What is a college? The typical image of a college comes with buildings, classrooms, parking lots, sports teams and sometimes ivory towers. However, none of this can be provided online.
So, what is a college online? Really, nothing separates a college from a non-college when delivering online courses. The only distinction is that students taking online courses from “colleges,” as defined by the federal Department of Education, are eligible for cheap loans and Pell grants. Yet, over 90% of colleges charge the same OR MORE for online courses than for face-to-face courses – despite the fact that the cost of delivery is far less.
Financial Aid Only for Most Expensive Online Courses
In essence, online students are paying for the physical infrastructure of a college, despite neither needing nor using it. Perversely, this means that taxpayer funded financial aid can only be applied to the most expensive online courses.
Given that online, general education course offerings from colleges are essentially the same as those offered by providers like StraighterLine -- but StraighterLine and its ilk are dramatically cheaper – thought leaders and policymakers are trying to figure out how to fit new online providers into their regulatory and financial frameworks.
Accreditation for Online Courses
In the last two months alone, Senator Lamar Alexander, Chair of the Senate Committee on Health, Education, Labor and Pensions (HELP), released a paper on accrediting alternative providers. The American Council on Education’s Credit Recommendation Service, already a validator of course quality, launched a project with the Gates Foundation to extend credit transferability from alternative providers to a wider group of colleges.
The Council for Higher Education Accreditors (CHEA) announced the results of a study group on the subject. The Distance Education Accrediting Commission, a federal Department of Education recognized accreditor, created the Approved Quality Curriculum (AQC) project to provide validation for new providers. (StraighterLine is prominently mentioned or is an active participant in all of these projects).
Good Policy or Good Politics?
While it may seem obvious that regulating and financing all online course providers equally is good policy, it may not be good politics. Accredited colleges receive a host of taxpayer subsidies. These include direct funding from states, Pell grants for their students, subsidized loans, tax credits for tuition expenses, tax preferred savings plans, non-profit tax status and participation in federal grant programs.
By my rough estimate, in total, this equals around $250 billion per year that flows only to accredited colleges. What’s more, over 90% of congressional districts have 5 or more accredited colleges in them – giving accredited colleges significant political power. When a lot of money and a lot power are combined, change isn’t easy.
Online General Education Courses Reducing Cost of College
The combination of political resistance and a slow-moving legislative process means that inclusion of alternative course providers in the federal regulatory fabric will likely take years. However, events might overtake the political process.
Already, signs are emerging that the price distinctions between 4 year colleges, 2 year colleges and non-colleges are breaking down for online general education courses. Arizona State University and EdX announced plans to award credit for MOOC courses (though at $600 per course). The University of Akron slashed its general education course prices to $50 per credit and is now actively marketing against local community colleges.
Herb Stein, Chair of the Council for Economic Advisors to two presidents once famously said, “if something can’t go on forever, it will stop.” Colleges can’t continue to raise their prices for online courses while the cost of delivery falls. Eventually, enough students will choose equivalent, lower-priced options, then policymakers will follow.
Burck Smith (@burck) is the CEO and founder of StraighterLine.