Free courses may shake universities’ monopoly on credit in the USA

by Jon Marcus

Just as the Internet has made news free and music cheap, it may be about to vastly lower the cost of one of the most expensive commodities in America: college.
Several new companies and organizations with impressive pedigrees are harnessing the Internet to provide college courses for free, or for next to nothing. And while many traditional universities are slowing this trend by refusing to give academic credit toward degrees to students who complete such programs, several no- and low-cost startups are doing an end-run around this monopoly by inventing new kinds of credentials that employers may consider just as good.
“If I were the universities, I might be a little nervous,” said Alana Harrington, director of Saylor.org, a Washington, D.C.-based nonprofit established by entrepreneur Michael Saylor that offers 200 free online college courses in 12 majors.
Among other similar initiatives are Peer-to-Peer University, or P2PU, which also offers free online courses and is supported by the web-browser company Mozilla and the Hewlett Foundation, and University of the People, which charges $10 to $50 for any of more than 40 online courses, and whose backers include the Clinton Global Initiative. Both are also nonprofits.

Change and competition in American higher education

If providers of low- and no-cost online courses can invent credentials that will be accepted by employers in lieu of university degrees, it could forever change the world of higher education. What are the prospects for that? The pros and cons? The potential outcomes? Higher-education leaders and observers weigh in:
Molly Broad, president, American Council on Education
This is a period of significant transformation. I hope [conventional universities] are paying attention to it.
We are at or approaching a point of inflection that may have as much to do with modularizing your advanced education—that is, where people are able to snap modules together or link them in ways that produce what are sometimes called stackable credentials.
We’re just really in an experimental stage with some of these things.
We are in the process of learning more about what works for different individuals with different learning preferences.
It is not beyond our reach to think that there will be a wide array of choices that can be mixed and matched by institutions, by other kinds of non-higher-education institutions, and by individuals pursuing independent learning.
… The brick-and-mortar campus, and in loco parentis, really now serves only a portion of the population.
The challenges that our nation faces on sustaining economic growth and prosperity mean not just that we need to do a better job of raising educational attainment for our kids in K-12 going into higher education, but for adults. There’s not one right answer about the best ways to advance their attainment.
There certainly is, I think, going to be competition, and by and large I think competition is a good thing.
We hear corporations express frustration that American higher education is not preparing the kind of workforce that they need. I’d like to be able to say to them, ‘Don’t stand on the sidelines. Work with us.
We can help you build those credentials inside your organization so you can continue to improve the competitiveness of your workforce and your company.’

Michael Horn, executive director for education at the Innosight Institute and author of Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns

There are a lot of institutions that are observing what people really need from universities. Maybe these upstarts don’t have all the bells and whistles of the beautiful campuses. But people are deciding it’s not worth paying for that.

