BUSINESSWEEK ONLINE : AUGUST 9, 1999 ISSUE
SOCIAL ISSUES

Wiring the Ivory Tower
But will online courses lower standards?

There was no applause or windy speeches at this graduation ceremony. No one walked across a stage in a cap and gown. For the five members of three-year-old Jones International University's graduating class, the big day was a click-through affair. As they sat in front of computers in their homes on May 17, cable entrepreneur and university founder Glenn R. Jones gave the keynote speech--video-streamed across the Net. The university's president then solemnly read out the names of those receiving master's degrees in business communications. After the ceremony, graduates--scattered from Colorado to Maryland--repaired to a chat room for a short reception.

Welcome to the latest E-revolution. Like shopping and trading stocks, taking college courses, or even getting an entire university degree, is something you can do from the comfort of your home. Some 1 million students will take courses at a distance, most of them online, in 1999, estimates International Data Corp. in Framingham, Mass.--a number expected to more than double by 2002. All those eyeballs have entrepreneurs such as Jones and former junk-bond king Michael Milken jostling for position alongside much of the traditional higher-education Establishment. ''Everyone sees the train leaving the station and wants to be on it,'' says Columbia Business School Dean Meyer Feldberg.

The new cybereducators envision a world of opportunity as higher education is freed from the physical confines of the classroom. For-profits such as Jones are targeting workers who need retraining for the New Economy. They are banking on a vast market paid for in part by employers, who hope ''distance learning'' will help employees to squeeze in more schooling around their jobs. Elite universities are hopping online to extend their franchises or even make money with new for-profit units to deliver courses over the Web.

Public colleges, meanwhile, see the Web as a way to serve working adults and to accommodate millions of Gen Y-ers expected to hit campuses over the next 10 years. ''There's no way we can build enough facilities to meet the tidal wave of new students,'' says Charles B. Reed, chancellor of the California State University system. ''If I can meet 10% of our students with technology, maybe we have a chance.''

WHAT HAPPENED? Traditionalists worry that armies of students clicking their way through Shakespeare at home will degrade learning traditions dating back to Socrates, in which lecturers and students engage in face-to-face dialogue. ''Ten years from now we will look at the wired remains of our system and wonder how we let it happen,'' warns David F. Noble, a history professor at York University in Toronto.

But such concerns are rapidly being overwhelmed by the lure of the Web. Jones University (www.jonesinternational.edu), which became the first online-only university to gain accreditation this spring, already has 600 adult students who pay $4,000 a year, vs. $3,200 at the average state college. Jones has no overhead for dorms or sports fields. And each course is a standard product taught by adjunct instructors instead of costly tenured professors. Still, Jones won't be profitable unless enrollment hits a projected 3,000 in two years--a tall order for a college trying to build a reputation from scratch.

The for-profit University of Phoenix (www.uophx.edu) has already met that challenge. Its online arm teaches more than 8,000 students everything from nursing to computer science. The move was a natural one for a company that built the country's largest private university, with 65,000 students on 81 campuses, by offering older students the flexibility of year-round enrollment and satellite campuses near freeway exits. U. of P.'s $1,460-per-course online tuition is slightly more than most state schools, and like Jones, it has low overhead. Its parent, Apollo Group Inc., doesn't break out online profits, but the university as a whole earned $46 million on $391 million in revenues in 1998.

Jim Palmer, 36, of Riverside, Calif., is a typical U. of P. cyberstudent. A father of four who dropped out of college, Palmer works as a Lucent Technologies Inc. sales rep during the day. At night, he downloads course work on his home computer to complete his BA. Palmer uses E-mail to do joint projects with other students and to ask questions of his professor, called a ''facilitator.'' ''For me, this was the only way, since I can't afford the time to go to class,'' says Palmer, whose tuition is paid by Lucent.

A slew of other players have sprung up to emulate the U. of P. Several, like textbook publisher Harcourt Brace, are trying to create entirely new universities online. More than a dozen other startups, including Milken-funded UNext.com, eCollege.com, and University Access, are partnering with traditional institutions to create cybercourses aimed at working adults.

Two-year-old UNext is one of the most ambitious. It has assembled a roster of Nobel laureates as board members and has given financial stakes to five universities so far, including Stanford and the University of Chicago. In exchange, the universities' leading professors are working with UNext staff to adapt their courses into slick multimedia packages. The courses, such as accounting and finance, will have video-streamed lectures from the star professors, but part-time instructors will answer E-mails and grade assignments.

UNext is shelling out more than a million to create each course. It hopes to recoup the cost by getting companies to pay for thousands or even hundreds of thousands of courses--at roughly $2,000 each--for their employees. UNext isn't yet accredited but has signed up IBM as its first client. ''Students around the world are starved for U.S. education,'' says Donald A. Norman, head of UNext's business school.

Some elite universities are also launching their own cybercolleges. Most are aiming at professionals who want to learn engineering or business. The goal: to tap new sources of revenue and enhance the school's prestige. Last year, for example, Stanford, which has long offered televised engineering courses to 300 technology companies, launched a Web-based master's degree as well. Duke University is marketing an $89,000, 19-month Internet-based executive MBA program, including 11 weeks of residential stays at four campuses around the globe. And NYU and Columbia have set up for-profit divisions to offer noncredit courses on the Net.

Large public college systems see the Web more as a low-cost expansion tool than a profit center. Cyber-ed provides a new solution for already overcrowded state colleges, which expect applications to jump by up to 20% by 2008 as Gen Y graduates from high school. Public colleges also hope that the Web will help them serve adults, who comprise 45% of college students today.

BEST MINDS. Already, cyberlearning is up and running in a big way at state college systems in New York (www.suny.edu), Maryland, and Pennsylvania, all at the same price as on-campus courses. New York's five-year-old program will offer 1,000 online courses this year. The University of Maryland (www.umuc.edu) has some 10,000 students taking online courses in everything from English to engineering. The University of Maine even offers online biology: Students are overnighted fetal pigs to dissect.

How the Web will affect educational quality is the big question. Some advocates believe it will allow millions of students to tap into courses designed by the world's best minds. True, online interaction can never compete with a charismatic professor teaching a class of 15. But that's not what most students get in many night colleges or 500-student undergraduate classes. For mature students who know what they want to learn, Web courses can be effective if done well.

Cybereducation also raises questions about academic standards. Traditionally, professors create courses and own the rights to textbooks they write. Now, they are being asked to help design online courses that universities want to co-own or even own completely. This could undermine academic freedom if administrators or private companies control what's taught and how. Recently, the University of Washington scaled back its online effort after faculty members protested, citing fears of loss of independence. ''Online courses require new policies, and there is real potential for conflict if not handled well,'' says Pennsylvania State University President Graham B. Spanier.

Initially, online courses may be of inconsistent quality as colleges feel their way into a new world. But in the not too distant future, many students may find that the hallowed halls of academe look a lot like their own living rooms.

By Kathleen Morris in Los Angeles

To read a correction/clarification about this story, click here.

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