The Attack on Online Education

The attacks on online education are coming largely from private institutional colleges and universities, and from associations of professors and deans. It's about the money. Truth, not so much.
The attacks on online education are coming largely from private institutional colleges and universities, and from associations of professors and deans. It's about the money. Truth, not so much.

Responding to Detractors

This article discusses the applicability of a recent paper to the ongoing social debate surrounding the value of an online degree versus the value of a traditional, campus degree. An opponent of online degrees (this woman calls them 'degree mills') sent a link to an article titled "The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?". The Journal of Economic Perspectives published the paper. David J. Deming, Claudia Golden, and Laurence Katz, all of Harvard, authored the paper.

Thais article addresses evidence of bias in the Critter paper and in the title. This article you are reading also addresses how important data, like initial income, is not addressed in analysis. Additionally, this paper looks at the demographics of online students versus the demographics of not-for-profit programs.

Um, Biased?

Is it Leading to Title a Paper with Words like Critter and Predator?

  • Yes
  • No
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Nimble Critters?

The Nimble Critters paper does little to veil apathy for online programs. First, the businessmen who operate Bridgepoint, Apollo, and other educational services corporations are referenced as “nimble critters” in a place where “entrepreneurs” would better fit. Later, the paper claims that such business people are either nimble critters or agile predators.

Personal Attack

Neither of the terms, “critter” or “predator” speaks kindly of for-profit schools. Neither of these connote positive attributes. The two popular phrases that come to mind are “creeping critters” and “predatory lending”; one of these you pay to have killed, the other inspires letters to Congress and arguments before judges.

Consider for yourself if you would appreciate being called a critter. When the title of a paper labels the subject of discussion pejoratively, the idea of a scientific paper following has already begun to evaporate. The black or white fallacy has also been committed. It is entirely possible that a third category, “genius”, or some other fourth or fifth category may apply to these vehicles of education which are rapidly expanding to meet the demands of a nation which has a shortage of talent and skilled workers.

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More Unveiled Denigration

Attacks on "for-profit" education are not limited to the title, as a reader might anticipate. On page 10 of the paper, the authors equate distance education to "vocational schools", a place where trade work is learned. The authors speculate that for-profit schools are not designed with consideration toward advancing to higher degrees. The truth is that many online Masters and PhD programs exist.

The study lumps together educational and training programs that are not traditionally mapped together in thought. To facilitate this uncommon grouping, the word "degree" is replaced with "certificate".

Trained clinical and scientific minds have to wonder if this report was ever intended to be anything but a slant piece.

Some Problems with the Nimble Critters Paper

As already mentioned, bias destroys a scientific paper. This article shows how some important factors of analysis have been overlooked; bias likely brought the authors to their incorrect assertion that “for-profit” schools produce inferior graduates who earn less, are less satisfied with their certificate or degree, and have greater default rates repaying student loans. The Nimble Critters paper seems to imply (by overlooking other, significant factors) that the aforementioned negative traits have something do with "for-profit". Is this true?

A second glaring problem with the paper is that some very important differences between the pools of data are ignored entirely or not controlled for. One of the biggest differences between those who attended non-profit programs and those who attended for-profit programs is their income claimed when applying for financial aid. This is not addressed in the paper. Is it possible these authors overlooked the possible causal relationship between a history of low income and higher default rates?

A third significant problem exists. The paper does not control for the different types of degrees earned online versus the kinds of degrees earned on campus. Student loan default rates vary greatly by degree earned. This should have been considered.

Fourth, how does the paper address the early drop outs from for-profit programs? Is the problem with higher default based on those who quit and do not earn a degree, or is it based on the quality of people who learn via for-profit and distance education?

The online detractor who brought this paper to my attention presented the paper as support for "campus good, online bad". However, the "for-profit" category is NOT a fair representation of online. In fact, appendix 1 shows that the distance education portion of the aggregrate "for-profit" cohort is least correlated with the table data for default rates. The for-profit category includes vocational programs as well as other kinds of certificate programs. Additionally, the online students are entering professions and fields of work very different from vocational school grads.

Distance Education is Important and Relevant

The increase in distance education is presented as a kind of aggressive, “proprietary”, “agile predator” approach. However, the truth of the world is that an online program can expand and respond to increased market demand much more rapidly than the local community college can build a new campus. In California, new construction for the University of California at Merced was delayed for seven years while an environmental impact process worked around “vernal pools” (read: rainy season mud puddles) and “tadpole fairy shrimp”. The first class graduated in 2009- just 49% of those who started in 2005. A proposed build-out for the university is projected to cost 1.23 billion dollars. UC Merced is the first new California state college in 40 years. The rise in online enrollment is a factor of the physical ability of online systems to rapidly expand and the bureaucracy and expense involved in building a new brick-and-mortar campus. Additionally, most not-for-profit schools are not known for their innovation.

