Are Online Schools Too Profit-Focused?

By Staff

A report released this week by the Campaign for the Future of Higher Education (CFHE) suggests that much of online education — including courses offered by public or non-profit schools — is focused on “profit”. In the case of non-profit schools, online education is a way to boost enrollment and reach markets that they otherwise could not service. As far as online for-profit schools are concerned, CFHE calls education “big business”.

According to CFHE’s report, with so much national focus on the “promises” of online higher education to expand access and to reduce costs, one truth about online higher education rarely mentioned is that it is big business. In much of the public commentary, online education is touted for its promise to dramatically increase access to higher education. To be sure, broad access to quality higher education is a valuable goal that should inform higher education policy in any democratic society; but in many ways, access is not the primary goal of those promoting online higher education.

Increasingly, online higher education is big business with huge profits being made by many private companies. We are told repeatedly that students will benefit from the rush toward more online learning, but we must ask who’s benefiting more: students? or investors and corporations?

Whether it’s subprime mortgages or swiffers, the sales pitch always involves consumer-centered promises of convenience, savings, or grander “dreams come true.” In the world of swiffers, the social cost of allowing deceptive sales pitches to frame public discussion of products may or may not be problematic. But with a crucial social service like higher education, which affects individuals and societies in such far-reaching ways, the long-term cost of not looking behind corporate rhetoric can be huge.

The subprime mortgage crisis is instructive. Problematic loan practices proliferated for years in part because they were conducted in the name of expanding the middle-class dream of home ownership. No one could disagree with that desirable, over-arching goal, of course; and consequently, few questioned the methods being employed by mortgage companies or the huge profits being made.

American education has become big – very big – business. Rupert Murdoch, for instance, has opined that education in the U.S. represents a potential investment opportunity of five hundred billion dollars. And investors are rushing in to get at those profits.

“Ed tech” is itself a huge sub-area in the “education industry.” According to GVS Advisors, an ed tech consulting group, investment in that sector hit $1.1 billion in 2012, a figure almost as big as that in the dot com market. Profits are following for many investors in this market area. For instance, in just one year (from the second quarter of 2011 to the second quarter of 2012), investors in 324 companies offering ed tech products and services made $1.43 billion.

Online higher education has also become a hot spot for corporate growth. The online higher education market has had an action-packed history in just the last decade and a half. Throughout this time, investors and corporate leaders have done a remarkable job of “following the money” to be made – expanding rapidly in areas where profits were robust, moving into virgin territory when new laws or other changes created new possibilities, tweaking their ventures when faced with bad press or regulatory crackdown, and always shaping their sales pitch to make each move appear a boon for students and for our country.

The latest for-profit online innovation, MOOCs, seem poised to make a big revenue leap as well. Doug Barker, for instance, a funder of Coursera, sees them as a “very nice business.” Despite having no significant profits at this point and a product that is being given away for the most part, other investors seem confident that profits are in their future and are prepared to put up the money necessary to explore the possibilities. The three big MOOC providers, Coursera, Udacity, and EdX have “cash to burn,” according to a report in Inside Higher Education: Udacity has received at least $21.5 million of investor money and Coursera, $43 million. EdX, while technically a nonprofit, has been generously bankrolled with $60 million from MIT and Harvard.

Again, the rationale presented to the public for this latest online learning innovation is high-minded and even utopian. With no acknowledgment of the dismal completion rates for MOOCs or the Digital Divide impediments to online learning even in the United States, MOOC promoters (in the tradition of the for-profit online industry from its inception) promise unimagined-before access to higher education and the dawning of a new age.

For instance, Daphne Koller, CEO for Coursera, sees MOOCs creating a “global classroom” that “erases barriers between people of different cultures,” gives students a chance to learn “without the limits imposed by physical or socio-economic circumstances,” and offers teachers everywhere “the ability to transcend boundaries.” Sebastian Thrun, head of Udacity, sees MOOCs as “the beginning of something magical” and somewhat more prosaically predicts “a tenfold increase in the market for higher education.”

According to CFHE, this rhetoric is perhaps the most glittery yet in the public discourse about online higher education. But it is also a diversion shifting attention away from the logic of profit-making. For parents, students, and the general public who focus primarily on what education means for people’s futures, for social mobility, for a healthy economy and a robust democracy, a dip into the insider talk of MOOCs, their investors, and industry analysts is both instructive and disorienting.

Whatever one’s feelings about whether private companies are a plus or a minus in higher education, broader access to the full range of facts about corporate interests is a fundamental requirement for a discussion that leads to sound higher education policy. Currently, the online higher education industry is clear about its interests and pursuing them with vigor. As CFHE puts it, though, the public has too often been offered only slogans that pay lip service to the public interest.