The ABCs of E-degrees

By Jim Pethokoukis
The ABCs of E-degrees

Only five years ago, many in both the academic community and the business world were claiming that the Internet was going to change education forever. Though its deep impact is undeniable, the Internet has yet to prove that it can single-handedly change education. CEOs of online universities, for example, are not nearly as brash in their pronouncements as they were in the late 90s. No more do we hear quotes of how the brick and mortar classroom will be a memory in 20 years. In fact, as venture capital for online education ventures is being cut, many administrators in higher education are scaling back in their commitments to online learning.

The successful approach of late seems to be a holistic one, where video and the World Wide Web are used to enhance a classroom, not replace it. This type of holistic approach is a lot easier to pull off if you didn’t join the high-tech bandwagon in the 1990s and place a large bet on a future higher education landscape that would be dominated by technology-based distance learning.

This holistic approach is how Illinois Institute of Technology is treating its e-learning programs. IIT began offering courses at a distance using microwave to sites within the Chicago area in 1976. IIT Online, which put its first class on the Internet in 1997, currently offers 62 Internet classes. Video and audio from the lecture is combined with an accompanying slide window which contains everything the professor writes on a blackboard as well as materials distributed to the class. “Now students can focus on thinking about what the professor is saying and formulate questions and not worry about taking notes or writing down formulas,” says Louise Hewitt, director of IIT Online Technical Services. And to supplement the classroom experience, professors can set up chat rooms or video conferencing. The approach is working—enrollments online via the Internet almost doubled this past year.

The complementary approach is working at other institutions as well. If it wasn’t for an e-learning program at the University of Tennessee in Knoxville, you can bet Dirk DiSantis of Johnson City, Tennessee, wouldn’t be getting his MBA right now—at least not if he wanted to stay happily married. “My wife would clobber me if I tried to get an MBA the regular way,” says DiSantis, whose wife, Susan, is expecting their third child this summer. “Without the Internet, there’s just no way time wise that I could swing it.” In addition to juggling family and school responsibilities, the marketing specialist with Eastman Chemical spends plenty of time playing road warrior as he travels frequently for his company throughout the country.

Clearly DiSantis is a bad fit for any program requiring lots of physical classroom time. But luckily for him, UT, Knoxville, offers a blended MBA program where students spend about 10 days every other month on campus. Between these residence periods, the school holds virtual classes and workshops online where students can ask questions and work on projects with each other via the Internet.

A practical example of e-learning? Sure. But it’s a comparatively mundane manifestation of the glorious “classes for the masses” vision that many colleges and universities promoted at the height of the late 1990s Internet frenzy. It was a vision driven by both greed and fear. Some schools fretted that Microsoft or some other tech powerhouse would launch an educational version of Amazon and make brick-and-mortar-and-ivy colleges obsolete overnight. Other schools hoped e-learning programs would increase their market share and attract thousands of new students such as retirees wishing to take courses in Greek mythology or the Civil War. Perhaps these programs could even become wildly profitable separate ventures with public offerings.

Yet just as Webzines found it tough to get people to pay for subscriptions, colleges found few takers for their liberal arts, learning-for-pleasure Internet fare. Now many of these institutions of higher learning, like many beleaguered Web companies, are refocusing their efforts and doing what they should have done right from the start; determine who in 2002 are really their potential customers, who actually needs to use e-learning and is willing to pay for it, and then figure out the best way of delivering their services to them.

That process and the stark financial realities it has uncovered prompted many institutions to drop out. New York University recently closed its e-learning company, NYU Online, while the University of Maryland University College closed its for-profit online venture last October. Temple University’s company, Virtual Temple, closed in the summer of 2001. “These schools thought these companies were going to be growth vehicles for them and maybe even go public,” says Greg Capelli, a Chicago-based e-learning analyst for Credit Suisse First Boston. “They spent millions, but it never happened.”

Those who have stuck it out have been forced to switch directions. Take Fathom, for instance. A for-profit venture started two year ago by Columbia University—and partnered with other institutions such as the University of Chicago, University of Michigan and the London School of Economics—Fathom was supposed to bring in the big bucks by offering liberal arts courses online to so-called lifelong learners. Yet few signed up for these classes, such as a $670 semester-long course called “Shakespeare to 1603” about the earlier works of the Bard. “When we were launched, we were heavily weighted toward these lifelong learners, but I think we underestimated their comfort level with the Internet” says Anne Rollow, vice president of strategic alliances and marketing for Fathom. “There is a hesitancy to pay unless you know exactly what you’re getting.”

