MOOCs: Not a Revolution, but Perhaps a Reformation

Posted on September 30th, 2013, by 1 Comment

The wave of hype and optimism for massive open online courses—MOOCs— is ending. In Slate, Will Oremus questions MOOCs as a substitute and remedy for skyrocketing costs:

As much as everyone wants to see college costs reined in, replacing thousands of professors and classrooms with a handful of websites populated by remote talking heads cannot be the answer. But before we throw the whole idea out the window, it’s worth asking: Mightn’t there be a way that online lectures could complement the traditional higher-education experience rather than replace it?

Oremus’ advocates for small private online classes (SPOCs) instead, and that seems to be the dominant online learning style for traditional students. SPOCs engage students in discussion and allow instructors to interact in a meaningful way, critical for students who aren’t as self-driven or interested in the topic. MOOCs, in contrast, do better for access, cost-control, and flexibility. A 200-student MOOC course on psychology won’t spark an interest for many students, but it’s a cost-effective way for uninterested students to earn required credit.

I’m skeptical of MOOCs dominating four-year colleges and universities. They have more appeal for non-traditional students who have families or jobs that make a degree difficult to obtain (and it’s a demographic that few four-year universities target, anyway). Community colleges could leverage MOOCs for lower costs and distance learning, but some data indicates that community-college students who take online courses have a higher dropout rate. Encouraging online course growth could backfire. Community colleges take a conservative approach to MOOCs. Traditional universities with abhorrent graduation rates and student debt levels are vulnerable. In that case, good riddance. As only 59 percent of students finish a four-year degree in six years, taking MOOC courses for timely graduation could reduce debt and allow early entry into the workforce.

Displacement in academia might happen, but experimentation and evolution within teaching methods should be encouraged for the sake of students, not discouraged to save the jobs academics. Opposing MOOCs because it might alter the status quo is a shabby argument. Protectionism isn’t new, but I don’t see why sympathy with the faculty should trump quality alternatives for students.

The abysmal completion rate for MOOCs gets too much attention. With no barrier to enrollment aside from an internet connection and an email address, combined with class sizes that can reach 50,000 students, shirking should be expected. Were academic credit or a small fee required, I’d expect a drop in students and an increase in completion rates. Many people (including myself) take MOOCs as a hobby and enroll on impulse. Some will follow through; others won’t. That’s an indictment of individual drive or dedication more than the MOOC itself. I’m currently in a SPOC, but I’m much more dedicated to it than a MOOC due to greater interest in the content and greater interaction with others in the SPOC.

Have MOOCs been overhyped? Absolutely. It’s difficult to go more than three days without reading about MOOCs; a search on Inside Higher Ed returns four MOOC-related posts in 2011, 214 in 2012, and 313 in 2013.  The Chronicle of Higher Education has 67 from less than three years ago and 328 from less than one year ago. Coverage centers around speculation rather than empirical results, however. Georgia Tech’s experimentation with a MOOC to earn a master’s degree in computer science, the first of its kind, provides a case study to watch. The benefits and disadvantages of MOOCs will become clear only after their use expands.

Technological advancements in teaching are rare. Instead of fretting about unemployed academics, universities should concern themselves with what’s best for students and the long-term goals of the institution.

Testimony at the University of North Carolina from Richard Vedder

Posted on September 23rd, 2013, by Leave a comment

Recently, Richard Vedder testified in front of  the University of North Carolina Board of Governors at their September meeting. From his remarks:

I am honored to be here today. Alas, my message is not altogether pleasant. Indeed, it may be the intellectual equivalent of having a hemorrhoid operation performed by an unlicensed French physician just returned from a wine laden lunch.

Read his full testimony here.

