Innovative Higher Education Business Models

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1 Innovative Higher Education Business Models Michael Gower, Senior Vice President for Finance Rutgers University John Case, Director, PwC David Hemingson, Managing Director, PwC Higher Education and Academic Medical Center Advisory Practice

2 Agenda Recap of Executive Summit of 2012 EACUBO Update: Experimentation and Breakthroughs Discussion: Innovations at Your Institution 2

3 Recap of Executive Summit of 2012 EACUBO Innovative Business Models

4 Recap of Executive Summit of EACUBO 2012 Discussed innovative business models Three presentations Southern New Hampshire University Kris Clerkin, Executive Director, College of America Northeastern University Sean Gallagher, Senior Strategist and Market Development Officer Massachusetts Institute of Technology Michael Howard, Vice President for Finance PwC whitepaper summarizes strategies, challenges and successes 4

5 Exploring new business models New models demonstrate willingness to adapt Affordability Changing student demographics Technology to tailor learning to individual schedules and learning needs 5

6 Exploring new business models But questions remain Is online learning here to stay? Can new delivery models increase revenue? Will faculty accept non-traditional teaching mechanisms? Will accrediting agencies validate these models? Can these new delivery models shape a more competitive workforce? 6

7 Innovations SNHU College of America program aimed at non-traditional students Northeastern Satellite graduate campus sites in Charlotte and Seattle MIT edx, the massive online open course (MOOC) initiative with Harvard 7

8 College of Online and Continuing Education (COCE) and College of America (COA) Not-for-profit, regionally-accredited university with 80- year history and 23,000 students with 180 degree and certificate programs, available online Objectives COCE leverage NFP advantage to provide nontraditional students an affordable undergraduate degree COA piloting competency-based assessment program to provide Associates degree for $5,000 Goals SNHU 350,000 students by 2018 COA 10,000 student by

9 College of Online and Continuing Education (COCE) and College of America (COA) Strategy Establish separate businesses with the autonomy to develop innovative business model Develop partnerships with employers looking to educate their workforce Dedicated staff has freedom to develop cost structure, technology, business model and sales and marketing strategy Customer-driven approach including an advisor for each student and extensive analytics of student experiences, particularly completion rates and workplace success 9

10 Northeastern s Graduate Campus Network Private research university of 21,000 full-time students with strong emphasis on experiential learning Objective establish strategic presence in new domestic markets where Northeastern could leverage its brand to meet demand for graduate education programs Strategy following extensive research, establish a lean (15,000 sq. ft.) campus-based presence with hybrid programming Classroom and online learning Northeastern-based and local faculty 10

11 Northeastern s Graduate Campus Network New campuses in Charlotte (2011) and Seattle (2013) Each campus offers multiple disciplines Close working relationships with local industries urban planning research in Charlotte; biotechnology research in Seattle have broaden Northeastern s network Hybrid degrees are now offered on the Boston campus 11

12 edx, the MIT/Harvard MOOC Not-for-profit owned & governed by MIT & Harvard, based on $30M investment by each partner Objective build global community of online learners benefiting from MIT/Harvard-quality course content Strategy develop strong brand worldwide, quickly and with high quality; like amazon.com, become preferred provider Features video lesson segments, embedded quizzes, immediate feedback, student-ranked Q&As, online labs and student-paced learning Technology base to learn how students learn and adapt instruction accordingly Students receive certificates of mastery 12

13 Update: Experimentation and Breakthroughs

14 MOOC/Online Learning Update The Year of the MOOC (NY Times) + 1 Massive online open course Online instruction and social networking Online interaction video lectures, simulations, exercises, labs, forums, quizzes Certificate of completion Chronicle of Higher Education survey of 100 professors teaching MOOC 79% agreed MOOCS were worth the hype Majority thought students succeeding with MOOC should not receive credit for their free courses 14

15 Major Players edx 1.25M students May 2012 start-up MIT/Harvard Coursera 4.7M students April 2012 commercial start-up Udacity 150,000 students January 2012 commercial start-up Khan Academy Udemy MOOC / OL Update 15

16 edx 29 partners as of September UC Berkeley, Cornell, Georgetown MOOC / OL Update Partnering with Google to form Open edx and Mooc.org to facilitate development of online courses Courses developed using Google s Course Builder facility will transfer to edx platform Financial arrangements and quality control under development 16

17 Coursera 87 university partners Stanford, Princeton, Penn, Michigan Additions include Yale, Duke, Wisconsin, Chicago 400 courses in 7 languages $43M venture capital injection in July Laureate Education among investors MOOC / OL Update Expands on $22M initial investment from Penn, California Institute of Technology, among others 17

18 Udacity Partners at 84 universities MOOC / OL Update Virginia, Emory, Penn, Princeton, Duke NSF review of San Jose State experience Outcomes in summer classes improved after spring class directed at at-risk students paled against comparable classroom-based instruction NSF concludes SJSU has learned from experience 18

19 Experimentation Many start; few finish MOOC / OL Update Many plan to combine online snippets with traditional instruction or online course with campus-based exams Distinguished and/or on-campus professor instruction; courses available to others Focus on remedial and gateway courses 19

20 Breakthroughs Georgia Tech offers online masters degree in computer science through MOOC platform Offered for $6,600 compared to campus-based course for $45,000 GT anticipates strong participation from outside US Dean: Online, there s no visa problem. (NYT) 60/40 revenue split with Udacity 2014 projection: $3.1M investment; $240,000 profit Year 3 projection: $4.7M profit Full and provisional admission Certificates if program not completed MOOC / OL Update 20

21 Breakthroughs University of Florida to offer online bachelors degree Tuition at ¾ cost of tuition for in-state students, per legislature s direction University of Georgia System to offer general education courses through Coursera across all campuses Initial courses offered this fall MOOC / OL Update 21

22 Breakthroughs MOOC / OL Update Blackboard announces support for MOOCs at annual conference in July 15 institutions planned to offer MOOCs on the platform this fall Competes with Instructure s MOOC platform, Canvas Network 22

23 Breakthroughs MOOC platforms offered to complement or replace classroom instruction 23 e.g., Coursera charges of $8 per student for platform; $30 to $60 per student for course developed at another university* Alternative credentialing expands MITx, a division of MIT, announced last month that it will offer certificates to students who complete a series of courses *Rates vary Equivalent of 2 to 4 courses Estimates 6 months to 2 years to complete MOOC / OL Update

24 Issues and Concerns Impact on University brand Instructional quality Outsourcing core instruction to for-profits MOOCs best investment alternative MOOC / OL Update 24

25 Competency-based Education In March, US Department of Education endorsed competency-based education SNHU Update SNHU gained US DOE approval to pursue federal financial aid funding for competencybased approach SNHU plans to expand College of America to bachelors programs 25

26 New Campuses Northeastern University Graduate campuses Charlotte (2011) and Seattle (January) Close collaborations with local industry Northeastern Update 26

27 Discussion: Innovations at Your Institution

28 Thank you 28

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