The Independent Investor: Online Education Is Not a Panacea

Over the last decade, online enrollment in college classes has exploded. Many hope that it will ultimately help reduce the burgeoning future costs of a college education. The evidence, thus far, indicates that we have a long way to go.

At the outset, readers should understand that there are two initiatives that have yet to converge in online education. There are MOOCs (Massive Open Online Courses) offered for free by several universities and colleges, although in some cases the educational institution will issue a certificate or letter of completion (for a price).

These MOOC courses enroll hundreds of thousands of students in 150 or more countries worldwide. The courses are usually developed and taught by big-name educators and function as promotional tools for the teacher and their college or university. The students, in turn, benefit from the acquisition of new information, knowledge and skills, as well as making connections with fellow students from all over the world.

There are also online tuition courses offered by colleges and universities where students pay tuition comparable to what they pay for the traditional physical college class and receive college credit for successfully completing these courses. Back in 2002, only 34.5 pecent of colleges offered online courses; today that figure has grown to 62.4 percent. There are, however, some interesting dimensions to these classes and who enrolls in them, according to the online education company, Learning House.

In a July 2012 report, Learning House found that 80 percent of online students lived within 100 miles of the physical campus of their online educational institute and many lived even closer — within commuting distance and with good reason.

Studies have found that students still need the physical interaction of the classroom. Evidently, face time with the teacher remains an important element of the educational process. So students may enroll in one or two online courses because of a part-time job or other scheduling conflict, but they still take the majority of their classes on campus.

There are also some unexpected issues that have cropped up within the online classroom. Columbia University's College Research Center found that the attrition rate of students attending online courses is quite high. In some cases, especially in the highly popular MOOC courses, those students who failed to complete the courses approached 90 percent. Higher attrition rates also plague smaller classes as well.

Some studies indicate that online classes are better suited for highly motivated, highly skilled students; while those students who struggle or who have failed to master the basics like math and English, do poorly. Unfortunately, that accounts for a great number of today's students who are also having the hardest time affording college tuition.  

There is also some concern that only certain subjects, such as mathematics, computer science and engineering, can be effectively taught online. It may be more difficult to teach liberal sciences such as writing, communications or even lab work. There are also technology issues that can make the best course a nightmare to attend because of poor or inadequate video, document sharing, discussion boards, etc.

That does not mean that online education will not continue to grow. I believe it will and online learning will ultimately find its niche within the educational system. However, I see little evidence that it will alleviate climbing college tuition costs any time soon.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.