For-profit colleges are facing increasingly stiff online competition from regional public universities. Those revenue-hungry campuses are using the degree programs to attract both local students and those hailing from beyond state and national borders.
The University of Massachusetts at Lowell got into the game early, with deep distance-education programs that the university began 13 years ago. A more recent entrant is the State University of New York’s Delhi campus, which has a new online nursing program that is competing with for-profits. Both universities are attracting students who might have gone to, or were attending, online programs at for-profit colleges.
Officials at the two universities say they use online learning to serve nontraditional students. But they are also proud of the programs’ bottom lines. Times are tight on both campuses, and distance education has helped them balance their budgets.
“We went into this as a business venture,” says Jacqueline F. Moloney, executive vice chancellor at Lowell, who led its charge into online courses.
That business is booming at Lowell, which brought in $25-million in revenue last year from distance education. That money, after expenses, netted a profit of $10-million. The timing is good, as the University of Massachusetts system has taken a budget beating. The state’s total annual contribution of $379-million to the system is $25-million less than it was in 1998.
The SUNY College of Technology at Delhi is located in rural central New York. Working nurses in the region who want four-year degrees typically go online, and the University of Phoenix and Walden University were recruiting locally.
To tap the market, the Delhi campus began offering an online bachelor’s of science in nursing in 2008. Part of the draw is the $207-per-credit price, which is cheaper than similar programs at for-profit colleges. Walden’s program, for example, costs about $245 per credit.
The program, which began with 35 students, will hit 300 this fall, far exceeding expectations. Students are enrolling from Georgia, Texas, and as far away as Israel. This year tuition from the nursing degree is plowing a profit of $250,000 into the university’s operating budget.
SUNY’s budget situation is grim. But the new online revenue “has provided a cushion for us to weather this storm,” says Candace Vancko, Delhi’s president. “We are not laying people off.”
Strong Brands
Several major public-university systems have gotten into online higher education in a big way, such as University of Maryland University College, with a worldwide head count of about 86,000 students and an enrollment that is 72 percent online.
Revenue-producing online programs at regional public universities are still fairly rare, experts say. But that is almost certain to change.
State budgets are stagnant at best, and public universities are looking with dread toward 2012, when federal stimulus funds dry up. Meanwhile, demand for online education is booming. About one in four students took at least one class online in 2007-8, according to a study by the Sloan Consortium, a membership organization that specializes in online higher education, and the annual growth rate for online enrollment is 17 percent.
Public universities are watching the success of for-profits and entrepreneurial private universities, says Darcy W. Hardy, assistant vice chancellor for academic affairs at the University of Texas system and executive director of UT TeleCampus.
“If they’re smart, they’re taking lessons,” she says.
In the public sphere, the key to making online learning both profitable and academically strong is faculty buy-in and support from university leadership. Dabbling in distance education, Ms. Hardy says, and just trying to shift what is done on campus to the Internet, won’t work in the long run.
But regional public universities have an asset that for-profit colleges generally can’t match: A trusted brand with a long history. Despite their recent budget woes, SUNY and UMass have clout when printed on the top of a diploma.
Anteah N. Jones attends Lowell full time as an online student but lives about 500 miles away, in Springfield, Va. She is a 28-year-old mother of four, and her husband, in the Air Force, is often deployed overseas. They shopped around for online bachelor’s-degree programs in psychology, and settled on Lowell. Ms. Jones, a satisfied customer, praises the flexibility of the online course work and the easy access to professors and technical support.
Being a UMass student is also a plus, she says. “It sounds good. You know it has a main campus. It’s a true university. You can see it.”
Ms. Jones recently got to see the campus herself. She traveled to Lowell in April for an honor-society induction. (She has a 3.96 GPA.)
Visiting Lowell and meeting her professors was “a wonderful experience,” says Ms. Jones, who plans to earn master’s and doctoral degrees. “I am going all the way through.”
Faculty Buy-In
Lowell’s history is tied to the textile mills that were the lifeblood of the city, which is located about 25 miles northeast of Boston. With more than 12,000 students, the university has long had a technical focus.
In the mid-1990s, some of Lowell’s traditional continuing-education courses had sagging enrollments and were in danger of closing. Yet there was strong demand for those courses around Massachusetts.
Ms. Moloney, the executive vice chancellor, was then dean of continuing studies. She recognized the supply-and-demand gap and set out to build extensive online offerings. The big challenge, she says, was coming up with a financial model in which open-access degree programs would also generate revenue.
Their approach worked. The online continuing-education courses were a success from the start.
“As soon as we moved them online, we had massive demand,” she says.
Part of the reason, Ms. Moloney says, is that the university “engaged the faculty from Day 1.” Professors were the driving force behind the design of online courses. Lowell has been recognized as an industry leader by the Sloan Consortium.
Lisa Panagopoulos was teaching information-technology courses at Lowell in 1997, when she went fully online. She is now the university’s coordinator of distance learning and faculty development.
Unlike at for-profits, individual professors at Lowell have a large degree of latitude in running online courses. At Lowell, faculty members are trained in how to use Blackboard and the “tricks of the trade,” like how to assess students online. But much of the rest is up to them. (Online and classroom faculty members are paid the same at Lowell, although those who develop new online courses receive a small extra stipend.)
“Once we give them the tools,” Ms. Panagopoulos says, “then they are left to their own creativity to design the course.”
Officials of Walden University say their online nursing programs stack up well against the competition.
Sara Torres, associate dean of Walden’s College of Health Sciences, says students are attracted by the high engagement level of the course work as well as by the diversity of fellow students, many of whom may not be attending “campus-based universities.”
In addition, she says in a written statement, “all of Walden’s nursing faculty are doctorally prepared and are highly qualified experts in their field.”
Frugal and Profitable
In addition to drawing much-needed tuition dollars from out-of-state students, online courses can also help public universities recruit professors who might otherwise take a pass on their job ads.
Deborah S. Adelman is an associate professor of nursing at Delhi. A former adjunct faculty member at Walden, she lives in Springfield, Ill. She wanted to continue working in online education but didn’t want to leave Illinois. The job at Delhi was a perfect match, she says, and she signed on in 2007.
Ms. Adelman and officials at both Delhi and Lowell praised many aspects of their for-profit competitors. However, she says, public universities offer several advantages.
“When you’re working in a state school, there’s less pressure on profit and more on education,” says Ms. Adelman, who worked at Walden for about three years. She praises the Delhi nursing program for the creativity it encourages in professors.
Yet for-profit colleges and large public university systems have the advantage of scale. Leaders at Delhi have had to be frugal to make their relatively small degree program affordable and profitable.
Delhi saved $100,000 by ditching Blackboard’s online-learning system for Moodle, an open-source software package. At the same time, the university could not scrimp on online advising or tutoring, which must be 24/7 to keep students satisfied. The costs were minimized, however, as Delhi has scaled up by hiring new faculty members and advisers gradually, as enrollment has grown. And one of the larger expenses of the program, new library databases, were financed by the SUNY system.
As Delhi’s program grows, its leaders are considering more online degrees, as well as possible partnerships with community colleges in New York. They also intend to keep their distance-learning efforts profitable.
“In this financial environment,” says Ms. Vancko, “if you’re not nimble, you lose.”