I took Developmental Psychology at the University of Pennsylvania. A tenured Professor Winston used sheet-protector-covered, yellowed and flaking at the edges sheets of paper from which to give all his lectures. At one point he asked the class if the brain could be repaired. Excited, I raised my hand and responded in the affirmative. He then lectured the class on how this is impossible. Apparently, he did not know that research on U Penn campus using fetal brain tissue and Alzheimer’s patients had proven that new neurons can grow, and the brain can be repaired.

So, the question currently exists: Which is the superior model for the education system of the future? Will universities run by old-school academics adapt to meet the rapidly advancing world of information and processes? Or, will entrepreneurial, responsive business models continue to provide educational training to degree seekers? Businesses compete aggressively to bring the best products and services to market in the fastest manner possible. The competition from online schools should be expected to increase. The product will continue to improve in it’s ability to meet market demands - it’s the law of supply meeting demand.

For Profit or Not for Profit?

Another issue distorted by the paper is the profit making of “non-profit” universities. The paper on the proposed build out for UC Merced anticipates an annual “$954 million in positive cash flow back to UC and the state” once the student body reaches 15,000 persons. Perhaps these Harvard authors also do not know that Harvard has over a billion dollars in investments, or that the State of California regularly makes a profit on higher education.

This is a very common misconception. Universities make money. States profit in tens and hundreds of millions of dollars every year from undergraduate and graduate tuition. For example, tuition and living expenses of foreign students account for tens of billions of dollars per year in U.S. exports.

In fact, under Obamacare, student loans will now be issued and held by the U.S. government. Remember, student loans are not dischargeable, even in bankruptcy. No matter what, with very few exceptions, students will repay student loans, interest, late fees, and other penalties. These penalties and fees can double or triple a debt that never goes away. In fact, the government has sent SWAT teams to break down the doors of non-paying student debt holders.

So, is it appropriate to categorize state-run, public institutions as "non-profit"?

Read the Fine Print: Online is Better for Pay

While the Critters paper mentions that for-profit associate’s degree programs graduate a higher percentage than non-profit associate’s programs, the paper does not address the fact that for-profit students typically take longer to graduate. Income increases with years of work experience. So, this should evolve into higher average annual earnings for the non-profit cohort in the 2009 year sampling used in the paper (because they graduated earlier and have had more time to receive raises and promotions.)

Finally, the report waits until the very last page, page 42 in the appendix, to list data for 4-year degree holders which lists “for-profit” graduates as earning more than “non-profit” graduates.

4-yr public & non-profit: $34,528

2-yr public & non-profit: $30,617

4-yr for-profit: $37,578

You see that correctly: Of students who started school in 2003-2004, 4-year degree holders from for-profit institutions earned more in 2009 than 4-year degree holders from non-profit institutions.

As previously noted in this paper, the "for profit" category in the nimble critters paper includes 2-year vocational programs and other certificate programs which are almost always less than four years. Therefore, this number represents the online degree bachelor's degree students much more heavily than it does the other statistics attributed to for-profit enterprises listed in the nimble critters paper.

Ergo: The nimble critters paper actually credits online degree holders with higher income after 6 years than degree holders from schools labeled non-profit in that paper.

Corrected Numbers Increasingly Favor Online Degree Holders

I used the last page, 4-year data, and adjusted it to control for gender. Women make significantly less than men. While the average man with a bachelor’s degree earned $82,197. The average woman earned $54,204. The mens’ average salary to womens’ average salary ratio is 1.516:1.00.

With such a big difference in income by gender, a small increase in proportion of women in one study group should drop that group’s average income. For-profit schools typically contain 69.2% women. The national average for not-for-profit schools is 56.9%.

When the 2009 4-year, for-profit average income is adjusted, it becomes $39,634 ($39,600 using significant figures). The $34,528 will be reduced when correcting for the fact that mens’ salaries averaged into that number are slightly over-representative of the national sampling of college students. Additionally, if minority classes, and their lower incomes are controlled, the gap between for-profit and not-for-profit earnings will change significantly from the uncorrected numbers shown in the Capsee Center report appendices.

The Nimble Critters Report is Meaningless in the Online vs Campus Debate

A PhD student sent the Capsee report link to me as support for a war on online schools (alternately called “degree mills” by her). However, the data in the Capsee report only shows that students entering for-profit (including online) programs come from poorer backgrounds, default on student loans at a higher percentage, and have only about half the chance of finishing a bachelor’s in 6 years as do campus students. The report also shows that associate’s degree seekers have a much better chance of degree attainment with for-profit institutions.