Fathom now allows users to experiment with shorter (10 weeks or so), less expensive ($45) e-courses such as “The Shakespeare You Never Knew: The Early History Plays.” Prospective students can also sign up for free two-hour seminars if they really want to ease into e-learning. More importantly, Fathom has belatedly realized that the most profitable market segment for e-learning is people who see furthering their education as a way of moving up the corporate ladder. In February, Fathom introduced a “professional development” section featuring more down-to-earth class selections such as “Closing the Sale” and “Assert to Achieve.” Rollow says that while “personal enrichment” learning may well be the future of the company, “professional development is really where the growth is and we’re tapping into it.”

The ABCs of E-degrees

Fathom has gotten at least part of the profit puzzle right. The $235 billion post-secondary education market, according to the U.S. Department of Education, is expected to grow at a six percent annual clip during the next five years. But the portion of the market comprising students who are 25 and older is expected to grow at nine percent per year—and three-quarters of that group work while attending school. These are students, says Bear Stearns analyst Jennifer Childe, who “seek education to update and improve their skills ... and enhance their earning potential.”

That is exactly the market sought by the University of Phoenix Online, one of e-learning’s biggest success stories. It’s the largest such program in the United States with nearly 34,000 students currently enrolled, having awarded nearly 10,000 online degrees. Enrollment is up 72 percent during the past four years. “People talk about all the commercial failures, but online education has not been a failure,” says Terri Hedegaard, senior vice president of distance learning for the University of Phoenix. “There are programs at universities all over the country. They just haven’t been wrapped up into a big, fat commercial venture.” Indeed, more than 150 institutions offer undergraduate degrees online and nearly 200 offer graduate degrees.

Another school making online education work is the University of Maryland which has more than 3,000 online students. Childe explains that the success of Maryland’s and the Phoenix’s programs shows that in addition to going after the right sort of student, e-learning programs “must establish an educational brand name to compete effectively.” She notes that pure e-learning firms such as Jones International University and Capella University have only 6,000 and 3,000 students, respectively, despite being around since the mid-1990s.

An alternative e-learning approach is taken by UNext, based in Deerfield, Illinois. The company has created a pure online entity called Cardean University, but the business-oriented courses are fashioned by mining the brains of faculty at schools with top-notch MBA programs, such as the University of Chicago, Stanford and Carnegie Mellon. By gearing the school toward business students—it has professional development courses and a full online MBA—CEO Andrew Rosenfield explains that he is picking “the low-hanging fruit” of the e-learning market. While Rosenfield’s gut feeling is that lifelong learning will eventually be a big market, it just doesn’t make economic sense right now. The online MBA, by contrast, is particularly attractive to students overseas where there’s a paucity of business schools. “There are probably more quality business schools within 50 miles of Chicago than in all of Europe,” Rosenfield says.

But whatever the focus of an e-learning program, it must successfully replicate the university environment. And that means more than just streaming video feeds of lectures. “A lot of schools thought you could put a video camera at the back of classroom, send it over the Web and have an Internet program,” says Rosenfield. “Learning a subject is vastly more complicated and deeper than that.”

The ability of students to attend class on their own schedules is a big plus, whether for a degree program at IIT or if a student is taking a professional development class through a group like UNext. IIT’s Hewitt notes that over 50 percent of users live on or near an IIT campus, whether the Main Campus or a satellite site. For now about 45 percent of IIT’s distance-learning classes are offered via the Internet—including three master’s programs—and she hopes to have 90 percent online within the next few years, with the only exceptions being classes that require some sort of lab work.

And if a student has trouble with his online classes, he may be able to summon an online tutor. A Washington, D.C. based company called Smarthinking now offers live, online tutoring for colleges, universities, high schools, publishers and government. Ah yes, the miracles of the Internet. We can take classes over it and attend discussion groups over it. And now we can even get tutoring over it. If we only could get it to do the homework and take the test for us as well.

Jim Pethokoukis is a senior editor at U.S. News and World Report.