How Technology Is Disrupting Education

The age-old model for higher education is under assault.

Now granted, it may have been a long time since colleges conformed to the romantic stereotypes: ivy-covered stone walls, cozy seminars around long oak tables, crusty but lovable professors with tweed jackets and meerschaum pipes who took an active interest in each and every one of their pupils. But even the modern, 50,000-student campus versions are being turned around by the potential threat of a new model for education, delivered online.

It's a tsunami that is bearing down on every institution of higher education in the country. And anyone who doesn't act with appropriate foresight risks inundation, a threat which has university officials around the nation acting out of panic.

The idea of moving classes to the Internet is not a new one, of course. The University of Phoenix – one of the pioneers in the commoditization of education – started its for-profit "distance-learning" program with an initial class of 12 way back in 1989, first over private networks and later the Web. Although Phoenix has come under heavy criticism for its students' high debt loads and low job prospects, it nevertheless still enrolls over 400,000 per year.

There is also the Khan Academy, a non-degree tutorial program begun in 2006 by Bangladeshi-American educator and Harvard Business School graduate Salman Khan. Khan had a vision – to construct "the world's first free, world-class virtual school where anyone can learn anything." To this end, he has overseen the creation of more than 3,000 microlectures via video tutorials, stored on YouTube and covering subjects from physics and chemistry to art history and microeconomics.

In addition, most schools now offer at least some online instruction. According to the Babson Research Group's annual survey of more than 2,500 colleges and universities, more than 6.1 million students took at least one online class during fall, 2010. That's a 10% increase over the year before, and represents 31% of all students – up from less than 10% in 2002.

And it isn't as if forward thinking JVs haven't been tried before, notably with Fathom, an unsuccessful 2001 commercial venture that involved the University of Chicago, the University of Michigan, and Columbia University, and AllLearn, a nonprofit effort from Yale, Princeton, and Stanford that was canned in 2006.

So what is new?

In a May 3 op-ed in the New York Times, columnist David Brooks wrote that, "[O]ver the past few months, something has changed. The elite, pace-setting universities have embraced the Internet. Not long ago, online courses were interesting experiments. Now online activity is at the core of how these schools envision their futures."

Take MIT and Harvard, which rolled out a new educational partnership in April. Dubbed edX, it will offer free online courses from both universities, starting with its first five this coming fall. edX will be overseen by a nonprofit organization governed equally by the two universities, each of which has committed $30 million to the project.

And that JV followed hard on the heels of MIT's announcement last December that it was starting an open online learning project, called MITx. Its first course offering, "Circuits and Electronics," debuted in March and attracted an enrollment of about 120,000. Those who complete the course get a certificate of mastery and a grade, but no official credit. That's similar to what will happen with edX.

Developments like this require a new acronym, you know. So we are going to have to become comfortable with MOOC, which stands for "Massively Open Online Course."

MOOCs are a hot topic on both coasts and everywhere in between. At the same time as the Boston duo was trumpeting edX, another consortium – consisting of Stanford, UCal Berkeley, Princeton, and the Universities of Michigan and Pennsylvania – was introducing Coursera.

Unlike edX, Coursera is a commercial company. The founders – Stanford computer scientists Daphne Koller and Andrew Ng – have so far attracted $16 million in venture capital from such luminaries as John Doerr of Kleiner Perkins Caufield & Byers – who has backed some of the world's most successful entrepreneurs, including the likes of Larry Page, Sergey Brin, and Eric Schmidt of Google; Jeff Bezos of Amazon.com; Scott Cook and Bill Campbell of Intuit; and Mark Pincus of Zynga.

The tech behind MOOCs – characterized at the moment by video-lesson segments, embedded quizzes, immediate feedback, and student-paced learning – is still evolving, albeit rapidly. And the future is unpredictable.

However, "Projects like this can impact lives around the world, for the next billion students from China and India," says George Siemens, of publicly supported, online Athabasca University in Canada. "But if I were president of a mid-tier university, I would be looking over my shoulder very nervously right now, because if a leading university offers a free circuits course, it becomes a real question whether other universities need to develop a circuits course."

Put another way, if you have a choice between a course taught by an average professor at your school and one taught online by a nationally recognized expert in the field, which are you going to pick?

