online education disadvantages for for-profit schools

 

online education disadvantages for for-profit schools 

A review of the consequences of online learning for for-profit college institutions Charles Millen, J. Scott Lipscomb, and Tyler C. Millward August 21, 2015, National Bureau of Economic Research Online learning offers students access to knowledge, but it’s just as likely to turn students into investors. Charles Millen of George Mason University, J. Scott Lipscomb of the University of Nebraska at Omaha, and Tyler C. Millward of the University of California at Riverside examine the effect of online learning on for-profit institutions’ profitability. They find that the adoption of online learning by students at for-profit colleges (FAFIs) diminishes earnings at these institutions by 15-30%. In addition, they conclude that these findings have important implications for policy, such as the success of state efforts to oversee the business practices of FAFIs. The cost of student debt is one of the most significant challenges facing today’s student borrowers. In recent years, student debt has risen rapidly, surpassing $1 trillion and expanding the gap between upper- and middle-class borrowers. Research has shown that students defaulting on their student loans, and ultimately defaulting on their homes, experience a decline in family wealth and have financial and psychological impacts on their children. But research also indicates that for-profit college students are disproportionately likely to default on their student loans. While for-profit colleges only make up 9% of all postsecondary institutions in the US, they account for 21% of all students seeking postsecondary education, and enroll 15% of all students leaving high school without a diploma. Online education can help for-profit college students overcome barriers to degree completion and graduation. Students can take classes at night or during their own time, rather than during traditional time slots and on campus, increasing their opportunities for learning. Online learning offers students access to knowledge, but it’s just as likely to turn students into investors. The online platform provides both the opportunity for immediate reward and the possibility for future profits. Online learning platforms, and those similar to them, have developed a reputation for imposing high tuition costs for students, leading many to question the effectiveness of online learning as a strategy to reduce student debt. To address this concern, we examined student performance as well as profitability for more than 5000 graduates of for-profit, online, and vocational degree programs at a number of institutions. Across all programs, online students outperformed their peers in traditional-college-level programs in almost every regard. They earned slightly higher grades and were generally less likely to take remedial classes. The online program for landscape architecture earned an average grade of “B”, compared with an average “C” for traditional-college-level programs. As one might expect, however, online students also spent less money, had less debt, and were less likely to end up defaulting on their student loans. Online learning brings substantial benefits to individual students, but also has substantial disadvantages for for-profit college institutions. We examined the effect of online learning on profits at for-profit FAFIs, which is an indicator of the quality of a school’s offerings and its ability to compete with other schools for students. In this analysis, we focused on the effects of online learning on the profitability of a school’s operations. We found that online learning for-profit students increased the profitability of these institutions by 15-30%, but that it decreased the likelihood of students leaving school with a degree or credential. This result helps counter the tendency of for-profit schools to advertise that they reduce the need for remedial or associate degree programs. To understand the effects of online learning on students, we compared students who enrolled in online for-profit degree programs to students who enrolled in similar programs through conventional FAFIs. When compared with students in traditional FAFIs, the average net price of a degree for online students was 25-40% lower. The median cost of a degree for students in online for-profit degree programs was $12,000, compared with $13,500 for students enrolled in similar programs through conventional FAFIs. As for how students paid for their online programs, we found that students from lower income families paid approximately $2000 more per year for their online program than students in similar programs at traditional FAFIs. This result suggests that for-profit online schools may benefit their students by increasing their access to higher education, but that the students still fall far short of comparable students enrolled in traditional FAFIs. Several concerns still persist, however,