“Our February 2011 education study forecast “a massive shift in society’s attitudes toward education.” Our study said this shift would reverse a century-long, upward trend in the popularity and cost of higher education (click here to read it).
The bursting of such an enormous bubble takes years to accomplish. Nonetheless, significant change is already under way. In this update, we report on the status of seven developments in the education industry. Five are on track with our forecasts, one is evolving, and we have to admit that the emergence of the last one surprised even us.
1. The “Creative Destruction” of the Industry Has Begun
What We Said
Traditional educational institutions may eventually lose control of the manufacture and distribution of education much as the music and publishing industries lost their grip on music and text. Bear markets topple dominant players and open the field to nimbler entrepreneurs, who will develop alternatives to institutional education.1
What Has Happened Since
Seven months later, in an October 2011 article titled “The University of Wherever,” The New York Times practically quoted our study:
Two recent events at Stanford University suggest that the day is growing nearer when quality higher education confronts the technological disruptions that have already upended the music and book industries….2
As Pete Kendall reported in the October 1995 issue of The Elliott Wave Theorist, intense technological advancement is common to advances leading to major peaks in the economy. Such breakthroughs tend to lower the costs of production and consumption of certain goods and services and enable entrepreneurs to capture business from old, less nimble providers. Entire industries must adapt to survive; otherwise, they die. Economist Joseph Schumpeter called this process “creative destruction.”
Today’s technological breakthrough is the Internet, of course, which the July 1998 Theorist called “a massive engine for falling prices in countless businesses and professions.” Education is no exception. On March 4, 2012, The New York Times took note of the trend:
Welcome to the brave new world of Massive Open Online Courses — known as MOOCs — a tool for democratizing higher education. … in the past few months hundreds of thousands of motivated students around the world who lack access to elite universities have been embracing them … without paying tuition or collecting a college degree. And in what some see as a threat to traditional institutions, several of these courses now come with an informal credential….3
For example, Stanford professor Sebastian Thrun offers remote students the same lectures, assignments and exams that on-campus students pay $50,000 a year for. But the online courses are free. Online students get a “statement of accomplishment,” though not Stanford credit, for passing the classes. “If we can solve [quality-control problems such as cheating and accreditation], I think it will disrupt all of higher education,” Thrun says.
Bill Keller of The New York Times agrees: “Disrupt is right … [Free, online education] would be an earthquake for the majority of colleges that depend on tuition income … . Many could go the way of local newspapers.”2 Thrun goes on to say,
I’m not at all against the on-campus experience … . I love it. … But it’s also insanely uneconomical. … Literally, we can probably get the same quality of education I teach in class for about 1 to 2 percent of the cost.2
In December 2011, the Massachusetts Institute of Technology expanded its free, online M.I.T.x OpenCourseWare program to include nearly 2100 online courses. The university says more than 100 million people have used the program. Like Stanford, MIT also offers credentials for those who complete courses.4
Diploma-granting institutions are skeptical. Stanford’s provost said,
There are issues to consider, from copyright questions to what it might mean for our accreditation if we provide some official credential for these courses, branded as Stanford.
Thrun’s answer to the accreditation problem is to completely bypass the old system via a new business model. The idea is that online education can produce detailed data on precisely what the courses teach, which aspects of the classes the students master, how long they take to complete the courses and so on. This dataset can be far more useful to employers than just grade point average and a diploma from an elite school. Thrun’s new company, Udacity, plans to monetize the model by selling pinpoint leads to job recruiters:
If a recruiter is looking for the hundred best people in some geographic area … that’s something we could provide, for a fee. I think it’s the cusp of a revolution.3
Richard DeMillo, director of the Center for 21st Century Universities at the Georgia Institute of Technology, said, “If I were still in industry and someone came in with an M.I.T.x credential, I’d take it.”4
Thrun’s and MIT’s efforts are part of a trend that now extends even to grade schools. We included in our 2011 study a list of 100 online educational resources. Among those are the thousands of concise lessons in math, biology, chemistry and physics aimed at younger students and given away by Salman Khan, a Harvard MBA, at khanacademy.org. Khan now rides a growing wave of popular acclaim and has secured backing from Google, Bill Gates and others. Khan says his goal is to “change education worldwide.” Here are a few highlights from Khan’s March 11 CBS 60 Minutes interview5:
Khan Academy has created a dashboard so teachers like Courtney Cadwell can monitor each student’s progress … . I can see who’s rushing ahead, who’s lagging behind. I can see if they begin to stagnate. … you can see the number of seconds they spent on each problem. …6
Khan promises he’ll never put a price tag on his instruction.
The new “free-ed” model could soon bring top-quality education to many students, including third-world scholars who otherwise would have no such access. Many of those students, in turn, could become great online teachers.
In the meantime, the progress of education’s creative destruction will ebb and flow with social mood…”
Source: Socionomics Institute