Economics of Distance & Online Learning
The opportunity to complete a degree online is touted on commercials by institutions, such as the University of Phoenix and Devry. However, for-profit schools and trade schools are not the only ones offering online classes and degrees: state schools and non-profit schools, such as New York University and Harvard University also offer online programs. The proliferation of online schools has caused several economic impacts.
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Cost Considerations
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The ability to take classes online increases competition. Before the Internet, students were limited to taking coursework within a specific geographic area. Online schooling lowers the opportunity cost of attending college. The opportunity cost is what a person gives up to pursue a course of action: taking courses online removes a few costs of attending school in-person, such as relocation costs and commuting to and from school. Martin J. Finkelstein, author of “Dollars, Distance and Online Education: The New Economics of a College Education” states the increase in Internet colleges drives down costs and challenges traditional higher education institutions.
Benefits for Students and Universities
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Online schooling offers benefits to both the students and university. For instance, many students might turn down going to school in a rural city despite being a strong academic fit for the college. Removing these geographic barriers means both schools and students can be better matched. Similarly, top-notch universities can attract a wider pool of candidates and hand-select the best ones when geography is not a consideration. Students able to earn a degree from an institution several states over win as well, especially adults who are anchored to their current community because of family or career.
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Theories/Speculation
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Some states currently have an advantage over others due to the caliber of its education system. For instance, Massachusetts’s quality school system is one reason the state has one of the most educated work forces in the US. If a student from a state with a lower-quality education system, such as Arizona is able to earn a degree from a Massachusetts school, the state of Arizona benefits if that student remains in the state. Therefore, the discrepancy in the skilled labor forces across the states could be gradually reduced and evened out as a result of online education.
Warning
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Some unaccredited schools require large amounts of money but require little work to earn a degree. These institutions, called diploma mills, provide little value to students. Though students invest high amounts of money, the return on their investment is not worth the cost: The Federal Trade Commission warns employers not to hire students with such credentials. If students cannot earn the return of a higher salary as a result of their expenditure, earning a diploma from such an institution is not an economically sound decision.
Trends
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In 2008, The Wall Street Journal reports an additional cost consideration: Many colleges, such as Massachusetts Institute of Technology offer free online courses. The Open Education Resources movement provides learning materials at no charge with the goal of increasing collaboration and transparency in the realm of academia. However, a degree from these institutions is not free. Thus, the incentive to enroll at a college and spend money on tuition is not diminished for the majority of people who attend with the goal of earning a degree.
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References
Resources
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