How The $1.2 Trillion College Debt Crisis Is Crippling Students, Parents And The Economy

Posted on September 4th, 2013, by 1 Comment

Originally published on here on 8/7/2013

Total Student Loan Debt: $1 Trillion                   

Two-thirds, that’s right, two-thirds of students graduating from American colleges and universities are graduating with some level of debt.  How much?  According to The Institute for College Access and Success (TICAS) Project on Student Debt, the average borrower will graduate $26,600 in the red.  While we’ve all heard the screaming headlines of graduates with crippling debt of $100,000 or more, this is the case for only about 1% of graduates.  That said, one in 10 graduates accumulate more than $40,000.

It’s a negative sum game for both student-borrowers and the economy. According to the Consumer Financial Protection Bureau, student loan debt has reached a new milestone, crossing the $1.2 trillion mark — $1 trillion of that in federal student loan debt.

This pushes student loan debts to dizzying new heights, as they now account for the second highest form of consumer debt behind mortgages.  With the federal debt at $16.7 trillion, student loan debts measure at 6% of the overall national debt.  This is no small figure, and national debt carries many consequences including slowing economic growth (translating into fewer jobs being created) and rising interest rates.  Capital will not be as easy to access.

The majority of student loans are backed by the U.S. government through banks like Sallie Mae, or since 2010, by the Department of Education.  Translation: the creditor in this scenario is the U.S. tax payer, who if students default on these loans will be subject to carry the burden of these loans.

Federal Loans are Safer than Private

Lauren Asher, president of TICAS, a nonpartisan policy group, says that government loans are the safest type of loans to take while financing education. “Federal student loans are the best way to borrow if you have to in order to get through.” She identifies a lack of information as a major problem in the debt game as she identifies growing private loan debt as a major problem. “Half of those taking out private loans have not maxed out on federal loans.”

Why the preference for federal loans with federal debt being such a hot topic? “Federal loans are subject to income based payback, fixed interest rates, and take nine months to default on, making them a much safer loan for students to take,” Asher explains.  Conversely, private loans have done away with late fees, and in the fine print have redefined the right to claim default on the loan after missing a single payment.  Default is a one way ticket to bad credit.  “Any ding in credit rating can affect [a borrower] more now than ever, even employment,” says Asher.

Asher argues, however, that higher education “is still the best investment in your future.” The college degree is getting more and more weight as political leaders are calling for upwards of 60% national higher education attainment by 2025.  And the demand for higher education is increasing.  “When the economy is down, more people turn to higher education to get an edge in the job market, but have less money to finance it,” explains Asher.

Debt and Community Colleges

If you are under the impression that only four-year schools are subject to debt, think again.  Of those students completing an associate’s degree from a community college in 2008, 38% graduated with debt.  In the for-profit sector of two-year degrees, over 90% have debt.  The average debt load at a public two-year institution is $7,000.

One community college, Henry Ford Community College in Dearborn, Mich., is offering a one-time student debt amnesty program that will allow students who owed a balance prior to or including the winter 2012 semester to afford to return to the college. The program “offers the opportunity for students to pay 50% of what is owed on their account to settle their debt with the College.”  Will this become a norm within the two-year degree space as more and more debt is accumulated?

The Cost of Debt

Of this $1.2 trillion in student debt, about $1 trillion is in federal student loans.  This figure does not tell the full story, however, as the $1.2 trillion does not include funds students must divert away from retirement savings, parent borrowing, or credit card debt.  President Obama is expected to sign the bipartisan Senate bill to tie federal student loan interest rates to the market this week.  On one side, this will reverse the interest rate hike that went into effect on July 1, lowering the current rates for undergraduate students from 6.8 to 3.8%. As the market climbs, however, these rates will climb until they reach a cap of 8.25%.  By TICAS calculation, this may cost families $715 million more over the next 10 years.

What does 3.8% interest translate to for students?  If we go back to that average figure of $26,600, compounding for interest year over year using the 10-year-payback plan that is the standard, the total cost of your $26,600 loan is about $38,600.  Break that down by monthly payments and you are looking at about $320 per month going toward student loan payments.  “Debt costs you time in savings, pushes back when and whether you can buy a home, start a family, open a small business or access capital,” says Asher.  Not to mention the opportunity cost of the education itself at almost $40,000.

