The “New Way College” Model

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In his article  “The Real Precipice,” Richard Holmgren, Vice President for Information Services and Planning at Allegheny College, offers a hypothetical scenario for just how an alternative model integrating the Carnegie Mellon Online Learning Initiative, existing universities, and corporate interests might work. In this scenario, a university that is already committed to, and active in, online competency-based credentialing would partner with a provider similar to the OLI to create a fictional online college (call it “New Way College”) within the larger host institution. New Way College provides a basic curriculum of hybrid courses with no more than twenty students per course, enabling students to earn an associate degree at significant cost savings.

Holmgren’s financial model for New Way College is compelling: Students pay $400 for a four-credit course, and sixteen courses are required for an associate degree. Student cost for the degree would be $6,400, and students qualifying for the maximum Pell grant could have their degree fully underwritten by the federal government. For local organizations, suppose New Way partnered with a public library to offer a course for 15 students, and that the course was staffed by a volunteer from a literacy program. In this example, the public library collects $1800, which would be a boon for local libraries beset by budget cuts, while the curriculum provider and the host university each collect $600, and the testing/proctor firm would receive $3000. Considered at the scale of the university and corporate partners, even a modest program of 30 courses with average enrollment of 10,000 students would generate $84 million to be divided among the curriculum provider, host university, and testing service. Another $36 million would be split among local hosts.

“By unbundling the learning experience—separating local support, course design, delivery, assessment, administrative support, and advising—the NWC model achieves superior outcomes at lower cost, at least when outcomes are measured by exam or other task performance. Local organization and student support is provided by entities with deep roots in their communities, missions aligned with the educational endeavor, existing meeting spaces that are often underutilized and could readily be used to house weekly class meetings, access to volunteer or relatively low-cost tutors to provide student support, and budget constraints that create incentives to leverage these resources to market and support classes for their communities,” Holmgren writes. Such a model could well revitalize local host organizations looking for renewed revenue in harsh economic times.  Such disruptive innovation could also wreak financial havoc with local colleges competing in the same market in more traditional fashion.

It is easy to imagine organizations like the Saylor Foundation and StraighterLine developing such a model.  A surplus of post-doc Ph.Ds with no realistic hope of securing a traditional tenure-track position provide an abundant labor force for local host organizations. The enthusiasm and prior investment of venture capital players in this market suggests that such a model may well be highly attractive to them.

There are real limitations to the OLI model, including significant overhead cost. Further, the model seems to be restricted to courses like mathematics and statistics, the humanities being completely unrepresented to date. These limitations notwithstanding, the extensibility of the program shows promise; the OLI’s iterative model of persistent research, design, and development making use of data generated by student interaction with material will likely be integrated into, and influence, MOOCs and other online platforms. Such integration, in fact, is already under way.


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