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How Will Online Courses Weather the Economic Downturn?

By Laurie Rowell / February 2009

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Paul Palley has noticed lively discussions these days in the economics courses he teaches at University of Phoenix. "We see a lot of focus on the recession, on layoffs, and on unemployment," says Palley, an economist who teaches University of Phoenix classes both online and at the local Phoenix campus. But the awkward economic times have not dampened enrollment at a school best known for its online courses. "In the fourth quarter, enrollment at the University of Phoenix increased over 15 percent for the entire year," says Palley. "That's pretty substantial. They have over 360,000 students."

In the minds of most e-learning professionals, the University of Phoenix is closely tied to the concept of online courses—at least in part because the for-profit institution's pop-up advertisements for them are so ubiquitous. And while exact figures are difficult to pin down (one estimate suggesting 75 percent), it is certain a majority of students at University of Phoenix do at least some of their coursework online. After all, online courses offer huge time savings for the university's target population of working students, and such courses are covered by financial aid as reliably as those taught in a traditional classroom. In fact, the university's students racked up a hefty $2.8 billion in federal loans and grants in fiscal year 2008, according to the government site Top 100 Recipients of Federal Assistance.

How the economic downturn is going to affect general college enrollment in 2009 is not yet clear, but the emerging consensus is that community colleges will likely get a bump in enrollment while four-year institutions may struggle. Online enrollment, however, is expected to do well across most institutions.

"We expect to see an uptick in online offerings, with 13 percent to 15 percent expected this next year," says I. Elaine Allen, an associate professor of statistics and entrepreneurship at Babson College, Babson Park, MA. Allen is co-author, with Jeff Seaman, of Staying the Course: Online Education in the United States, 2008, part of an ongoing project sponsored by the Sloan Foundation that annually surveys every school of higher education in the U.S. —around 4,000 institutions—asking questions about their online learning options.

"For the past three years response has been at about 65 percent, so we have a good handle on what's going on online," says Allen.

Many respondents to the study saw the shaky economy spurring e-learning. Gas prices were expected to boost enrollment in online courses, contributing in part to that anticipated 13-15 percent rise. "Gas prices were at $4.00 a gallon when we did the study," Allen points out, "but we expect those figures to hold." Beyond gas savings, online students may find they can save on public transit costs, reduce maintenance on vehicles, or eliminate the need for on- or near-campus digs. For those who juggle work or family responsibilities, classes taken online can mean there is no need to hire a babysitter or to choose between work and school. Colleges often approach online education as a strategic effort to reach beyond their traditional geographic boundaries. "While 80 percent say that is the case, we found 75 percent of the online students came from within 50 miles of campus," says Allen. Yet a commute of 30-50 miles can rack up costs.

So do students choose Palley's online courses at University of Phoenix with an eye to fuel prices? "That is a factor for some students; I've had them mention it, particularly when gas prices were higher," he says. "If they live in a community where they have an hour or more commute to work, then maybe an hour or so commute to a campus, certainly that becomes an issue."

Plenty of students trim costs by going to a community college, so perhaps it isn't surprising that online course offerings are doing well there. "Community colleges are most likely to benefit and the most likely to grow their online courses," says Allen. In fact, the study found that over half of all online students were from associate institutions—where student commuting is common and where 85 percent of the respondents saw gas prices as likely to push up online enrollment.

The study also offered an intriguing finding or two about the perceived quality of courses taken at the computer. "CFOs and faculty believe the quality of online education is as good as face-to-face," says Allen. As a finding, that's something of a surprise, and Allen attributes it to improved media quality, citing advances such as interactive video that weren't available six years ago when the first study was conducted. With luck it may suggest online education is coming to be seen not just as a bargain, but as a genuine value in higher education.

Also of interest was what Allen calls "the disconnect between the chief financial officer and the faculty, how they see what they're teaching and who they're reaching." For administrators, online education offers economic opportunity; for instructors, it offers pedagogical options. "The faculty sees it as an opportunity to deliver more modes of learning online than in the classroom," Allen explains. For one thing, online presentation allows faculty to address the needs of whichever 10 percent of their students didn't understand today's lecture. It's easy in an online class to offer access to supplementary material and optional exercises.

Palley says that his students at the University of Phoenix choose online courses because they are convenient and accommodate work schedules; they can work in the evenings or whenever they are not at work, and still manage family obligations.

Such considerations have led Allen's respondents to see online education as poised for a jump. "Online courses allow students to save on gas and the institutions save on heat and electricity. They're seeing it as a win-win situation," she says.

About the Author
Laurie Rowell is a freelance writer in technology and education with a background teaching both in person and online.

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