HESA

Higher Education Strategy Associates

What Students Pay For (II)

As we saw yesterday, the various new digital learning providers face a challenge of competing with traditional providers which have advantages in terms of providing students with i) fuller student experiences, ii) better-known brands and iii) widely-accepted credentials. So what are they doing to try to win this competition?

We can more or less dispense with student experience. Most new providers essentially punt on this; there’s virtually no effort among most to try to provide value in this area. That leaves brands and credentials.

The basic building block of any institutional brand is alumni. Institutions are judged by what their alumni go on to achieve; until you have alumni, nobody can judge your product. That’s true whether your institution is in cyberspace or meatspace – Quest University, for instance, has to deal with this, too. So how can a new digital provider compete? One interesting approach is that taken by Minerva University. This start-up, which recently received $25 million in venture capital funding is trying to position itself as an online Ivy League-equivalent primarily by being highly selective and limiting class sizes. Basically, Minerva is deliberately sacrificing digital education’s biggest perceived strength on both the demand side (openness) and the supply side (economies of scale) – in order to get prestige. When you have to turn your back on your medium’s greatest strengths in order to get prestige, it’s not a good sign for the industry as a whole.

MITx, seems like a good candidate to solve this problem, since in theory it can draw on existing brand equity that start-ups like Minerva can’t. However, for the moment MITx isn’t trying to issue credentials, which is a bit of a problem. And if it eventually does go that route, it won’t be using the MIT name, because – in no uncertain terms – MIT isn’t about to run the risk of having an experimental initiative screw up the stature it has developed over the last 150 years.

Leveraging the reputation of existing institutions into digital space isn’t impossible; it’s just that the risk-reward equation is terrible for top institutions. As a result, real pioneers are likely to come from a tier or two below the top. That’s why the company 2Tor, which is partnering with professional programs at institutions like Georgetown and UNC to extend the classroom experience to a wider audience, is worth watching.

To sum up, quite apart from regulatory issues, student expectations themselves form a major barrier to entry in PSE. To make a go of it, private companies need to partner with existing institutions; on their own, they simply can’t yet offer most students enough of what they’re looking for to be a viable alternative. And that’s not going to change anytime soon.

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One Response to What Students Pay For (II)

  1. Ian Johnston says:

    Why not set up a system where credits for a particular course are based upon demonstrated competence, with no worries about how the student acquired that competence and with no requirement that a student enrol in a university? We could, for example, have an institution with the power to grant credit (e.g., the Open University) from time to time invite member of the public to sit for examinations in a range of subjects. The students would pay a small fee to cover the costs of the examination, take the test, and, if they passed, would receive the appropriate credits. How the students prepared for the examination would be entirely up to them (the university would provide no assistance, since they would not be registered students). Some universities already grant credit in this way (i.e., by a test for competence) but there’s a catch: once the student has demonstrated her competence she has to pay the full fee for the course, just as if she had taken it, before she receives the credit.

    Even if not all undergraduate courses could be adapted to fit this model, a great many could be (especially in the first two years). Such a system, incidentally, would not place any additional costs on the universities or the government. This arrangement would not be as attractive or effective for most students as attending university in the normal way, but it might significantly reduce costs. Until we divorce the ability to acquire academic credits from the need to enrol in a university, there will be no effective way to lower tuition rates, because university tuition rates are all based on a fee per credit.

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