replace those with the best online content — it might be from the one professor or could be from somebody else, from [University of Cambridge] or MIT or Stanford [University] … — and then, instead of having two hours of discussion, they get four hours of discussion. So, learners get the chance to ask more questions, to develop their own thinking, to reflect with other people, to build a learning community, which is very hard to do with a lecture. That would be a [subtle], but different, form of higher education. And it requires a whole set of mechanisms to happen; for example, it requires, in many cases, retraining faculty to be able to lead discussion. That’s not a trivial skill and most faculty do not get training in that in graduate school when they set out to become new professors.

Moreover, it doesn’t scale as much. One of the advantages of lectures and one of the reasons so many schools do it is because they are very inexpensive to offer and they scale hugely. It’s as cheap to lecture to 50 students as it is to 500 or 5,000. So, instead of having one lecture hall with 500 students in it, no, now you have to have dozens of sections. That’s hard to scale up. You have to figure out a way to handle that. … The incorporation of technology, the way I described it, if we’re replacing lectures with discussion, might accelerate [the increase in adjunct instructors in higher education]. In fact, we might see … the face of higher education on physical campuses may be swarms of low-paid, low-benefited, no-tenure-track faculty working through discussion sections, and the campus responsibility might be in part to train and develop those adjuncts and that ability and that set of skills for discussion. … I’m not positioning this as a utopia or a dystopia; I think there are a lot of drivers that can lead that way.

5. Is there anything you’d like to add about the impact of technology in the higher education marketplace and how technology is changing the business of higher ed?

Sure. I’m glossing over a lot of small detail, for example, one of the quiet revolutions that happened for the past 15 years has been the incorporation of automatic billing systems and registration systems. There is a whole elaborate backend of student affairs now that is managed in a different way, which is pretty tremendous. I mean, it’s literally the business of registering for classes and being assessed for classes and paying for classes and all of that has been automated, which is an interesting development.

But I think we are talking about a few of the pieces that are perhaps larger or more difficult to think about. One is the growth of entrepreneurs who are entering that education space. The most famous is … the Khan Academy, where a former hedge fund trader set himself up as a curriculum provider and, although much criticized, has been very successful in terms of getting eyeballs and getting attention. And, I have to say, a lot of the Khan Academy videos are very useful. …

But there are other entrepreneurs seeking to try to ease different pain points in education, from improving student life to finding advisors to connecting learners to tutors and a whole galaxy of people doing that. We may be seeing a bubble; we may be seeing a whole bunch of these guys popping up in Boston and New York, especially Silicon Valley, and the bubble will burst at some point. We know that a lot of investors are interested in education because it’s a very large market with a lot of money flowing in and out of it. … The climate of crisis and concern over education really signals an entrepreneurial opportunity. We should watch these. These may not conquer the world, they may not change things, but already we’re beginning to see some interesting shifts. For example, the course management space, which has been dominated by the giant of Blackboard, is now being disrupted by some Web 2.0-style companies — namely, Canvas from Instructure — which gives a very Web-friendly form of doing … content management. We may see more examples of that begin to unfurl, especially as we move toward mobile technology and embrace the forms of mobile devices.

Another thing to think about — and this is perhaps bigger than anything I’ve ever talked about — is that we’re seeing the gradual interconnection of learners, content providers and teachers on a global basis. … There is nothing national that allows or forbids access to a MOOC. … We know that the MOOC providers are rapidly expanding into key languages in order to make their audience share deeper and broader in an international way. American higher education has long focused on America as its scope but, really, we’re seeing technology enable internationalism, a kind of re-globalization of higher education. … We have to think about what does this mean for learners from multiple ethnicities, multiple religious backgrounds and multiple regions to interact in a class on, say, the history of religion or women’s studies? Thinking about what it means to have students from Russia, China and Singapore sitting alongside traders from Wall Street in a class about finance.

What amazing pedagogical opportunities or challenges or policy issues! One of the striking things that we’ll be seeing is we have to assume that the default now … is global, that the classroom is not a small box, that in fact it is an open field where anybody can play.

That, I think, is a transformation we’re just being able to walk into and one that I’m really looking forward to following.

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Readers Comments

Shaun Wright 2013/06/06 at 11:49 am

I take issue with how Alexander describes online education as lower in quality than its face-to-face counterpart. In fact, he himself acknowledges that large lectures are not conducive to learning, even though they are face-to-face offerings. There’s room for improvement in online education, certainly, but there are elements of the traditional higher education experience that likewise have to change. I take the optimistic view that the (real or perceived) ‘threat’ of online education will cause brick-and-mortar institutions to re-examine their current practices, which is a good thing.

    Bryan Alexander 2013/06/16 at 6:32 pm

    Shaun, I share your hope.
    But face-to-face education is more diverse than just lectures, as I’m sure you know. Bricks and mortar institutions also offer seminars, discussion sections, labs, master classes, etc. Those are usually what campuses celebrate, instead of lecture halls.

Paul LaSalle 2013/06/06 at 3:01 pm

I wonder if the same institutions will begin offering the high- and low-cost experiences for students. One example I can think of is Harvard University’s introduction of MOOCs via edX. Currently, Harvard’s MOOCs do not count as credit, but perhaps that is the next step for elite institutions and open education. This could lead to an interesting situation where elite institutions would have a share of two very different segments of the market.

Bryan Alexander 2013/06/16 at 6:47 pm

Good thought, Paul. Maybe we will see a growth in two-tier schools.
If so, I wonder which will do better?

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