Higher Ed Shake Up
Where Online Education Is Working

Defenders of the Ivory Tower status quo have been declaring online education a failure and a waste of resources for the past several years. And there was a kernel of truth to their position: Massively open online courses did not have the immediate and transformative impact that their most wide-eyed proponents imagined; it doesn’t look like the brick-and-mortar university will ever be completely swallowed up into cyberspace.

Nonetheless, online education is carving out a critical space in the U.S. educational system: Granting high-quality, low-cost technical degrees to mid-career professionals. A new National Bureau of Economics Research analysis found that Georgia Tech’s $7,000 per-year online computer science master’s program will by itself lead to a seven to ten percent increase in the number of master’s degrees awarded each year in the United States:

Our descriptive evidence shows large demand for the first low-cost online degree offered by a highly-ranked institution. Applicant pools to the online and in-person versions of this degree program show almost no overlap in individuals or in demographic characteristics. Unlike its inperson equivalent, the online option generates demand largely from mid-career Americans. Large demand from older, employed individuals is consistent with the possibility that the geographic and temporal flexibility of the online option are critical to its appeal. Online education can provide mid-career training without forcing individuals to quit their jobs or move to locations with appropriate educational institutions.

The authors note that the Georgia Tech model of online education—”large-scale program offered by a highly-ranked department, priced much lower than its in-person equivalent and culminating in a prestigious graduate degree”—is being replicated by other institutions, including the University of Illinois, which now offers an “iMBA,” and Yale, which is poised to roll out an online physicians assistant program. If the market responds to these (and other) programs the same way it responded to Georgia Tech’s, they will lead to a significant expansion in access to post-graduate education, especially for students with several years of work experience looking to change or upgrade their careers without uprooting their lives to move to a college campus.

Interestingly, the great majority of enrollees in the Georgia Tech program were American citizens. While online education has traditionally been described as a globalizing force, foreign students seem to prefer the brick-and-mortar alternative. The authors write: “Relatively low demand for the online option from non-Americans is consistent with the value of in-person programs stemming at least partially from physical access to U.S. social networks and labor markets.” This highlights the fact that education is valuable not only because of the skills it imparts but because of the social and career relationships it facilitates. One reason mid-career professionals are more likely to take advantage of the online programs is probably because they have less of a need to form such relationships than recent college graduates.

As goods like education and healthcare get steadily more expensive, a crucial division is emerging in the policy class: Should the government respond to such cost increases by offering a commensurate expansion of subsidies, or should it encourage and facilitate policies that might actually bring down cost in the first place? The success of emerging online education programs at offering quality product at lower cost is evidence that, with the right technology and regulatory structure, prices can be brought down. Figuring out how to expand on this success and replicate it in other market areas should be the overriding goal of domestic policy in the post-blue world.

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