Who's Going to Pay for Online Education?

It’s been 20 years since the Michigan State University began its Computer-Assisted Personal Approach (CAPA) project.

Within five years, the award-winning program multi-media project that offers mostly science and math courses reached more than 6,000 students on the MSU campus and was available at 40 institutions nationwide. By 1999, it became a LON-CAPA (Learning Online Network with Computer-Assisted Personalized Approach) program offered at more than 70 institutions that had received funding from the Sloan and Mellon Foundations.

The problem for online education, massive open online courses, and open-source software is not necessarily the funding. Firms are investing millions of dollars in these start-up firms, but the question remains if it’s a sustainable business model.

Gerd Kortemeyer, associate professor of physics, education, has seen how the project works as director of the LON-CAPA project at MSU and identifies the biggest question facing online learning is who’s going to pay for it? He talked about his concerns in a recent post on the Educause listserv:

A lot of bandwidth gets spent these days arguing that open education and free stuff is good … and that traditional colleges and textbooks are quickly approaching obsolescence. I am oscillating between enthusiasm and cynicism.

Our open-source content-sharing project, LON-CAPA, just celebrated its 20th anniversary: www.lon-capa.org/anniversary.html, and we are starting a successor project, www.courseweaver.org/.

Looking back over those 20 years, it's been an almost constant uphill battle for funding. Some money came from grants, but that model is inherently unsustainable: you can get money for new initiatives, but you cannot get grant funding to sustain something that works. Some research funding was even harmful to our project, as it made us do experimental stuff that did not benefit the majority of our users. The remainder of the funding has come from traditional colleges and universities.

Looking at MOOCs, open content, open-source software, etc., I still do not understand the business model, and I don't see it seriously discussed, except occasionally like in the Chronicle article about Coursera: http://chronicle.com/article/How-an-Upstart-Company-Might/133065/—notice the "might" in the title.

Somebody in the end has to pay for salaries, retirement, health insurance, connectivity, hardware … at the moment, it seems like the business model is parasitic on traditional higher education. How is it going to move out of that mode?

My cynical self is reminded of the infamous dot-com business model: "We make a loss with every customer, so let's get more." Are we heading toward a dot-edu bubble? Please convince me of the opposite.

A good question, indeed.