What we predict is that these upstarts coming in will get better and better over time such that they would try to handle those accreditation problems and be more visible to employers.
Part of what we’re seeing is a shakeout of the different reasons people go into higher education. Some go because they want four years away from home [to] grow up as an adult. But for a whole mass of people around the world, they never had access to that in the first place, so they’re delighted with this alternative.
There’s a huge mindset and processes and a business model [at conventional universities] built around doing things the old way.
What higher education is going through is not unique to higher education. If you think about the car industry and how the Japanese disrupted the Detroit automakers, that process took 30 years. As it became clear the Japanese automakers were more and more threatening, the American automakers spent a lot of time trying to keep the Japanese out by erecting tariffs and so forth. That’s the same kind of thinking we’re seeing here. Employers, for most universities, are actually the end customer, in the sense that students can’t repay loans and make tuition work unless they get jobs. If employers start to move into this new world, that’s when it’s really going to take off.
Carol Geary Schneider, president, Association of American Association of Colleges and Universities
We can expect to see in the indefinite future the use of technology to multiply all the different ways you can dip into something that interests you. But as an employer, I make a huge distinction between a person who is a candidate for the first degree, who has come out of high school and is still a candidate for a B.A., or somebody who has a B.A. or B.S. and does further study.
The courses that these non-credit programs offer for people who are already in the field provide more information about something they already know something about. I would never (as an employer) consider an undergraduate who pieced together their education without faculty supervision from a set of courses that are out there in cyberspace.
The key to quality is not the set of courses that you took, or even how many courses you took. The key to quality is what you were asked to do in that course, what kind of assignments you were asked to do. It is one thing to read and listen. It’s another to do and apply. I want to know what they can actually do with their knowledge. For that, you have to go beneath the course title to the question, what kinds of activities went on in this course. Somebody has to be confirming that you are capable of doing something with your knowledge.
The opportunities to use technology to support high-quality learning are definitely there. But the key to fulfilling that potential is whether or not faculty with knowledge of and competence in the field are putting together a comprehensive course of study.
Libraries are free, too. You can roam around, read books and study. But hardly anyone would say that spending time in the library is a good preparation to work in any economy, much less this one.
Philipp Schmidt, founder and director, Peer to Peer University
I don’t think free is necessarily the key point here. But the fact that there is this innovation around what’s offered by the mainstream system shows that the mainstream system isn’t meeting the demand that exists.
A university degree has become a passport into adult employment, but it doesn’t really fit with what people really need for the rest of their lives. Most of the things you’ve learned are outdated by the time you’re done.
The existing institutions have invested a lot … into the infrastructure that they have now. They have to charge a certain amount of money to pay for things they’ve invested in. If someone comes along with zero investment and starts competing at the quality level, then the last thing universities have to protect themselves is this discussion of academic credit.
It’s not a deep concern for the interests of the students. It’s a deep concern for the interests of the institutions.
The reason P2P was started was that conventional institutions weren’t innovating.
Maybe we can make enough noise that some of these institutions pay attention.
A lot of the middle-tier universities are going to be in trouble as a result of these developments. Because if you can show that you got a certificate for having taken MIT courses, they’re going to see this as real competition in the next few years.
There’s some part of me that is really nervous about some of those changes. There’s something really fantastic about the idea of the university, but over the last few decades it feels like we’ve eroded what’s important about the university, which is to be that space for people to make that transition from youth into adulthood. We’ve dumbed all of that down to, all you need is this list of skills and then you’ll be a useful participant in the workforce.
To some degree, I don’t want the institution to die.