Dealing with the Problem

What can we do?  With more and more emphasis being placed on college education for all, raising costs of an already expensive degree, and underemployment of college graduates running rampant, student loan debt is a problem that will cripple economic possibilities and success to come. In its recent report, Aligning the Means and the Ends: How to Improve Federal Student Aid and Increase College Access and Succes, TICAS is calling for simplification and better access to information regarding student loan debt, including information on consolidating debt, and increasing students’ information to both school’s default and graduation rates.

While many have been calling for debt forgiveness to help settle this score, others have a problem with burdening the taxpayer with the responsibility to pay back loans that they are neither responsible for, nor benefit directly from.  While a more educated populous has positive externalities, debt forgiveness sets a bad precedent for the financial world.  Ohio University developmental economist Julia Paxton says:

One of the problems of debt forgiveness is that it sets a precedent that similar loans in the future will also be forgiven. Although the loans are allocated toward education, money is fungible and will have the net impact of increasing the spending ability of students in other areas of their lives. As the expectation of repayment obligation falls, borrowers may enter into a situation where they take on higher levels of debt and take more risks. This will lead to a weakened ability to repay, creating a vicious cycle that hurts the financial sector and the credit ratings of the borrowers.

I have seen firsthand the effects of this phenomenon that economists call moral hazard. One friend explained to me in my sophomore year that because his student loan money finally came through he was able to put the finishing touches on his beer pong table.

The Rise And Fail Of The Five-Year College Degree

Posted on September 3rd, 2013, by Leave a comment

Originally published at here on 7/25/13

Taking Five Years

These days, only 49% of students that enter one of our America’s Best Colleges will graduate on-time, if at all. Now that the mantra calls everyone to college – it is, after all, largely considered a ticket to the middle class – what does that mean for  the nearly half of college degree holders who are underemployed?

More and more students are taking five years to complete what have historically been four-year programs. This gap is especially noticeable in public schools. The result: extra year of costs, plus a year of wages and on-the-job experience lost.

There are many legitimate reasons to take five years to get through a traditionally four-year degree.  Perhaps a student is financing his own education and needs to slow down the course load in order to work his way through school. Maybe a student is participating in a “co-op” or internship opportunity during the academic year, and falls a semester behind in studies. There is always the case of a student who is closed out of a prerequisite class that won’t be offered again for another year, or faces similar systemic challenges.

Public vs. Privates

Legitimate reasons, all, but it appears the private schools are much less affected. Private school students are more likely to have their education financed by their parents, and therefore don’t feel the need to work part or full time to pay their way through school. But certainly students at private schools take on internships, or due to small class size pressures, miss out on a course that they need.

Private schools do a better job, in general, with graduating students. The average 4-year graduation rate of our list of private schools was 59% while at publics it was 32%.  Beyond that, the vast majority of those that do graduate from private schools do so in four years (over 80%), while almost half of graduating students at public schools take five or more.  Arizona State University, the largest school in our list, graduates 57% of its students in 6 years according to 2011 U.S. Department of Education statistics.  Of those that graduate, roughly 44% take longer than four years.

It is easy to say that the cost of college is to blame for this difference. The average tuition at a private school is nearly four times greater than that of its public counterpart. Dr. Richard Vedder, the director of The Center for College Affordability and Productivity, points to the simple economic principle of supply and demand. “When something costs more, consumers will conserve on that good,” he says. “Because private schools cost more, parents are more concerned with their students getting through in four years. This establishes competition among private schools to have high graduation rates to attract students. A parent is much less likely to pay $34,000 each year for five years than for four.

Those Were the Best Days of Our Lives

It is not unreasonable to think of attending university as consuming a good. For many people, these are the best years of their lives as suddenly students find freedom in ways they never knew possible.  The National Survey of Student Engagement (NSSE) tracks students’ average weekly time use.  According to the NSSE results, both first-year students and seniors at private schools more frequently participated in deep learning activities than their counterparts at public schools.  This speaks to both the nature of private schools as typically being more rigorous as well as to the culture at private schools of no nonsense (or less nonsense anyway.)

