Arizona State University wants to challenge for-profit colleges to become the dominant force in online education. To get there, it has embraced unprecedented corporate partnerships.
ASU President Michael Crow speaks at the annual ASU+GSV Education Innovation Summit, which has become the sector's premier conference for investors, businessmen, and educators, held at the swanky Phonecian resort in Scottsdale.
Andy Delisle / Arizona State University
Five years ago, Arizona State University, like many other giant public universities, was lagging in the field of online education, with just 1,200 students enrolled in its degree programs. Today, that enrollment has swelled to 10,000, and by next year, when an influx of Starbucks baristas enroll in online programs through a highly publicized partnership announced last month, it is expected to have more than twice as many online students. But for ASU, 25,000 students is hardly enough. The school has set its sights on growing online enrollment to at least 100,000 students in the next five years — more than tripling a 2011 goal of 30,000 students by 2020.
"If the University of Phoenix can have 400,000 students, most of them online, why can't a real university like Arizona State grow to a similar size," Phil Regier, the dean of ASU's online programs, rhetorically asked in an interview with BuzzFeed.
The goal, Regier said, is to make ASU into an online giant, but one that doesn't fall into the familiar traps of the University of Phoenix and other for-profit universities. For-profits like Phoenix were the original pioneers in online education, but have struggled in recent years with low completion, high student loan default rates, and allegations of poor quality and misleading marketing practices.
Michael Crow, ASU's dynamic president of 12 years, has trumpeted the expansion of ASU Online as a mission of increased access and educational innovation. But some critics say that its rapid growth is something else: a pursuit of profit that has already taken the univeristy too far in the direction of corporatization, leading it to operate more as a business concerned with generating revenue than as a public university. The deal with Starbucks, they say, is not about college access, but a prime example of a blurring line between for-profit companies and public universities' online programs.
Much of the credit for ASU Online's growth goes, in fact, to a for-profit company: Pearson. In 2010, Pearson, the world's largest education company, put up much of the capital to launch ASU Online, and now shares in the program's ever-growing tuition revenue. Pearson's involvement has helped ASU Online grow and transform into what Crow calls "the New American University."
"Public universities know that the for-profits are professionals at online education — they've built a business out of it," said Todd Hitchcock, chief operating officer of Pearson's online learning division. "We're helping them really enter and prosper in the markets that for-profits have traditionally dominated."
Money is undoubtedly one of the major motives behind ASU Online. Like other public universities, ASU has been hit hard by budget cuts, continually fending off efforts to slice millions off of its operating budget. Between 2008 and 2011, the university's operating budget had been reduced by $91 million, even as ASU dealt with an influx of thousands of new students, forcing the university raise tuition, increase class sizes, and make drastic cuts in staff.
In 2011, with an enrollment of 3,500 students, ASU Online generated $4.4 million in revenue. In 2014, that number was $94 million, enough to make up for three years of budget cuts. Online tuition is a key part of Crow's plan to drastically reduce the university's reliance on state funding, protecting the university from budget cuts.
"Look at the state funding for ASU over the past five years," said Daniel Pianko, a managing director at University Ventures, an investment firm focused on higher education. "ASU was forced to innovate."
Adithya Sambamurthy/CIR
In the early 2000s, for-profit universities — most notably, the University of Phoenix — were among the first to embrace online education. Offering convenience that was unrivalled by public and nonprofit colleges, and without the traditional constraints of campus buildings, dorms, or even class sizes, for-profits grew to staggering sizes. At its peak, in 2010, Phoenix boasted some 475,000 students.
A report from the Parthenon Group in 2011 found that 818,000 students were enrolled in online-only programs at for-profit colleges that year. By comparison, there were just 280,000 students enrolled in online-only programs at nonprofit and public schools.
But for-profit colleges' hold on the online education world is slipping. Enrollment has fallen sharply in the face of heavy criticism, lawsuits, and regulatory problems. Phoenix's enrollment has shrunk by 156,000 to 319,000 students. Corinthian Colleges, once a giant of the for-profit college industry with an enrollment of 110,00 students, is selling or shuttering all of its physical campuses. Declining enrollment in its once-robust Everest College Online programs was partly responsible for the company's financial woes.
MOOCs, or "massively open online courses," had their moment two years ago, when the New York Times declared 2012 "The Year of the MOOC." The CEO of Udacity, then a major MOOC-provider, predicted the free, open lecture classes would transform higher education, leaving just 10 institutions standing. But skepticism over their efficacy and reach — most of their participants were white and well-educated — tempered much of the excitement around their potential for revolutionizing education. Udacity's CEO eventually pulled the company out of the MOOC game altogether, switching over to corporate training courses.
Public universities, experts say, are positioned to succeed in the online sphere because they have clout and name recognition that MOOCs and for-profits like Phoenix and Corinthian can't match. MOOCs have been unsuccessful, in part, because the certificates earned had little currency with employers or established universities — one Corinthian student told the Los Angeles Times last week that she removed her degree from her résumé because employers saw it as a drawback. By contrast, a degree from ASU Online reads "Arizona State University," with no distinction between online and in-person degrees. And the resources of large research universities make providing a quality education more feasible than at for-profits, which have long struggled with their graduation rates: Public universities have tenured professors, decades of curriculum,
"It's big public universities that are the future of online education," said Jose
Ferreira, founder and CEO of Knewton, an up-and-coming young ed-tech company that works closely with ASU on its online programs. "Not MOOCs, not for-profit colleges."
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