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Is the Higher Education Bubble Ready to Burst?

The higher education marketplace is rapidly shifting and changing, leading many to question whether the industry is in fact a bubble ready to burst.

The current crisis in higher education is a topic that has caught the attention of major media outlets in a stream of articles in recent months. In one such article, David Brooks made a case that higher education is about to face the same fate as the newspapers and magazine businesses [1]. Rising debt burdens for college students, increased scrutiny of education providers by states and even the Department of Education has concerns about higher education, specifically in the areas of student loans and student outcomes at career colleges [2]. There have been those who have called the current environment a higher education bubble, much like the recent housing bubble, that is set to burst. Entering into this fray are the newcomers, in the form of the Massive Online Open Courses (MOOCs) phenomenon that has already spawned companies like Udacity, edX, and Coursera, which have brought new excitement to the higher education marketplace.

Online learning is not a new phenomenon in higher education, with many institutions with experience in offering degree programs online for since the 1990s (or 1989 in the case of the University of Phoenix). Now, according to Jeff Seaman of Babson Research, online learning is pervasive [4]. According to the 2011 Babson Survey, 65% of institutions say that online learning was a critical part of their long-term strategy [3]. In a given year, 25% of all faculty teach online and 33% of students take online courses. In this same survey, online learning accounted for one half of all enrollment growth (counting only fully online students, 2003 to fall 2010).

MOOCs are bringing excitement and experimentation to higher education. In a previous article in The Evolllution, Ray Schroeder from the University of Illinois – Springfield, has described MOOCs as having the “potential for a radically different higher education marketplace”. While it is still to be seen if MOOCs themselves are the disruptive technology that will change education in the vein of disruptive innovations as described by Christensen, the presence of these options for higher education will influence higher education institutions, regulators and policy makers [5].

As the state allocations diminish in many states, there is a new pressure to increase funding via tuition and enrollment growth. With the elimination of distance as a barrier, institutions are seeking to capture new markets for students. The ambition is not limited by geographic boundaries as in years past. State regulations to authorize education providers within states require new administrative effort to expand service areas, but many institutions are working through these barriers. Newcomer Coursera ran into challenges with the State of Minnesota as a result of these state regulations [6]. Eventually the issues with state authorization will be resolved, but we now live in a world where the distance between Muncie and Memphis is not so different than the distance between Memphis and Mumbai. In the not too distant future, the competition for students will be truly a global market.

There is now a stated goal by the UK Open University to expand outside of the UK, as part of the Global Direct initiative that will further expand the over 15,000 students that are already enrolled outside of the UK and Ireland [7]. Additionally, Apollo Group’s acquisition of the BPP University College in 2009 marks an entry of a U.S. owned corporation into the UK education market [8]. These are the first signs of a global education market that will expand in the coming years.

While there is quite a bit of excitement with the launch of MOOCs at universities such as Stanford, Harvard, and MIT, a solid model for certifying the learning gained in tangible and transferable ways must be created. This is a process that will take a great deal of work on the part of institutions, accreditors and governments. One of the first steps towards acceptance of these alternative delivery formats can be seen in the move by the Colorado State University-Global Campus to now accept Udacity’s CS101 MOOC on the Introduction to Computer Programming. Other institutions will follow this lead, or will at least determine what the institutional policy will be for accepting these new learning models. Once a viable model is developed for efficiently measuring and transferring courses into programs and degrees, there will be a sea change in higher education. The time is now for traditional universities to develop their strategies to adapt to this changing environment.

What is the future of this global market? What role do MOOCs play in higher education? How should institutions adapt their plans in order to thrive in this new environment? These are questions that will be answered in the coming years, if not by the institutions with the most at stake, then by those who can take advantage of the changing marketplace of higher education.

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[1] David Brooks, “The Campus Tsunami,” The New York Times, May., 3, 2012, New York Times Opinion Pages, accessed Oct. 30, 2012 from

[2] David Van Zandt, “Holding All Universities Accountable for Student Outcomes,” The Huffington Post, October 22, 2012, The Huffington Post Blog, accessed Oct. 30, 2012 from

[3] Babson, “Babson Survey Research Group: Survey Reports,” no date listed, available from Babson, accessed Oct. 30, 2012 from

[4] The Sloan Consortium, “Online Learning Report: Will the Real Online Learning Please Stand Up?,” Sloan-C web site,, accessed Oct. 30, 2012

[5] Clayton Christensen, “Disruptive Innovation,” Clayton Christensen web site, accessed Oct. 30, 2012

[6] Katherine Mangan, “Minnesota Gives Coursera the Boot, Citing a Decades-Old Law,” The Chronicle of Higher Education, October 18, 2012. The Chronicle of Higher Education Online, accessed Oct 30, 2012 from

[7] “OU appoints a new Director for its international business division,” Open University press release, September 14, 2012, on the Open University web site,, accessed October 30, 2012.

[8] Mike Baker, “What will market forces mean for universities?,” BBC News, June 24, 2011, BBC News Online, accessed October 30, 2012 from

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