College is fun. As a current student I can vouch for this. We have access to social opportunities hard to come by in “the real world”.  Getting back to our cost argument, because students are paying nearly four times more to consume this culture than students at public, students at private schools will consume less of these social activities and focus on getting through school in four years.  As public schools are funded heavily by taxpayer money, Vedder says “It is one thing to subsidize investments in human capital, it is another to subsidize students to engage in social activities.”

College as a Bomb Shelter

With a bleak job market, students look for alternatives to the pressures and hardships of the job hunt. A simple alternative is to stay in school. Maybe a student suddenly realizes how nice it would be to take an extra math class, or that art course they’ve been meaning to take but never had time, and stick around a little longer. Students are staying in college longer to avoid the hardships of the real world, the scary decisions, and are able to defer student loan payment a little longer. Better yet, many students are going onto graduate school as a way to buffer themselves from the real world hoping that at the end of the time we’ll be experiencing a more favorable job market.

Bad Incentives

What can we do about this problem? It seems that the public higher education establishment has high incentive to keep its students around as long as possible. This is not the case for the top private schools, who are competing for the top students with the best of the best public schools, such as University of California, Berkeley, University of Michigan, or the College of William and Mary as all experience the same competitive market that forces graduation rates up. However, many more public schools are competing only with similar public schools, and funding from the state may be based on enrollment size. Says Vedder, “If a school can get credit for students in a fifth year, then they are making 5/4ths of the subsidy that they would if they graduate students “on time” in four years.” More students staying longer is the public University’s equation for funding, funding that allows for the research, athletic teams, and administrative salaries that we’ve become accustomed to.

What Can We Do?

How do we break this cycle? Legislators can consider tying state funding in part on graduation rate. If this were to happen, schools would go to extreme lengths to ensure students have the opportunity to graduate in four. Vedder hopes that this will “eliminate some of the unnecessary graduation requirements that serve as a barrier to graduation.” With the proper incentives in place, meaning a performance-based funding model, we would not see these barriers to mobility, and fewer students would be closed out of classes.”

Of course, if this were to lead to professors changing grades, or lowering standards, leading to further grade inflation, Vedder is not quick to sacrifice quality for graduation rates. “Perhaps a national college exit exam is necessary. This would ensure students were receiving a quality education while still allowing a graduation rates to rise. Possibly we could work accreditation into this equation.”  If accreditation is linked to performance and graduation rates we would see some real change.  If a school loses its accreditation, as Matt Schifrin says in his recent piece on University’s Financial Health it will see government funding quickly dry up and the lights go out.

The NCAA, Athletic Transfers, and a Power Imbalance

Posted on July 12th, 2013, by Leave a comment

In yet another example of the NCAA disadvantaging its student-athletes, Slate published a wonderful article by Josh Levin on a transfer rule that limits athletes’ playing time at new schools. Coaches invoke hyperbole about transfers as an “epidemic” (among other points that Levin shows to be absurd) and fear that the specter of free agency threatens to destroy college athletics. Although the NCAA has many sins to atone for (some of which CCAP has covered), enforcing harsher penalties on transfer students seems particularly grating to level-headed sensibilities. Why any penalty for transfer students should exist seems spurious.

As the NCAA claims to be founded “as a way to protect student-athletes” and “continues to implement that principle with increased emphasis on both athletics and academic excellence,” articles like Levin’s  must perplex NCAA officials. Limitations on transfers  and the wildly imbalanced power coaches hold over athletes make the NCAA appear less as a paternal organization to protect student-athletes and more as a cabal that, as Levin says, “gives a coach the ultimate authority over everyone on his team.”As coaches tend to make more than any public employee in most states, its’s questionable as to why they should have so much power other their athletes, especially as athletes receive no paycheck.

