How Cheap Online Certificate Programs Like MIT’s “XSeries Certificate” Are Disrupting Higher Education

Getting schooled.
Sept. 19 2013 9:15 AM

The iTunes of Higher Education

The rapid rise of online “certificates” and how they threaten traditional university degree programs. 

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The marketing is aggressive. Empowered runs television ads, and anyone who visits the website is invited to a live chat. Certificates range from global sustainability to, oddly enough, college admissions counseling. They take about a year to complete and cost between $6,000 and $9,800.

Empowered is backed by several venture capital firms, and its chief executive, Steven Poizner, is a tech entrepreneur who lost the 2010 Republican nomination for California governor to Meg Whitman. The idea behind the company was to tap into people already in the workforce who needed fresh skills to jump-start their careers. But the company is also betting that universities couldn’t resist an opportunity to resell online classes they already had on their books.

“Universities have all kinds of intellectual property that can be packaged and delivered by exploiting technology,” Poizner says.

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But it’s not clear that certificates are going to be an economic boon for higher education. Other industries that have been forced into a process of unbundling have met with disaster. The music industry was crippled when consumers went from buying $15 CDs to digital downloads of single songs, or, worse still, trading them online for free. Newspapers have been unable to arrest a slide in revenue that began when consumers began trading daily subscriptions for à la carte articles on the Web.

Higher education is facing the same threats. In some cases the institutions themselves have accelerated the process. Big universities have pushed out online versions of some of their most popular courses on platforms such as Coursera, Udacity, and edX, and offered them for free in a move eerily reminiscent of how newspapers rushed to make their content available digitally. These universities didn’t think to charge for the courses because their stated goal was to increase access to education.

Earlier this year, however, Coursera began charging up to $100 for providing an official certificate that verifies someone completed one of its courses.

EdX, which also counts Harvard University, Rice University, and others among its consortium, is not far behind. It, too, is now considering charging for official recognition of completing a single course. “We’ve been giving these things away for free, but we’ve always talked about putting a price on it,” says Anant Agarwal, edX’s president. “Every survey tells us that people are willing to pay.”

Platforms like edX are caught between wanting to make their courses accessible to all and the need to generate revenue. Agarwal, who is also a professor at MIT, says edX could charge somewhere between $50 to $100 for those who want an official badge that certifies they’ve completed a course. “In some countries $50 might not be such a large sum; in other places it’s a king’s ransom,” he says. But edX has the advantage of scale: Often more than 100,000 people will enroll in a class, though only a fraction complete it. Still, a $100 price tag for an official badge could produce significant revenues. Coursera says it has brought in more than $1 million from its course certificates so far.

These moves create an even smaller unit of academic currency: a single course. It’s unclear what kind of value employers might place on that, though Agarwal notes that many people have begun to list edX classes on their resumes and LinkedIn profiles. “It is definitely serving as a currency already,” he says.

What’s also unclear is how all the new and smaller academic credentials might ultimately impact the value of traditional degrees. A certificate in business doesn’t carry the same weight as a two-year MBA. But does a $20,000 business certificate make it more difficult for schools to charge as much as $130,000 for an MBA?

“The dilemma is how not to eat your own lunch,” says Anshuman Razdan, a computer science professor at Arizona State University. “All the institutions are struggling with this. Like with airlines, once one starts cutting prices, the rest are forced to do the same.”

Razdan is betting that as edX and other online platforms offer formal recognition for completing their classes, they will need better systems to prove that students aren’t cheating their way through. He started a company called VProctor that allows for remote proctoring of tests taken online. Indeed, MIT won’t start charging for its XSeries until it can work the kinks out of its online verification software.

What was once a straightforward marketplace of well-recognized degrees is now giving way to a more intricate menu of qualifications. “Schools are toying with all sorts of different things, from badges, to laddering certificates that eventually add up to a degree,” says Rovy Branon, an associate dean at the University of Wisconsin–Extension. “All of that’s on the table. All of it challenges our current business models.” 

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