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Online Education Made Possible With College, Management Firm Partnerships

When Jackson State University opened for classes this year, it marked its fifth anniversary in the online education business by adding a full four-year, undergraduate degree program in early childhood education to its offerings.

“It’s certainly a part of the future,” says Dr. Willie Brown, vice president for information and process management at Jackson State, about online full-degree programs.

Jackson State is among a growing number of historically Black colleges tying part of their future survival and growth strategy to the online education industry. In its 2010 HBCU Distance Learning Report, the Howard University Digital Learning Lab identified 19 HBCUs offering online degrees last fall, an increase of 58 percent over fall of 2006. While the majority of online degrees were offered by public HBCUs, private HBCUs appeared to be catching up.

A variety of forces are converging to make the online education business appealing to HBCUs and other minority-serving institutions this decade, say higher education experts and online education services vendors.

With increasing competition from other higher education providers like community colleges and for-profit universities, HBCUs have seen their traditional student base shrink, leaving them scrambling to find new sources of students and revenue. In such a landscape, online education can become a powerful lure, providing a near global reach to thousands more potential students — if the startup costs can be conquered. Last decade, several large schools lost millions of dollars on their online education ventures, due in part to the unexpectedly high costs of running the entire operation in-house.

Full-degree online programs have since become more affordable for cash-strapped schools via the emergence of online learning management companies. They are willing to provide most of the initial investment required to convert traditional face-to-face learning programs to online programs, allowing many smaller, private or under-resourced schools to seriously consider taking the leap. In Jackson State’s case, a private company allowed it to move from just offering online courses, which can be launched easily and inexpensively, to a full-degree program, a costly proposition that requires a four-year catalog of courses and a long-term commitment to students who enroll.

Many of the smattering of learning management companies sweeten the deal by handling the marketing and recruitment themselves. The result: Smaller schools can end up with the same kind of high-profile, glitzy marketing they’ve seen online giants like the University of Phoenix pull off with phenomenal success in recent years.

Another by-product is more partnerships emerging between student-hungry schools and online learning management companies. The schools provide the academic lesson plans and instruction. The management companies provide the technical expertise, marketing and student retention services. If all goes well, both sides split the profits over time.

Risky Business

Making it in the online education business is not as easy as it sounds, however.

“It’s like producing a movie,” says Dr. Roy Beasley, director of Howard’s online programs and author of its HBCU Distance Learning reports. “Online is not cheap. It’s labor intensive. But, if you get it right, you can make money.”

Most schools, and the vendors they work with, are guarded about discussing costs and profit potential, a sign Beasley and others suggest indicates that only a few schools are making money on their ventures now.

There is money to be made, however, as evidenced by the rapid success of companies like Blackboard Inc., the nation’s leading provider of course management soft ware. Its products are used by more than 30 percent of the nation’s postsecondary schools. Blackboard, a publicly traded, Washington, D.C.-based company started in 1997, has been on a buying spree in recent years — the seven acquisitions it’s made in the past decade include its former e-learning soft ware rival, WebCT Inc., and web conferencing provider Elluminate. With a market capitalization of $1.3 billion, Blackboard reported a profit last year of $16.6 million, double its 2009 net income. But despite Blackboard’s strong presence in the market, there are more than a handful of other companies carving a niche and offering some schools a new chance to sustain themselves in the future. They range from Pearson, the textbook powerhouse that owns Pearson Learning Solutions, to smaller operations like Education Online Services Corporation (EOServCorp), a two-year-old company that is focusing on helping HBCUs step up their efforts. Mixed in are startups like radio personality Tom Joyner’s HBCUs Online, which started with programs at Texas Southern and Hampton Universities.

While the presence of external online management companies means online degree programs are now more affordable, it also means colleges lose some degree of autonomy over the programs they offer. Online education is, after all, a business, and in many cases that business is being run as much by the companies as by the educators.

“These guys are like employment agencies,” says Beasley. “The companies will say ‘We’ve studied your school, assessed who you are,’ and (they) decide whether you can offer a course online. They sit down with you and determine what they think the school can successfully sell in the market. They help identify the courses. They put up the money.”

With millions of dollars at stake, the management companies leave little to chance when pondering whether to help a school take a degree program online. Among the critical factors is faculty and administrative buy-in. Lack of institutional support for an online program can cause the overall effort to fail, costing the vendor millions. As the most visible component of any online program, faculty buy-in is particularly vital. Enthusiastic professors can be the difference between a student who drifts away from the program and one who re-enrolls for the next study period. Enrollment is key, since vendors usually charge schools a software license fee per enrolled student per study period, vendors and school administrators say.

When a school’s offering appears to have marketing potential but not many initial students, vendors will often customize their templates and prices to accommodate for smaller enrollments and lower return.

“We do have a criteria that we use to discern what colleges or universities to partner with,” says Ezell Brown, president and chief executive officer of Florida-based EOServCorp and no relation to Jackson State’s Brown. Its partners include Jackson State, Tougaloo and Kentucky State universities, among others.

“Not every institution of higher learning is interested or prepared to offer full-degree programs online so we have learned to meet prospective educational partners at their needs and focus on what the institution wants, yet being aware that in many cases they are just learning the distance learning platform,” he says. Although the range of services, like prices, vary by vendor, Brown and others say most vendors employ recruiters (some of whom simply work in call centers and field responses to advertisements), pay the costs of marketing and employ retention and graduation “coaches.”

“We learned to move at the pace of the institution and make sure our visions are in sync,” says Brown. “This is a major commitment of resources and it takes time to make these kinds of decisions.”

Return on Investment

It takes time to see economic results, as well. Although EOServCorp has been in business for two years, Brown says the company doesn’t expect to start seeing positive returns until 2013.

Even if private management companies handle the startup costs, the addition of an online degree program still requires significant “effort” costs, adds Jackson State’s Brown. His school’s contract with EOServCorp to provide the early childhood education degree required no up-front payments to the vendor, but the school still found itself paying thousands of dollars retraining staff (from professors to technicians) to work with the company. Professors who are assigned to teach classes online usually require several levels of training, depending upon how proficient they need or want to be.

“Once you get everything perfected, your cost per student should be less,” says Jackson State’s Brown. “It’s like anything else, when the course is a good fit and you’ve got a good instructor, you’re set. It’s got to be a good fit.”

The incentive is there for HBCUs and other minority-serving schools to get into the online degree business, as the market for students is being tapped by competitors large and small.

“Distance learning degree programs are going to become more and more common,” says Dr. Clarissa Myrick-Harris, interim executive director of the United Negro College Fund’s Institute for Capacity Building. “It’s going to become more imperative just to become competitive.”

Myrick-Harris says Black college presidents “understand where things are going.” Putting more degrees online has been “part of their vision,” particularly among public HBCUs, which have been most affected by limited financial and human resources. “Degree programs take a great deal of time and effort to get the curriculum up to speed,” she says. “Our institutions will become more and more in tune. It won’t replace brick and mortar, but it will become an essential component.


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