A Czech student’s experience with MOOCs

Posted on July 9th, 2013, by Leave a comment

Note: This is a guest post by Jan Škapa, a student at Brno University of Technology and Masaryk University, who met Richard Vedder at a seminar in Prague, Czech Republic last summer, and is a local coordinator for European Students For Liberty.

On ‘Education’ in General

I love education. And what I mean when I say “education” might differ from how most people define it. By “education,” I don’t mean just sitting in a physical classroom and listening to instructors. Yes, that is a specific type of conveying information, but it is quite literally an old-school model by which many people do not learn effectively.

When I say education, I mean the fascinating mental process of the human mind, which takes inputs and produces new ideas that consequently influence human action. The crucial aspect is that the mind needs to be ready and desirous of education; otherwise, the process fails, no matter how hard it’s forced from outside (and when forced, the mind relaxes and returns to familiar patterns, disregarding the new inputs).

To illustrate what I mean, let’s take an example of a person who just got a new computer. The person can either:

1)  self-educate, i.e. learn how to operate the computer on his own;

2)  get educated, i.e. find written instructions, seek help from an experienced user, or sign up for a class;

3)  relax, i.e. give the computer to someone else, refusing to learn.


Stanford Online AI Class of 2011

Two years ago, I took an online course from Stanford University on artificial intelligence. I completed the course in the advanced track, and it felt like one of the best learning experiences I’ve ever had. I love computer science and technology, so I was excited to learn about AI. However, putting that aside, the idea of massive online education fascinated me, maybe even as much as the course subject itself.

The number of people who took the course with me was astonishing: 160,000. By far, not all of them finished, and not all of them watched the first lecture. Nonetheless, just the feeling that thousands of people from around the world were getting educated in the same topic from the same leading experts was uplifting and very encouraging for me.

The year I took the course was the year when I finished high school and started university: neither of which, however, were in the United States. I went to high school in a small Moravian city, and transitioned to the largest Moravian city to attend university — all of which in the so-called “heart of Europe,” the Czech Republic.

Looking back, I must admit that high school — with mandatory attendance for every class — felt very much like prison to me. I was excited to go to university because it provided me with a chance to learn rather than “to get educated;” the learning part came primarily from the huge amount of free time that most Czech students enjoy. I was set free — and taking a Stanford course was a perfect way to start utilizing this freedom.

However, I didn’t stop there.


Universities and MOOCs

The university environment is very fruitful, but its costs are outpacing of its benefits, especially on the margin. That holds true for the United States as it does for the Czech Republic. Even though Czech students don’t directly pay for the institutions, the inefficiencies are clear when it requires more money from taxpayers (adjusted for inflation) to educate one student than it did a few years ago. The same goes for American higher education where the problem is much more visible thanks to a partial price system.

It seems to me that there is a disconnect between what is perceived as education and what education actually is. I’ve completed about 10 massive open online courses and two years of university, so I think I can compare my experience.

I’ve learned a lot while taking courses through Coursera, Udacity, and elsewhere. I’ve pursued my interests directly, but also discovered new ideas which I wouldn’t have been exposed to otherwise. I was awarded certificates, which are a second-hand proof of my education (moreover, they aren’t yet publicly recognized), the main proof being the knowledge I acquired.

I feel, however, that I’ve learned less at university — the environment is more static, especially at Czech universities, where students get locked into the major they chose. On the other hand, I met many people, and there are also other benefits, like learning to be on time and managing my schedule. But the degree that students earn is perceived as their “education.” So, though I’ve learned less, I am supposedly still getting my “education” at university, not elsewhere.


The Future of Education

Massive open online courses are provided primarily by universities, but they change the paradigm of education, reorienting the focus back to its roots. It is about the knowledge you get, and not about the degree. It’s rather interesting that the institutions responsible for the inefficiencies in education are also a major force in advancing education on the digital frontier.

There are still a lot of problems with massive open online courses, though — some providers haven’t found a profitable business model. There will probably be a lot of competition in this field, and good business models will prevail, while bad ones will perish. That is a good thing because, after the initial hype is over, we will have a stable market-based online educational system, which may or may not change the face of universities in a sort of backfiring loop.

