The table below is an illustration of the overwhelmingly compelling economics of online education using the numbers associated with the Georgia Tech experiment, as well as a couple of realistic assumptions.
The first column contains the categories of comparison; the second column, the on-campus numbers; and the third through fifth columns, the online format under three scenarios: the current enrollment; the enrollees necessary to equal the same revenue as obtained from the on‑campus program; and an estimate of future enrollment. I have assumed an operating margin of 20% for the on‑campus program, which is just a tad north of UoP’s 18.5% operating margin for fiscal 2014. Solely for purposes of demonstrating the positive economic leverage in play here, I have entered a possible future enrollment of 10,000 students, which is less than one‑fourth the average 43,000 enrollment of 279 courses from Udacity, Coursera, and edX.
As an aside, I would be remiss if I did not mention that the drop out rate for these same 279 MOOC courses is about 90%, whereas the drop out rate for the Georgia Tech degreed program was 18 percent at the end of the first semester. Now, focus on the last line in the above table, and note the dramatic decline in the cost per student. That steep curve is what has everyone so excited. It reflects, many hope, the antidote to incessantly rising tuition bills.
There are those in the world of post secondary education that believe the competitive dynamics discussed here do not apply to them, and that is very dangerous thinking indeed. The question really is not whether but how.
Jerry Dilettuso is a partner with Newport Board Group, a consulting firm, and the author of Seeking a CEO for America, published in serial format on the internet by Texas CEO magazine, and Prosperity: A Contentious Perspective, which has yet to be published.
1 Founded by computer science professors Andrew Ng and Daphne Koller from Stanford University
2 Founded by the Massachusetts Institute of Technology and Harvard University
3 Founded by Sebastian Thrun, David Stavens, and Mike Sokolsky as the outgrowth of free computer science classes offered in 2011 through Stanford University.
4 While it originally focused on offering university-°©‐‑style courses, Udacity now focuses more on vocational courses for professionals.
5 Schools, nonprofits, corporations, and international organizations
6 Alexa ranks website usage; the number represents the MOOC’s rank of a total of more than 30 million websites.