University 2.0 — Revolution in Education

Tue, May 15, 2012 - 4:05pm

Two major announcements in the last month showed online higher education moving decisively beyond for-profit institutions such as the University of Phoenix, Kaplan, Walden, and DeVry.

Some of the U.S.'s most prestigious, established universities are making aggressive inroads into the field of online education. The recent announcements were preceded about a decade ago when University of California Berkeley, Yale, and MIT began to offer free internet access to videos of their courses to the public. Video footage of classes received some acknowledgment for providing excellent knowledge from top universities for free, even though they offered no grade or certification of completion. However, in the last month a new company, Coursera, was launched. Coursera will be partnering with some top universities -- Princeton, University of Pennsylvania, Stanford (the home of the two professors at the helm of the startup), and the University of Michigan (the only non-Private University in this group) -- to provide free online courses.

Then, just last week, Harvard joined MIT in announcing their new joint e-learning platform, edX. Both online learning platforms go far beyond the simplicity of video lectures, and incorporate a variety of interactive learning tools. The entrance of such storied institutions has the potential to radically reshape the landscape of higher education worldwide.

With these universities typically admitting only about one applicant in fifteen -- and with those lucky few staring down a four-year bill of $200,000 or more -- such moves by the two universities raise a number of questions. Since the online courses will be free, what's their strategy?

Whatever their strategies are, the edX collaboration of Harvard and MIT will be different than Coursera's. The former is non-profit, and run on open-source software, while the latter is a for-profit startup. edX will generate enormous amounts of data on the processes of student learning, which the sponsors will be able to leverage to improve the provision of services for their paying students. Coursera, for its part, will probably be able to charge for the provision of premium services -- and given the huge user base it may develop, that could be very lucrative indeed. Or, they may choose to charge low fees. When their pricing policies are published, we will know more.

It's also important to note that these courses will not provide credit towards formal degrees; instead (for now, anyway) students that complete courses will receive a grade and certificates of completion. So it's a fair bet that all of these prestigious schools will be banking heavily on two things that only actual graduates receive -- the brand recognition of their degrees, and the networking opportunities provided by professors and alums.

Ultimately, the revolutionary effect of University 2.0 may usher in a wave of online learning of such a high caliber that it throws the doors open to a world of students. For many disciplines, educational foundations can be provided more effectively and more efficiently, in terms of cost and outcome, through an online vehicle. This must be part of what's on the mind of these prestigious schools: exploring a better way to deliver education than a lecture in front of hundreds of students in an auditorium. There will still be a place for career scholars in the humanities (a few of them, anyway), but already many CEOs in business and technology value knowledge and experience over formal degrees. Couple free online education with social media, and the possibilities available to hungry young entrepreneurs seem limitless -- whether they live in Dhaka or San Diego.

A relevant parallel may be the effect that the web has had on journalism. Yes, the first wave of online news media was convulsively democratic, laying low the honored bastions of print journalism; but increasingly we've seen a "flight to quality," with consumers demanding not just freedom and choice, but excellence and value. Likewise, the entry of prestigious institutions into online education shows that it's coming of age, and presages not just a democracy of mediocrity, but a move out of the brick and mortar educational model into online learning on a global basis for even the most prestigious universities. We think it's a winning proposition for all.

The institutions will win. The non-profits will hone their skills, amass their data, and provide their brick-and-mortar students with better education. The for-profits who partner with the institutions will build huge user bases and exploit them for data and fees. The fees for online education at the top universities will be a great deal lower than for in-residence education at the same universities. Talented teachers will have the opportunity to be heard by hundreds of thousands of students, and perhaps attain even more reward and recognition. Students everywhere seeking education on their own terms and to fit their own time, cost, and location needs will have access to the best foundational knowledge available at low fees or free of charge.

Tremendous achievements are seen at America's best universities... but do they really need all that brick and mortar?

We are of the opinion that education builds opportunity, and is a powerful foundation for success. When citizens of developing and developed nations alike grasp these opportunities, they strive to become educated and their life prospects will be enhanced. Historically, education has been a doorway to higher success and personal wealth and has indirectly assisted people in creating the success of their future employers, their nation, and the world.

What will be the long term effects of the growing opportunities in online education?

We see this as chapter two of a move from brick and mortar education to online education for much of the world. It is early to say, but we can see global education and global success enhances a new productivity driving intelligence that is being awakened for millions of people. This should stimulate global creativity, invention, innovation, and scientific, educational, social scientific and business success, and create millions of newly-educated citizens. These educated people will take their place in all aspects of commercial, scientific, educational and social life and bring more knowledge and success to many industries in the U.S. and the world.

In Other Words, it Has the Power to Revolutionize the Future

Here's our vision:

Higher education -- even the highest levels -- will be widely available, as knowledge is more easily shared and everyone with internet access can communicate. Employees will be located everywhere, but the best companies and the economic growth will be in those nations where six principles for success, which noted historian Niall Ferguson calls "the 6 killer apps of prosperity", are prevalent. The six killer apps are: competition, science, rule of law, modern medicine, consumerism, and work ethic. The reason the developed world is developed is because of these six principles have been adhered to. In the future, it will be those countries which adopt "the 6 killer apps of prosperity" that will be the world leaders.

Free, Internet-Based, High Quality Primary & Secondary Education Already Exists

This service has been has been pioneered by the brilliant Salman Khan who created the Khan Academy ( Khan Academy presently offers over 3,200 free educational video courses, and has delivered 100 million video lessons to the public via YouTube. The courses available range from basic first grade through early college level math, basic and more advanced physics, chemistry, biology, history, astronomy, economics, finance, banking, and college test preparation. We have previously mentioned this service in our letter and we heartily endorse it. These free online courses are presented in intelligible, 12-minute segments that students can use to learn subjects or brush up on previously learned content. Being free and of excellent quality, Khan Academy lectures represent a stunning example of accessible, high level education that is available to everyone.

About the Authors

Chief Investment Officer
guild [at] guildinvestment [dot] com ()

tdanaher [at] guildinvestment [dot] com ()