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Column: Online courses threaten universities' budgets

The catalog of course offerings in most modern American universities includes an array that is delivered online to their students. As the power of computers increase and their costs fall, these online innovations in instructional technology have been transforming the way courses are delivered.

More recently, a small number of elite institutions are experimenting with MOOCs (massive online open courses) that have the potential to reach tens of thousands of students, most not enrolled at the university. MOOCs have the potential for enormous educational benefit, as well as disruption of the usual business model of universities.

Beaming college courses to a mass audience is not new — Sunrise Semester, featuring New York University lectures, aired on CBS in 1957. What is new is how technology enables universities to enhance the educational value of such courses. Students enrolled in a MOOC are now able to interact with the course provider and get instantaneous feedback on quizzes, homework and examinations. They can access the course anywhere via a personal computer, tablet or smartphone.

MOOCs provide students with access to a wider variety of courses and professors than are available at their school; they can work at their own pace, review on their time schedule and remediate unlearned or poorly learned material. This flexibility is an important feature for many of today's students who often must combine work and child care with their studies. It is helpful also to those with disabilities or who struggle with English. It is a miracle for people living in poor countries around the world.

What serious academic-driven student would not want to take a course from a professor at Harvard, MIT or Stanford, or from one of the award-winning teachers at our major state universities? An example of a locally produced MOOC is the University of Florida's "Economic Issues, Food, and You." A large array of courses can be found on edX, Coursera and Udacity.

The full implication of what's coming with MOOCs is unknown. However, many university administrators and faculty view this expansion of competition not as something great but as a threat to the very survival of their institution. They should.

The competition will be particularly acute in basic courses, with large enrollments and fairly standardized syllabi, such as calculus, physics, accounting, logic and economics. Because the content of these courses is about the same at most universities, one MOOC can gain enormous enrollments, substituting for local face-to-face courses.

In many states, students enrolled in an online course can take a proficiency exam. If passed, they can have the credits transfer to their home institution for a small fee, and the home university suffers a revenue loss. With state universities already operating on a shoestring, this kind of revenue loss will have serious budget implications.

The typical public university relies on state budget support, tuition from undergraduate and graduate academic programming, revenues from several forms of research activity, and on private fundraising efforts. To provide a coherent education and to support their unfunded research agendas, numerous cash-losing small-enrollment classes are offered. These are financed with revenue from the university's large-enrollment classes.

As an example, English composition courses must be small in order that a number of writing projects can be assigned, read, graded, handed back for revision, reread and so on: a very labor-intensive process. The rest of the university relies on such cash-losing English courses to maintain rigorous standards of composition for the whole campus.

The providers of MOOCs will concentrate on the large-audience courses; that's where the money is. Consequently, they will compete for the very revenue that universities use to cross-subsidize their money-losing courses and unfunded research agenda. Should MOOCs be successful in reducing on-campus enrollments in large-audience classes, an important source of financing for the broad array of university offerings will be compromised.

Universities can try to shrink expenses by eliminating departments and majors, reducing faculty size, cutting support staff and raising teaching loads. In an effort to prevent MOOCs from eroding their market share, many will initiate costly efforts to improve the quality of their instruction, create more student living/learning centers, and place limits on the amount of MOOC credit they will accept toward degree completion.

We really do not know what is coming, and for some institutions the outcome may well be a downward spiral.

William L. Holahan is emeritus professor of economics at the University of Wisconsin-Milwaukee. Charles O. Kroncke, retired dean of the College of Business at UW-M, also recently retired from USF. They are co-authors of "Economics for Voters." They wrote this exclusively for the Tampa Bay Times.

Column: Online courses threaten universities' budgets 04/07/13 [Last modified: Friday, April 5, 2013 5:43pm]
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