One such expert is Sebastian Thrun.

Thrun is a computer scientist, a research professor at Stanford, and a Google Fellow. At Google, he founded Google X, which has launched projects like the self-driving car and the new Google Glass wearable computer. In 2011, he offered a free online course through Stanford called "Introduction to Artificial Intelligence." 160,000 students from all over the world signed up... 800 times the number that used to pack his lecture halls at Stanford.

That level of global interest convinced Thrun that MOOCs are the wave of the future. So he gave up his Stanford tenure last year and cofounded a new company called Udacity. As Thrun describes his "Matrix" moment: "Having done this, I can't teach at Stanford again. I feel like there's a red pill and a blue pill, and you can take the blue pill and go back to the classroom and lecture your 20 students. But I've taken the red pill. And I've seen wonderland."

Classes from Udacity, which has been generating a lot of buzz in academic circles, are different from simply watching a recorded lecture. Besides letting you proceed at your own pace, they're interactive, stopping to quiz you on what you've learned. They also use Google Moderator to let students submit questions.

Startup money came out of Thrun's own pocket and from a venture capital firm, Charles River Ventures. He opened his school in late February with two offerings from the computer field he knows so well: "Programming a Robotic Car," which he taught, and "Building a Search Engine," taught by Dave Evans of the University of Virginia. Four additional courses were added in mid-April, and five more at the end of June. The last batch incorporated subjects outside of computing, and Thrun says his ultimate intention is to offer a fully rounded curriculum.

As with the other new online schools, Thrun's courses are not for credit. You can't pursue a B.S. in Computer Science through Udacity. So in that sense, MOOCs are not an immediate challenge to brick-front institutions. But down the road, might they become accredited and degree-granting? While possible, it's not likely, because it would be difficult to offer a fully comprehensive degree program without charging for it.

Since they don't charge and don't intend to, the obvious and giant looming questions are: how are they going to make ends meet? What's the business model here? After all, the seed money will run out eventually. By then, the nonprofits will be expected to stand on their own electronic feet, while the private companies will be facing early, anxious investors who expect some kind of return on capital.

So far, no one is saying exactly what the business plan might be. The only revenue stream that the major new MOOC providers have said they will pursue is charging a fee for a certificate. Coursera, the largest, with over 1 million registrations, says it may charge between $30 and $80 per certificate, depending on the course. MIT and Harvard expect to charge a "modest fee" for the opportunity to earn an edX cert.

Problem is, these are tough courses. Among MOOCers, only a relatively small group – between 10 and 20% – successfully makes it all the way through the final exam to cert eligibility.

But Daphne Koller of Coursera notes that course registrations are on such a massive scale that monetizing merely 20% of them makes the business potentially sustainable. Doing the math: a million registrants x 0.20 x $55 (avg. cert fee) = $11 million. And if the million students turn over two or three times a year, then revenues could be a multiple of that. It might be sufficient.

Growth prospects remain a question mark, however, and the whole thing depends on the worth of the certificate. If it proves to have value to a prospective employer, then of course more people will strive to get one. But if it's not held in high regard, then the great bulk of registrants would remain non-paying, simply seeking the knowledge without the paper, as is generally the case now. Revenues would suffer.

Another possibility is "job matching," and here's where Udacity's Google connection becomes provocative. Udacity has admitted it might serve as a kind of headhunter to the information industry. But instead of just presenting students with certs that they can list on their résumés, Udacity would set up matches that bring together exceptional students and companies looking for someone with that particular skillset. And it would take a commission for each successful marriage.

Here again, it's questionable how much such a venture would bring in, given the low percentage of students who are apt to be placed and the competition from highly credentialed specialists already seeding their résumés across Silicon Valley. But Coursera's Koller and Udacity's CEO, David Stavens, maintain that this service should generate enough money to help beef up the companies' bottom lines. In Silicon Valley, headhunters generally get paid finder's fees equivalent to 20% of a software engineer's starting salary, Stavens says. That could mean around $15,000 per match, or $1.5 million per hundred – definitely not chump change.