The content they use comes from top universities, including MIT, Tufts, the University of California at Berkeley and the University of Michigan. Those are among some 250 institutions worldwide that have put a collective 15,000 courses online in what has become known as the open-courseware movement.
The universities’ intention is to widen access to course content, including to prospective students. At MIT, for instance, a pioneer of open courseware, half of incoming freshmen report that they’ve looked at MIT online courses and a third say it influenced their decision to go there.
But the material, which includes videos of lectures by top academics, can also be scooped up by others and organized into catalogs of free content. And while the number of students using these services so far is low— at a time when 6.1 million people are taking (and paying for) online courses from nonprofit and for-profit universities, P2PU says it has had 25,000 people open user accounts and University of the People has registered 1,100 students in two years (while Saylor.org has no way of tracking its enrollment)—the momentum is picking up as colleges continue to increase costs and students take on more and more debt to pay for tuition.
A Baltimore-based for-profit company called StraighterLine also offers online courses for $99 a month plus a $39 registration fee per class, which is less than the cost of tuition at most U.S. community colleges.
“Maybe these upstarts don’t have all the bells and whistles of the beautiful campuses. But people are deciding it’s not worth paying for that,” said Michael Horn, executive director for education at the Innosight Institute, a nonprofit think tank.
Still, conventional colleges and universities are largely refusing to accept transfer credits from these programs, making them less appealing to students. Universities’ currency is, after all, academic credit toward degrees, which employers depend on to determine the qualifications of job applicants. Although they do take transfer credits on a case-by-case basis, the universities say they can’t always judge the quality of courses offered by others, and that reading online content alone, or even watching lectures, is not the same as attending in-person classes.
“Libraries are free, too,” says Carol Geary Schneider, president of the Association of American Colleges and Universities. “You can roam around, read books and study. But hardly anyone would say that spending time in the library is a good preparation to work in any economy, much less this one.”
So rather than transfer credit they’ve earned elsewhere, students who want a degree from a conventional university find that they often have to take—and pay for—the same classes again there.
“The last thing universities have to protect themselves is this withholding of academic credit,” said Philipp Schmidt, cofounder and executive director of P2PU, who said the real reason for the schools’ refusal to accept transfer credits is to prevent competition. “It’s not about a deep concern for the interests of the students. It’s about a deep concern for the interests of the institutions.”
Besides, said Debbie Arthur, who has enrolled in StraighterLine courses toward what she hopes will someday be a degree in education: Many classes at universities are no more personal than the ones she takes online.
“The Pollyanna version of college is that you’re learning and discussing things with your professors,” said Arthur, a custom-jewelry maker who lives in Kingsport, Tenn. “The reality is that you have 450 kids in an auditorium listening to a teaching assistant. They’ve killed the golden goose themselves by being greedy, and I think people have started looking really closely at alternatives.”
Several universities agreed to be formal partners with StraighterLine, but then pulled out. One, Fort Hays State University in Kansas, conceded that it bumped the low-price company because it stood to make more money from its own online program. Documents obtained through a public-records request from another, theUniversity of Akron, show that its formal agreement with StraighterLine was canceled in part because of complaints from the faculty senate that it hadn’t been consulted about the deal.
Horn, coauthor of Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns,compares this to the way the U.S. auto industry reacted when it began to be threatened by cheaper foreign competition, particularly from Japan.
“As it became clear the Japanese automakers were more and more threatening, the American automakers spent a lot of time trying to keep the Japanese out by erecting tariffs and so forth,” instead of recognizing that consumers wanted smaller, cheaper cars, he said. “That’s the same kind of thinking we’re seeing here.”
In fact, the free-content providers are already trying to break the universities’ monopoly by coming up with altogether new kinds of credentials in place of credits or degrees. Saylor.org, for instance, will next month introduce an “electronic portfolio,” even more detailed than a college transcript, that its students can use to show employers what they’ve learned.
Also this month, the John D. and Catherine T. MacArthur Foundation is wrapping up a $2 million competitionto design digital “badges” that can be used instead of university degrees to prove a candidate’s experience and knowledge to employers. P2PU and Saylor are already experimenting with such badges to show when students have completed courses.
Last month, MIT announced a project called MITx that, starting this spring, will offer certificates of completion to anyone who successfully finishes courses the university makes available for free online, with a small fee for the certificates themselves.
“There’s a fundamental tension between the fact that people want standardization—which is what credentials and accreditation are—where a lot of these new, interesting educational organizations are coming in and saying, ‘Well, we don’t have to standardize,’ ” said Jessy Kate Schingler, a software developer who lives in Washington, D.C., and who has taken courses from P2PU alongside her doctoral studies in computer science at the University of Maryland, College Park.
Meanwhile, some businesses that offer tuition reimbursement to employees are becoming interested in the free- and low-cost education providers, which could put more pressure on traditional universities to accept credits from outside sources or else face the loss of potential transfer students, observers say.
“If employers start to move into this new world, that’s when it’s really going to take off,” said Horn.
CompuCom, a Dallas IT company with 5,000 employees, already has. It’s begun to work with StraighterLine, whose CEO, Burck Smith, said “colleges that want these students later will have to accept StraighterLine credits” as a result.
What CompuCom is doing, said Ed Rankin, who runs the tuition-reimbursement program there, “is analogous to what’s happening in healthcare, where you’ve got insurance companies negotiating on behalf of their insured for lower costs from their healthcare providers.” That’s because StraighterLine’s $99-a-month price tag not only saves CompuCom money; it saves money for the employees, who have to pay a portion of the cost.
Rankin said “there’s no question” other companies are likely to follow suit.
Universities are watching closely. As one direct response, the American Council on Education plans to set up a blue-ribbon commission to look into alternatives to conventional teaching using new technology, said ACE President Molly Corbett Broad.
“This is a period of significant transformation,” Broad said. She said she expects that higher education is approaching a point at which people will be able “to snap modules together or link them in ways that produce what are sometimes called stackable credentials,” including credits from, for example, community colleges, universities, life experience, online content and other sources.
“There certainly is, I think, going to be competition, and by and large I think competition is a good thing,” Broad said.
A handful of universities have already embraced the low- and no-cost education movement. Albany State University in Georgia encourages incoming students to take StraighterLine courses before they even arrive, accumulating credit toward their degrees and improving graduation rates.
“The resistance will be there for at least a little while longer,” said the university’s president, Everette Freeman, who faced opposition to the idea from his own faculty. “But it will change. It’s on the wrong side of history.”
Steve Carson, external relations director for MIT’s OpenCourseWare program, who is also on the advisory board of P2PU, said, “There’s no doubt this is a period of uncertainty for universities.” But he said that open-education systems will ultimately help the market grow.
“If there is a way to lower the price of higher education, you can’t stand there for long and say, ‘I’ll resist this and prevent it from happening,’ ” said Shai Reshef, founder and president of University of the People and an entrepreneur who once ran a for-profit higher-education company. “Maybe it will take a long time, and maybe it will be a harder road than it needs to be. But it will happen.”
A version of this story appeared in The Washington Post on January 23, 2012.