I believe education will once again become more knowledge-oriented, and less degree-oriented. That’s what education is about anyway — learning new things, which are useful for the individual and his or her life. We will see what role MOOCs will play — whether they will be just a transitional phenomenon or not.

Quote of the Week

Posted on June 11th, 2013, by Comments Off

Justin Martin:

There are far more students than professors in higher education, and the system is supposed to be set up for the aspirants, not the academics. I want universities to have robust, supported faculty, and I’m a professor myself, but MOOC-triggered alarms that that focus solely on faculty positions put the teacher first, learner last.

The Benefits of Prestige-Seeking Behavior

Posted on May 21st, 2013, by Comments Off

A while back the Wall Street Journal has a potentially ominous report about law schools:

Since the financial meltdown of 2008 and resulting economic recession, dozens of law schools, including those at George Washington University, in Washington; University of California’s Hastings College of the Law, based in San Francisco; and Creighton University in Omaha, Neb., have announced smaller class sizes. A survey conducted last summer by Kaplan Test Prep found that 51% of U.S. law schools had cut their admissions. The study didn’t identify the schools that made cuts.

But the move by Northwestern’s law school [to decrease the size of its incoming by 10%], based in Chicago, signals just how sharply the demand for young lawyers has dropped in recent years, and to a grim new prospect for law schools: that the legal profession may never return to its prerecession prosperity.

As the article notes later on (quoting law professor Bill Henderson), the underlying rationale for these schools to cut their class sizes is that doing so allows them to preserve institutional selectivity, in no small part to secure their places in law school rankings. Despite all the problems one might identify with prestige-seeking behavior in higher education, this is a good example of how the desire to maximize prestige can actually serve as a motive for corrective action. If we stipulate that there is indeed an oversupply of lawyers in the U.S. labor market, then perhaps the best way (and, I suspect, the most efficient way on a societal level) to address that problem is to begin curtailing law school enrollments. Notice that cutting enrollments is actually in the best interest of institutions who pursue prestige. For them, by cutting enrollments (which, for highly selective institutions implies cutting admissions) in the face of declining applications (which are themselves in response to the tepid job market for law school graduates), they are avoiding the awful specter of a decrease in institutional selectivity. An inputs-focus is certainly not all bad.

Chart of the Week: Average Discount Rate

Posted on May 10th, 2013, by 1 Comment

Earlier this week Kevin Kiley’s reporting for InsideHigherEd on the recent NACUBO report on tuition discounting included this interesting chart.

Tax U

Posted on May 9th, 2013, by Comments Off

A little while ago, Eric Kelderman had a story in the Chronicle that is, if not surprising to some, surely is distressing:

Thirty-four colleges audited recently by the Internal Revenue Service underpaid their taxes on unrelated business income by nearly $90-million, and nearly 20 percent of the private colleges in the group violated rules for nonprofit organizations in determining the compensation of their chief executives, according to a final report issued on Thursday by the federal agency.

But the real kicker comes from later on in the IRS report. As Kelderman describes it,

The audits, the report says, “identified some significant issues … that may well be present elsewhere across the tax-exempt sector.”

Back in 2007 or so, a movement was beginning to coalesce around certain proposals to regulate and limit colleges abilities to use their endowments to build up institutional wealth. While this push rightly died in the aftermath of the 2008 financial crisis (which hit college and university endowments with a vengeance), this new IRS report may provide something of a new impetus for increased scrutiny to colleges’ finances. Rather than poking away at an endowment problem that is only tangentially related (as I see it) to increasing college affordability, focusing on a failure to abide by the existing laws and regulations is preferable because 1) the focus is on rectifying a problem of which we know (or have good reason to suspect) and 2) it avoids the political fallout of having to propose and implement a new regulatory regime that, if we are honest, may have unintended consequences such that the cure is worse than the disease.