During his recent economic address at Knox College, President Barack Obama briefly referenced the promise of online learning. Specifically, he celebrated the fact that some colleges are “blending teaching with online learning to help students master material and earn credits in less time,” a development that holds great potential to contain the rising cost of higher education. Yet this potential is still a long way from being realized, as demonstrated by a recent hiccup at California’s San Jose State University.

Like many of America’s public universities, San Jose State has struggled in recent years to increase its graduation rate. Only 8 percent of students who enrolled as full-time first-years in the fall of 2003 managed to complete their bachelor’s degree in four years, a share that climbed to 46 percent over six years. For students who enrolled in the fall of 2005, the numbers barely budged, with 7 percent finishing in four years and 46 percent finishing in six years. San Jose State has an ambitious plan to increase that share, which includes San Jose State Plus, a new effort to harness the potential of online learning.

The San Jose State Plus initiative is a wonderful example of innovative public sector thinking. Rather than build new online courses in isolation, San Jose State partnered with edX, a non-profit organization founded by Harvard and MIT, and Udacity, a highly-regarded education startup, to create courses that were rigorous, accessible and cost-effective.

But as Jason Dearen reports, earlier this month San Jose State suspended five of its new online courses, all of which were offered in conjunction with Udacity and had no classroom learning. The courses — in elementary statistics, college algebra, entry-level math, introductory programming and introductory psychology — were in theory exactly the right kind of courses for an online instructional provider to teach, as they covered basic introductory material. Outsourcing this kind of teaching could in theory be an enormous boon to the bottom line of colleges and universities, as the most effective providers could spread their online courses across the country, sparing the need for large numbers of expensive faculty members. Indeed, Udacity’s entry-level courses were offered for $150 each, far less than the $620 San Jose State charges for traditional classroom-based courses.

The problem, however, is that between 56 percent and 76 percent of students who took the final exams ultimately failed them. Udacity has acknowledged that the results of its collaboration with San Jose State have been disappointing, and the startup is committed, in classic Silicon Valley fashion, to learn from its mistakes. That online learning will experience growing pains is to be expected.

But what if there is no free lunch to be had? That is, what if the only way to reduce the failure rate in online courses is to blend them with some of the more labor-intensive — and thus, more expensive — aspects of traditional education? Recently, a good friend of mine — a tenured academic who has the good sense not to publicly weigh in on higher education controversies — suggested that “massive online open courses,” better known as MOOCs, represent the logical culmination of a long-term trend in higher education. As the higher education sector has increased its reach, it has been recruiting students who are less prepared for rigorous instruction and less committed to completing their degrees than those who came before them. Tyler Cowen, the George Mason University economist and co-founder of Marginal Revolution University, a popular massive online open course, has argued that U.S. higher education institutions already reach the easiest students to teach (the “low-hanging fruit”), and so efforts to expand higher education access means reaching students who either face serious obstacles to graduating or who are otherwise less inclined to stick around. It is no coincidence that while only one-fifth of college enrollees failed to complete a degree in the 1960s, the number has since increased to one-third.

At the same time that the higher education sector is taking on tougher-to-teach students, it has aimed to use labor less intensively. Elite liberal arts colleges that offered a great deal of personal attention and hand-holding gave rise to large land grant universities that offered somewhat less personal attention and hand-holding. State schools, in turn, gave rise to community colleges, which offer still less of both, which in turn left room for for-profit higher education institutions that eagerly recruit students with minimal preparation for college-level coursework while offering them hardly any personal attention or hand-holding at all. With each step, higher education has in a sense become more inclusive. Yet with each step, the institutions in question also see a higher attrition rate.

By way of illustration, consider the four-year and six-year graduation rates at a few California colleges and universities. For students who entered Stanford University, one of America’s most prestigious and selective research universities, in the fall of 2005, 79 percent graduated in four years while 96 percent graduated in six. At highly-selective but public UCLA, the numbers were 68 percent in four year and 90 percent in six. At Cal State Northridge, a considerably less-selective land grant public institution, 13 percent graduated in four years and 46 percent graduated in six. Pierce College, a community college located in California’s diverse San Fernando Valley, had a 23 percent graduation rate over three years for its associate’s degree program, and 13 percent succeeded in transferring to four-year colleges. The for-profit University of Phoenix of Southern California, which prides itself on its accessibility, had a four-year graduation rate of 2 percent and a six-year graduation rate of 15 percent. You get the picture.

True MOOCs that make almost no use of faculty labor will be very cheap to deliver, but one can easily imagine that they will be plagued by an attrition rate at least as high as what we see in today’s for-profit colleges. Blended online courses that stream lectures while also making use of face-to-face teaching assistants might have a success rate closer to land grant public institutions, where interaction with senior faculty is limited but there is a human support system for students. It should go without saying that the latter are going to be much more expensive than the former.

One way of thinking about higher education, and education more broadly, is that once you get past the students who are the most prepared and most eager to learn, you have to apply increasing amounts of both help and hassle. That is, you need to offer personal attention and tutoring as well as discipline and structure, all of which are labor-intensive in the extreme. The irony, of course, is that the students who need help and hassle the least, like the super-well-prepared and super-eager undergraduates at schools like Stanford, tend to get the most personal attention and structure. The students who need help and hassle the most, like ill-prepared community college students who are not entirely sure that an associate’s degree is worth much in the way of time and effort, tend to get the least personal attention and structure. To some extent this is simply a numbers game: trained professionals are scarce and expensive, and the number of students who haven’t been well-served by their families and by their K-12 schools is depressingly large.

I have no doubt that online education is going to get better over time, and that innovators at places like edX and Udacity will find ways to better combine labor and technology in ways that will help contain higher education costs. But we shouldn’t expect miracles. Somehow we need to come up with better ways of engaging the large number of young Americans who aren’t destined to complete a bachelor’s degree, and who might need less in the way of help and hassle when they’re being offered real-world, job-specific skills. Until then, be very skeptical of anyone who promises that online education is going to make it much cheaper to educate struggling students.

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