Response to Michael Cusumano – “Are the Costs of ‘Free’ Too High in Online Education?”

This post is by Sarah Foregger, Ph.D., a consultant for the Saylor Foundation in the Communication discipline. Dr. Foregger taught for several years at the University of San Diego and has worked in consulting since 2012.

By Sarah Foregger, Ph.D.

“We need not fear that democratizing knowledge will cheapen its worth.”

In an article published this week by Michael Cusumano, Professor in MIT’s management program1, it was argued that the MOOC trend — which has seen free online courses offered by Coursera, edX, MITx, and Khan Academy, among others — may have a “negative” economic impact on our traditional institutions of higher education, potentially forcing the elimination of institutions on the lower rungs of the academic ladder.

Should we take pity on the “second and third tier” higher education institutions that, Cusumano warns, will suffer and shrink as a result of free online education available to all? Indeed, we may see virtually unknown institutions of higher education with price tags as high or higher than better-known public schools fade away.  The MOOC movement may cause the death of pesky for-profit institutions that charge a maximum for a degree with minimal respect. Should we mourn for them?

For the sake of every 17-year-old high school senior, trying to make a decision that will financially and otherwise impact their life forever, I hope we say a quick goodbye.

Yes, Mr. Cusumano, I hope there will be these “negative” implications from the disruptive nature of MOOCs in the marketplace.  Foremost, we should hope that MOOCs incentivize traditional higher ed institutions to rethink their price tags.  Our current price structure is leaving our young adult college graduates saddled with a debt they may never be able to repay, driving down their economic contributions and setting up our nation for an as-yet-unrealized economic crisis – a generation unable to repay over 1 trillion (yes, with a “T”) dollars in Federal Student Loan debt, unable to buy homes, cars, or support children2.  The Consumer Financial Protection Bureau, formed after the recent recession and housing crisis, has zeroed in on this potential disaster and agrees that the responsibility for rectifying ballooning student loan debt is on the heads of many, including the higher education community3:

“[C]onsumer protection is just one piece of preventing a student loan market meltdown. The financial services industry, the higher education community, and policymakers all bear responsibility to address the underlying causes of the growing debt levels.”

Without the disruptive force of the MOOC, academia may never have incentive to change and adapt.  Academia, which typically moves at glacial speed and which shelters some of our best and brightest minds, may now be forced to innovate – a prospect full of potential. We should embrace the paradigm that is forcing the most traditional — and yet the most important — pieces of our societal fabric to refine, and rethink what may now be antiquated processes.

Further, I respectfully decline to accept that Education is subject to the same pricing philosophy economic researchers apply to other products.  Education will never lose its value – even if it’s priced as “free”. There is a deep societal reverence — existing across many cultures — for all it symbolizes.  We need not fear that democratizing knowledge will cheapen its worth.

MOOCs may or may not be here for the long haul. But their current benefit lies in disrupting the dinosaur of thought the traditional academy has become.  When it’s all said and done, we MIGHT see some of our marginal brick and mortar schools shutter their doors – it happens.  But we might also see an increase in the number of educated individuals in our society – or heck, worldwide.  We MIGHT see education transition to a purely online format, but I’d venture to guess most traditional students want to experience the American rite of passage – packing up their worldly possessions and moving them into a 10 x 10 cinderblock room shared with another nervous teenager.  Our institutions of higher ed won’t die, but they will need to innovate.  If this drives down price, then bravo to the Open Ed movement.  It was certainly needed.

This is a complex issue with hypotheses and implications that can’t be covered in a short article.  As the CFPB states, “We all need to understand better and address a number of concerns, such as rapidly rising defaults in the for-profit college sector and high borrowing to gain training in fields with limited opportunities post-graduation.” [emphasis added]

Cusumano’s implications rest on so many premises, but in general, what we, the innovators, the dreamers, the changemakers accept and believe is that the technology exists to make knowledge available, accessible, and free.  Not only does the technology exist, but the belief in open access is held by many – those with Ph.D.s, inside and out of the Ivory Tower; those on the administrative level, working daily to make carefully vetted information available to anyone with the motivation and internet access; and those with deep pockets and the conviction that disruptive innovations may be uncomfortable, but they’re necessary to move everyone, including yourself, Mr. Cusumano, forward.

Our brick and mortar universities need to heed the advice of former Circuit City CEO, Alan Wurtzel, who said upon reflecting on Circuit City’s demise, “Don’t think you know all the answers, because once you get complacent, you’re in trouble.”4  Circuit City, if you remember, was where millions purchased electronics and appliances during the 80’s and 90’s but shuttered its doors for good in 2009 due to bankruptcy brought on by refusal to adapt to the market 5.

1 http://mitsloan.mit.edu/shared/ods/documents/High-Costs-of-Free-Online-Education.pdf&PubID=5082
[See also Steve Lohr’s synopsis in NYT’s Bits blog, “Beware the High Cost of ‘Free’ Online Courses” – http://bits.blogs.nytimes.com/2013/03/25/beware-of-the-high-cost-of-free-online-courses/]

2  Wall Street Journal: http://online.wsj.com/article/SB10001424052702304818404577350030559887086.html

3 Consumer Financial Protection Bureau: http://www.consumerfinance.gov/blog/too-big-to-fail-student-debt-hits-a-trillion/

4 Wall Street Journal: http://blogs.wsj.com/bankruptcy/2012/10/25/lessons-from-the-death-of-circuit-city/

http://www.time.com/time/business/article/0,8599,1858079,00.html – “Why Circuit City Busted, While Best Buy Boomed.”

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