This piece originally appeared in EdSurge.
If 2012 was “The Year of the MOOC”—massive open online courses, usually offered for free—2017 could be “The Year of the Microcredential.”
A growing number of elite colleges are offering short-form graduate and certificate programs that can be taken online for a fraction of the price of a traditional master’s. Proponents say the new offerings will expand access to graduate education and help workers update their skills in fast-changing fields. But the programs also serve as an example of how colleges, increasingly thinking like businesses, are eager to find new ways to bring in revenue.
EdX, the nonprofit originally founded by Harvard University and MIT to offer MOOCs, now lists 40 “MicroMasters” programs from 24 colleges and universities around the world. And Coursera, the venture-backed startup that also works with colleges to develop online courses, says it has added 50 new “specializations” (series of courses that add up to a noncredit certificate) in the past year.
In some ways, the offerings are similar to university extension programs that have been around for more than a century, says Mitchell Stevens, associate professor of education at Stanford University. “Elite universities have created alternative credentials for a long time,” he says. “All universities tend to grow toward new sources of revenue.”
The move to try new types of online degrees and certificates is part of what Stevens calls a “recapitalization” of the higher education sector, as state and federal support fades and Silicon Valley companies and foundations move in with greater influence.
A pioneer of these new online degrees has been MIT, which offered its first MicroMasters degree in 2015, in conjunction with EdX, in supply chain management. The program follows the same curriculum as MIT’s in-person master’s program, except that it covers only about 30 percent of that material (which is why it’s a “micro” degree). That means students take five courses (and pay $1,000 in fees) to get the MicroMasters. There’s no admissions process, so if a student can do the work, he or she can earn the credential. And for students in the online program who do well enough to gain admission to MIT’s in-person master’s, the online credits transfer, making that degree less expensive.
The program recently graduated its first batch of online students, and so far, the supply chain MicroMasters has brought in more than $4 million in revenue, according to Anant Agarwal, CEO of EdX. That money is split between MIT and EdX, which provides the platform and marketing for the courses. EdX also gets foundation support for its new credentials: The group won a $900,000 grant from the Lumina Foundation to help it create 30 “low-cost, open-admissions MicroMasters certificate programs.”
Agarwal says there are three primary reasons why the colleges that EdX works with are trying out the MicroMasters degrees. One is that they just want to try something new. Another is that they see it as a way to market their in-person graduate programs. (After all, paying for marketing and advertising to recruit students is a fast-growing cost for colleges, and building free and low-cost courses may appeal to colleges more than buying Google ads.) Third, colleges “want to create new revenue streams,” says Agarwal, and online courses allow them to reach a broader audience, especially internationally.
When deciding what subjects to offer MicroMasters in, “the marketability of the topic matters a lot,” says Agarwal. Though EdX is a nonprofit, it prides itself on operating like a Silicon Valley startup.
The refrain of thinking more like a business is an even stronger refrain at for-profit companies helping colleges set up new online programs. One such company, ExtensionEngine, urges colleges to go through a “mindset shift” when thinking of new degrees online. “Instead of approaching it as an effort to re-create an existing in-person course into an online program, [schools should] take a cue from some of the most successful online businesses,” says Michael DiPietro, chief marketing officer at ExtensionEngine. They have to “start with a business plan—one that outlines the market, learner personas, competition, revenue and cost projections, team and operational resources, e-commerce, positioning, differentiators, and more. Your product—the program, course, certificate, or degree—has to be unique and very specific to what your market wants.”
In some cases, though, university extension programs have started working with Silicon Valley startups to build new types of online credentials.
One example is the University of California–Davis Extension, which offers five “specializations” through Coursera. Specializations grant noncredit certificates to students who take a series of short online courses on a given topic. They’re different than MicroMasters in that they usually can’t be transferred for college credit, but they represent a new kind of credential that can be completed quickly and for a low price. The latest Davis specialization, in market research, involves taking four courses, and students pay a monthly Coursera subscription of $49 per month, while they are taking the courses, if they want a certificate showing completion. Each course is estimated to take four weeks to finish.
Linda Behrens, associate dean of online education at University of California–Davis, says she sees the certificates as similar in spirit to what the extension program has long offered. She was also careful to note that it is not intended to replace a graduate degree.
But Coursera’s leaders recently unveiled a strategy to make their subscription feel more like an employment-boosting service, complete with diagnostics and assessments that match customers (which it calls “learners”) with courses and offerings on the service to advance their careers.
Other startups have cut out colleges completely to offer similar microcredentials and services. The largest is Udacity, founded by former Stanford professor Sebastian Thrun, which offers what it calls “nanodegrees,” to students who pay $200 a month for access to the education service. The company works closely with high-tech companies to develop its courses. And it offers a premium service (for $299 a month) that includes some individualized help and mentorship, for an additional fee. It also promises a money-back guarantee for those who successfully complete a nanodegree and don’t find a job within six months. It’s fair to say that extension programs never used such decidedly market-based efforts as a money-back guarantee.
Mitchell Stevens, the Stanford education professor, says that other colleges are likely weighing whether they should jump in. The biggest risk for an institution like Stanford and other big-name institutions is the potential to undermine their existing brands. “The most valuable thing that universities have is their reputation,” he says. “The more prominent you are in the reputational economy, the more you have to lose.”
He says that there’s an “ongoing negotiation” around credentials right now. “It’s not about the status order among schools,” he says, “but it’s the status order among credentials.” In other words, which flavor of online graduate degree or certification will employers end up valuing?