SEPTEMBER 2006 :: THE TECH REPORT

Windows of Opportunity
Online Universities See Soaring Enrollment
As Course Quality Improves

By Daniel Golden
Staff Reporter of The Wall Street Journal

Pratiksha Patel and her brother, Jignesh, both decided to earn college degrees over the Internet. But while Jignesh enrolled at the for-profit University of Phoenix, Pratiksha sought a more selective, prestigious school: the University of Massachusetts.

Ms. Patel, an operations manager with a community-college degree, was admitted to UMass's online program in business administration in spring 2004 and maintained an "A" average. She visited the UMass campus only once, but she took courses from its regular faculty, got lots of feedback and developed friendships with classmates. "With outsourcing, I wanted to be competitive and include a quality education in my skill set," says Ms. Patel, 32, a single mother who contributed to online class discussions after her children went to bed.

While overall higher-education enrollment in the U.S. is virtually stagnant, online enrollment is skyrocketing, and the recent repeal of a federal rule requiring colleges to provide at least half of their instruction on campus will boost it more. By early 2008, one out of 10 college students will be enrolled in an online degree program, according to an estimate from market research firm Eduventures.

Traditional Advantages

Public schools are driving much of the growth. Overcoming skepticism among some faculty members, state universities are capitalizing on their traditional advantages-quality education at affordable prices-to attract a nontraditional student body: online learners who often live out of state. What's more, the online programs generate millions of dollars in tuition revenue that can be invested back into university operations.

At UMass, online enrollment has quadrupled to 9,200 students since 2001. Most are working adults between the ages of 25 and 50, and 30% are from out of state, compared with 20% of on-campus students. UMass's online applicants undergo the same admissions review as candidates for on-campus slots and can choose among 61 programs, ranging from a master's degree in business to certificates in gerontology and casino management.

Tuition is slightly higher than on-campus students pay, enabling the online program to net a projected $10 million this year for other university endeavors. For instance, online students pay $670 a credit toward a professional master's degree in business administration, compared with $540 to $600 for on-campus students. Still, UMass's online program is a bargain compared with some for-profit ones: Ms. Patel says she has paid $18,000 in tuition for two years at UMass, while her brother paid Phoenix $24,000 over a similar period.

"Public universities are moving into the online environment extremely rapidly," says Gary Miller, associate vice president for outreach at Penn State, which has 5,691 students taking online courses, up 18% from the prior fiscal year. "It's part of our mission as a land-grant university of reaching out to people. The question in our case wasn't 'Should we do this?' but 'How do we do it right?'"

UMass Online's advertising slogan, "Because Quality Matters," is a subtle dig at for-profit online schools, which admit nearly all comers and have faced numerous government investigations and lawsuits alleging shoddy instruction, high-pressure sales tactics and financial-aid fraud. Jignesh Patel, who graduated from the University of Phoenix in 2005, says his undergraduate program in business administration wasn't as demanding as his sister's. "I feel her textbooks had a stronger in-depth look at the subject matter," he says.

Executives of Laureate Education, which has more than 21,000 students in its for-profit online programs, mostly offering graduate degrees, recently said that growth in new-student enrollments is slowing because of increased Internet advertising by public and private nonprofit colleges.

But Brian Mueller, president of Apollo Group, which operates the University of Phoenix, predicts that demand for online education "is going to so outstrip the supply in the next five years" that there's room for all comers. Apollo Group has 160,000 students seeking online degrees, more than any other for-profit provider in the U.S.

As state universities compete vigorously with online for-profits, they are also edging out most of the elite private schools. Stanford University offers online master's degrees in such subjects as electrical engineering, biomedical informatics and computer science, but top schools have been reluctant to tarnish their famous names by offering Web-based undergraduate degrees. "We tend to focus so much on the learning experience on campus," says Dartmouth Provost Barry Scherr. "That specific atmosphere you try to create at top-tier liberal-arts institutions is really hard to duplicate online."

Few of the adult students who enter online programs at state universities are coming in as true freshmen, and they are generally held to the same admissions standards as on-campus students who enter with some college background. That means they are judged mostly on their grades in college courses and their work experience.

'National Audience'

At the University of Illinois's Springfield campus, which mainly serves transfer students from community colleges, about 42% of students are taking at least one online course this semester, and online enrollment is up 30% from a year ago. Online education has "been able to transform a small regional campus to serve a national audience," says Burks Oakley, associate vice president for academic affairs at the University of Illinois.

State university administrators say they have raised the quality of online courses so they are nearly as good as on-campus offerings. Although online programs are often criticized for having high dropout rates, Mr. Oakley says 92% of students who enroll in an online course at Illinois-Springfield complete it, close to the 94% retention rate for on-campus students.