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Trumping College Costs
By JIM MCTAGUE
You parents with young children: There's no reason to get bent out of shape about the college-affordability crisis. Nor is there any rationale for President Barack Obama to butt in. The free market already is addressing the problem of soaring tuition costs, primarily via the Internet. Just as the 'Net profoundly changed the business dynamics of the newspaper industry, the retail industry, and countless other industries, it is rapidly altering higher education, bending the cost curve downward. Obama wants the government to create a cost-benefit analysis of colleges and universities, which would take years of bureaucratic head-scratching, if it ever happens at all.
The average new college grad holds $26,500 in student-loan debt versus about $15,000 in 2004. According to the Federal Reserve Bank of New York, this is the only form of consumer obligation that has grown since consumer debt peaked in 2008. "Balances of student loans," it says, "have eclipsed both auto loans and credit cards, making student-loan debt the largest form of consumer debt outside of mortgages." Outstanding debt is close to $1 trillion, versus $350 billion in 2004.
Enter Internet entrepreneurs. At the University of Maryland University College, which offers online undergraduate programs, a four-year degree costs $30,000 for in-state residents and $60,000 for out-of-staters. That's a steal, compared with most not-for-profit four-year colleges and universities where costs easily can exceed $100,000. Currently, total enrollment is 95,000 students. Last week, Georgia Tech, along with Udacity and AT&T (ticker: T), announced creation of an online master's degree program at the bargain-basement price of $6,600.
Despite abuses that Barron's has chronicled over the years—including the recruitment of unqualified students by some publicly traded Internet schools merely to boost revenue and profits—online education is booming. According to the U.S. Department of Education, from 1999-00, 8% of undergrads were enrolled in a "distance" course. That doubled to 16% in 2003-04 and hit 20% in 2007-08. The number of Internet users worldwide rose from 248 million to 1.8 billion during this period. The Department of Education will update the data this year; presumably, the percentages will be higher.
STILL TOO MUCH for your pocketbook? Some of the finest courses in the world—from top-tier schools like MIT and Stanford—already are available at no cost via Massive Open Online Courses, or MOOCs. When Stanford made a MOOC of one of its prestigious artificial-intelligence courses in 2011, 160,000 students from 190 countries signed up. About 23,000—or 14%—of them completed it, and 248 aced it. (None were from Stanford.)
What about that indispensable sheepskin? The end is nigh for credentialism. Udacity, one of several Websites serving as a portal to free college courses, identifies the smartest pupils and tells headhunters. Says a spokesman: "We have about 350 companies who have signed up to receive résumés and profiles of our top students, including Addepar, Appdirect, AT&T, Autodesk (ADSK), Cadence, Game Closure, Google (GOOG), Nvidia (NVDA), and Trialpay. Some of these partners have developed courses directly with us, as well. We have placed about 25 students with partner employers. The number of people who have reported using our credentials and found work because of a Udacity course is in the hundreds."
Obama is way behind the curve. Free markets trump the pols every time.
http://online.barrons.com/article/SB50001424052748704719204579026763927229436.html?mod=BOL_hps_dc
By JIM MCTAGUE
You parents with young children: There's no reason to get bent out of shape about the college-affordability crisis. Nor is there any rationale for President Barack Obama to butt in. The free market already is addressing the problem of soaring tuition costs, primarily via the Internet. Just as the 'Net profoundly changed the business dynamics of the newspaper industry, the retail industry, and countless other industries, it is rapidly altering higher education, bending the cost curve downward. Obama wants the government to create a cost-benefit analysis of colleges and universities, which would take years of bureaucratic head-scratching, if it ever happens at all.
The average new college grad holds $26,500 in student-loan debt versus about $15,000 in 2004. According to the Federal Reserve Bank of New York, this is the only form of consumer obligation that has grown since consumer debt peaked in 2008. "Balances of student loans," it says, "have eclipsed both auto loans and credit cards, making student-loan debt the largest form of consumer debt outside of mortgages." Outstanding debt is close to $1 trillion, versus $350 billion in 2004.
Enter Internet entrepreneurs. At the University of Maryland University College, which offers online undergraduate programs, a four-year degree costs $30,000 for in-state residents and $60,000 for out-of-staters. That's a steal, compared with most not-for-profit four-year colleges and universities where costs easily can exceed $100,000. Currently, total enrollment is 95,000 students. Last week, Georgia Tech, along with Udacity and AT&T (ticker: T), announced creation of an online master's degree program at the bargain-basement price of $6,600.
Despite abuses that Barron's has chronicled over the years—including the recruitment of unqualified students by some publicly traded Internet schools merely to boost revenue and profits—online education is booming. According to the U.S. Department of Education, from 1999-00, 8% of undergrads were enrolled in a "distance" course. That doubled to 16% in 2003-04 and hit 20% in 2007-08. The number of Internet users worldwide rose from 248 million to 1.8 billion during this period. The Department of Education will update the data this year; presumably, the percentages will be higher.
STILL TOO MUCH for your pocketbook? Some of the finest courses in the world—from top-tier schools like MIT and Stanford—already are available at no cost via Massive Open Online Courses, or MOOCs. When Stanford made a MOOC of one of its prestigious artificial-intelligence courses in 2011, 160,000 students from 190 countries signed up. About 23,000—or 14%—of them completed it, and 248 aced it. (None were from Stanford.)
What about that indispensable sheepskin? The end is nigh for credentialism. Udacity, one of several Websites serving as a portal to free college courses, identifies the smartest pupils and tells headhunters. Says a spokesman: "We have about 350 companies who have signed up to receive résumés and profiles of our top students, including Addepar, Appdirect, AT&T, Autodesk (ADSK), Cadence, Game Closure, Google (GOOG), Nvidia (NVDA), and Trialpay. Some of these partners have developed courses directly with us, as well. We have placed about 25 students with partner employers. The number of people who have reported using our credentials and found work because of a Udacity course is in the hundreds."
Obama is way behind the curve. Free markets trump the pols every time.
http://online.barrons.com/article/SB50001424052748704719204579026763927229436.html?mod=BOL_hps_dc