Koller also points out that the MOOCs will have a deeper knowledge of their students' capabilities than an employer could glean from a standard college transcript. "Employers [could] be able to search against our databases, where you have very detailed, quantitative performance information on people across different skill sets," she says. "That might be something they would be interested to look at," and perhaps might be willing to pay for the right to peek.

If you're Google, whom would you rather hire, someone fresh out of a traditional college with a general CS degree or a programming genius who has proven his or her worth to you by acing Udacity's tough online course in search engine structure?

Thus, the current industry rumor, that Google is already raiding Udacity for its future superstars, just might not be unfounded (it's amazing what companies like Google will do to procure top tech talent).

Another possibility for MOOCs down the road is lead generation. Info on the many students who do not complete their courses might be sold to traditional online programs where they might have better luck. Lead gen is a big business, and Koller says it's under consideration.

Ann Kirschner, dean of the honors college at the City University of New York, suggests that MOOC providers could sell "accompanying content and services, so that it's not all about the courses themselves." The companies might make money by providing or outsourcing library resources, tutoring services, and other facets of the normal university life. "That 'envelope of learning' is going to have to happen somehow in order for this concept to really take off, and in creating that envelope will be opportunities for new businesses," Kirschner says. The MOOC companies might do it themselves, or a new satellite industry might grow up around them.

Adding "layers of more robust assessment” to their courses is another way to go, says Paul LeBlanc, the president of Southern New Hampshire University, a school that has a strong national online presence. A higher tier of feedback and human interaction – "something that inches closer to credit-bearing," in LeBlanc's words – might be a feature students would be willing to pay for, especially if it layered on greater credibility with prospective employers.

All of these potential sources of revenue have their pros and cons. But in the end, LeBlanc says, "Most of the stuff that will hold up over time, will be that which is attached to the brand … [if] everybody would put it on their résumé, they could make a billion dollars."

Maybe. But in order to get there, MOOCs will have to maximize their strengths.

Convenience and access to world-class instruction are not all they have going for them. There is also the prospect of selecting from a wide array of different lecturers with differing perspectives from across the planet; you could take the same subject twice, from separate scholars, extracting the best from each; two professors could link up to team teach, taking the parts of the subject in which they are most well-grounded; or the team might consist of experts in different but related disciplines, teaching together in a bidirectional learning experience, helping break down the historic walls between university departments.

MOOCs are by no means incompatible with traditional instruction, either. The two could combine, with far-flung masters supplying the lectures and on-site mentors concentrating on the more intimate give-and-take of one-on-one tutoring.

There are also many potential hard questions. Brooks wrote:

"Will online learning diminish the face-to-face community that is the heart of the college experience? Will it elevate functional courses in business and marginalize subjects that are harder to digest in an online format, like philosophy? Will fast online browsing replace deep reading? If a few star professors can lecture to millions, what happens to the rest of the faculty? Will academic standards be as rigorous? What happens to the students who don’t have enough intrinsic motivation to stay glued to their laptop hour after hour? How much communication is lost – gesture, mood, eye contact – when you are not actually in a room with a passionate teacher and students?"

Those questions will be answered one way or another, because MOOCs are here to stay. They won't replace the higher-educational experience as we know it – after all, students probably learn as much swapping ideas with their peers as they do in the classroom – but they will surely transform it.

With student debt loads at all-time highs, and with students from around the world simply unable to even dream of attending places like MIT in person, the demand for these courses will likely grow like crazy. If quality and availability continues to improve, they could become a real threat to the sustainability of growth in the university system.

Free courses from nonprofits or sponsored by companies with an eye toward large recruiting bases might pull marginal students out of the expensive university system, threatening the less elite schools. And they might cause the most talented kids – regardless of country of origin – to skip the degree system altogether and jump from a brilliant MOOC performance right into a high-paying job, much like the pros recruit sports stars directly from high school or early college.

No one can say how it's all going to shake out, not at this early stage. But at least some universities are not going to just sit around and wait to see what happens.

In summary, David Brooks wrote:

"The early Web radically democratized culture, but now in the media and elsewhere you're seeing a flight to quality. The best American colleges should be able to establish a magnetic authoritative presence online. My guess is it will be easier to be a terrible university on the wide-open Web, but it will also be possible for the most committed schools and students to be better than ever."

That seems like a good guess.