Higher Ed Has Now Split Into Dual Economies: Online and Traditional

Nov 07, 2019

The university is often portrayed as a place where young men and women loaf freely on a soft, grassy quad under a noble bell tower. Lecture halls and dormitories circle them, busy with faculty members and students coming and going on campus.

Hovering over this idyllic image is the online campus, where students rarely, if ever, set foot on manicured lawns. Digital students study at home or while commuting to and from work, often late at night after the kids are asleep.

Before the invasion of the internet, the university comprised a secure, single identity; now—with about a third of college students online—the American college is bifurcated.

When I first entered the virtual university a couple of decades ago as dean of online learning at Stevens Institute of Technology, I imagined, apart from instruction, that online and on campus in most respects would be pretty much the same. Surprisingly, just over twenty years later, things didn’t turn out that way in practice. Like fraternal twins, online and in-person campuses are the same, but different.

Delivery methods are hardly the only difference between face-to-face and virtual instruction. A deeper look reveals strikingly different economies and cultures, student populations, status of faculty members, curriculum, infrastructure and even tuition.

Different Students and Faculty

Work represents the principal difference that separates digital from face-to-face students. Online, about 80 percent work full or part time. In glaring contrast, just 25 percent of residential students work full time, a key economic difference that sets them apart from most academic consequences that follow. It’s A Tale of Two Cities, with mostly middle-class, 18-year-olds taking freshman seats on campus, while adult men and women (often more women than men), many married with children at home, occupy most virtual slots.

And online students are more likely than on-campus students to be the first in their families to go to college.

In other words, the digital university welcomes older, working, nontraditional learners who gravitate to online degrees to overcome workforce obstacles that prevent many without a degree from earning their fair share in today’s often-bewildering, post-industrial economy.

“The fastest growing population in higher education is adult learners, now comprising nearly half of the total learner population. Working professionals have vastly different needs than those of the traditional student," said Nelson Baker, dean of professional education at Georgia Tech in an American Council of Education report last month, acknowledging that college leaders are uneasy over the inability of conventional higher ed to respond effectively to fierce market forces. Baker is also the new president of UPCEA, the association for professional, continuing, and online education.

Online faculty members, too, are not drawn from the same pool as those on campus.

Physical campuses already have a growing number of part-time adjunct faculty—which now represent about three-quarters of university faculty—with a critical mass of full-time and tenured professors. But the situation online tilts far more to adjuncts, with very likely 90 percent or more in that category. Digging as hard as I could, I could not find reliable data revealing how many of them teach online. But from my own experience, and from my knowledge of hiring practices at for-profit and other schools with large online student enrollments (where little or no research is conducted), the number of full-time faculty teaching online is very thin, and at some colleges, very likely close to zero

Hanging Discount Tags Online

Hoping to attract budget-stretched families, colleges are struggling with spiraling tuition, testing inventive ways to damp it down without going bust. With continuing pressure of ever-escalating costs at private institutions and deep cuts at state schools, bringing prices down is no easy trick. Some have tried a slight-of-hand strategy, called “tuition resets,” in which colleges announce a cut, only to roll back grants and scholarships, keeping the net price just where it was before they marketed enticing, but deceptive, lower prices. Other college leaders chase scarce philanthropic dollars to fund tuition cuts, so far with limited success.

Boxed-in on campus, some universities have turned to virtual degrees to wriggle out of their tuition squeeze. A number of colleges have partnered with big MOOC providers, principally Coursera and edX, to offer large-scale online courses at far lower prices, in part to attract new students to their higher-priced online degrees.

"It’s a case of sibling rivalry in which the digital younger child is aggressively outdoing her older, favored residential sister. The higher ed family is puzzled as to how to deal with the strain."
—Robert Ubell

Thirty-six steeply discounted master’s programs are now available from top institutions on such platforms, including from the University of Michigan, GeorgiaTech and Imperial College London, with tuition ranging from a startlingly low $8,000 to a modestly high $42,000 for a complete master’s from many notable colleges. Just the other day, Purdue University, in partnership with Kaplan and edX, announced three new MOOC-based engineering degrees for under $25,000.

In a surprise move, the University of Pennsylvania, one of the nation’s most-selective institutions, is offering a nearly fully online bachelor’s in applied arts and sciences, among the first of the Ivies to offer a virtual undergraduate degree. To top it off, UPenn is also extending an unprecedented discount, cutting its online tuition by $1,000 per credit.

Admittedly, on the whole, virtual tuition is largely the same as on campus—occasionally even a bit more expensive. But MOOC-based degrees are just at the starting line of what appears to be a rush to hang discount tags on online degrees.

With enrollment in residential programs stalling, colleges have jettisoned some on-campus programs, replacing them with online delivery only. The University of Illinois Gies School of Business, housed on its flagship Urbana-Champaign campus, for instance, recently announced that it will stop delivering its on-campus MBA, offering its fast-growing online degree instead. Enrollment in the school’s online MBA, launched in 2016, jumped from 114 initially to 1,955 today. The 98 MBA students stranded on campus must now move online to complete their degrees. Tuition for the online degree, called an iMBA, is about $22,000. The previous on-campus equivalent was priced at about $80,000.

Different Infrastructure and Marketing Investments

A key difference between the residential campus and its online sibling is infrastructure. A conventional college requires enormous investments in soft, grassy grounds. Add security, dormitories, parking, gyms, cafeterias, heat and snow removal in winter, air-conditioning in summer—let alone classrooms, labs, and sports facilities—and the burden is often far more than what is required to support a luxury resort. Online, operating only in the air above, without a physical campus below, academic investments are limited to less than a handful of budget lines--instruction, course design and edtech software.

One of the more onerous tasks as dean of an online unit at a conventional university is to convince senior academic officers to pry open the school’s stubborn budget to pay for digital recruitment. Many high-ranking professors disdain marketing, and so they keep promotional funds locked away, thinking it vulgar to pursue enrollments too nakedly. “Our students will find us without us begging,” they often say.

With more than 130,000 mostly virtual students, Southern New Hampshire University, moved from a sleepy New England college in just 16 years to one of the three biggest universities in the U.S., alongside Arizona State University and Western Governors University. While a number of strategic steps helped the university scale up, the biggest push came from unprecedented investments in digital recruitment. Last year, Southern New Hampshire spent $139 million on advertising and promotion, with almost $47 million going to Google alone and just over $85 million to a media buying agency.

For years, many observers wondered when the digital revolution would overrun the university as it has commerce elsewhere. In my neighborhood in Manhattan—and in cities and towns across America—mom-and-pop shops and even national brand stores are collapsing, as if swept away by hurricane Katrina. Amazon’s indifferent digital finger has carelessly pushed most of them over. While the academic economy has not been as severely shaken yet, the recent ACE report warns that the inability of American higher ed to respond effectively may have equally disruptive consequences in the future.

It’s a case of sibling rivalry in which the digital younger child is aggressively outdoing her older, favored residential sister. The higher ed family is puzzled as to how to deal with the strain.


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