The Capsee report does not establish any causal relationship between demographic data and the outcomes. The report also completely fails to analyze incomes listed in the appendix for demographic data, nor is there a statistical analysis which addresses income versus loan default rate. In the for-profit to not-for-profit comparison, this is a very significant factor. The two groups comprise greatly differing cross-sections of the American demographic. The lower average incomes of the for-profit associate’s degree graduates is not controlled for demographics. And, without correction, the incomes of 4-year degree holders with jobs are higher for the online graduates!

In my mind, the Capsee report is just a list of numbers and a denigration of for-profit programs. In the content, no support for either “nimble critter” or “agile predator” is made. The paper reduces to a discussion of some data with only an implication that it is somehow bad. The use of the Capsee report in the dogma of “on-campus good, online bad” is irrelevant. The information contained in the appendices is much more likely attributable to the higher ratios of veteran, black, minority, female, and low-income students comprising for-profit student bodies than attributable to the "for-profit" nature of their educational and training vehicles.

Other Interpretations:

For example, here are some other possible explanations for the data:

Women are a higher percent of online students. Women are paid less just because they are women, without respect to type of degree held.

Family Expenses:

People from low-income backgrounds are unaccustomed to balancing a household budget and so default on loans because of management style. People from low-income backgrounds are more likely to have poor parents who require financial assistance, reduce the graduates’ incomes, and increase their likelihood for default. It is well known that there is a gap by culture in caring for parents. Minorities care for elders at a higher rate than whites. That is a factor in loan repayment.

Ethnic Hiring:

Higher unemployment amongst for-profit graduates is a reflection of the demographic difference. The female, black, and minority bias in hiring carries over to the for-profit graduates- not because of type of degree held, or the nature of the process by which they received it, but because of traditional bias in hiring.

The Nimble Critters paper does little for the analysis and comparison of online versus on-campus programs.

First, the "for-profit" category includes many programs which are not online, but which are vocational. How these two educational systems are grouped together for any kind of comparison escapes me. Perhaps the authors just wanted to promote traditional, education by comparing those programs against "everything else." The appendices also show that comparative data are least correlated with the category "online" than with other categories. This implies the data are much less applicable to online degrees, if at all.

Second, the data seems to say that online degree holders actually earn more when those online students earn a 4-year degree. This may be due to the "vocational" nature of such programs. Online degrees tend to include more business, teaching, and health care diplomas than other, lower-paying degrees like philosophy and history.

Finally, the paper ignores important data. The initial income of students entering programs grouped together as "for-profit" is much lower than for students entering not-for-profit programs. And, very large differences in demographics are ignored (except in a few line graphs.)

In Conclusion, the nimble critters paper is nothing more than the starting point for conversation in the issue of traditional campus programs versus every other kind of education, a conversation which has little or no value. In the "on-campus good, online bad" argument. The nimble critter paper is completely irrelevant except for showing that online 4-year degree holders earn more than other 4-year groups.

Who is CAPSEE?

IN 2011, the U.S. Department of Education gave a grant R305C110011 to form the Center for Analysis of Postsecondary Education and Employment (CAPSEE).The problem in this institution is it's current components. For-profit education is not represented.

Core Research

The web site for CAPSEE states the organization goal:

CAPSEE conducts research on the labor market returns to different education pathways and on policies that aim to improve completion of pathways leading to strong economic returns.

However, the nimble critters paper seems to be supportive of "liberal arts" programs. I have never seen a paper promoting liberal arts as a way to promote "strong economic returns". Additionally, the last page (repeatedly stated, sorry) plainly shows that 4-year, for-profit degree graduates earn more than those from other education pathways. However, judging by the bias of the nimble critters paper, promotion of online educational systems should not be expected.

Remember: state governments make profit from their university systems. CAPSEE represents states, not the "educational system" and not the student. This is a contest for profit, not better outcomes for the United States economy, and not better outcomes for American workers.

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Comments 3 comments

psycheskinner profile image

psycheskinner 4 years ago

There is no defending a "degree mill". You may not be appreciating that it is a name for a certain type of worthless online degree--not online degrees in general.


Man from Modesto profile image

Man from Modesto 4 years ago from Kiev, Ukraine (formerly Modesto, California) Author

Correct! I am not defending degree mills. I am professionally debating a person who chooses to constantly attack online degrees using heuristics and other fallacies of logic such as random, unrepresentative complaints.

Thank you for the opportunity to clarify.


JoshuaHill 2 years ago

A degree is really worth the person behind it. It is possible to receive a degree by inadequate effort from any school. Academic dishonesty is prevalent at every institution. Every professor has the ability to use the Turnitin software to check for plagiarism, so realistically it doesn't matter what institution of higher learning is looking for cheaters. What is agreeable is the fact that some schools disallow professor bias by using a grading rubric, such as Ashford University. This provides fairness across the board, but I digress. A degree is only worth what is actually learned. If someone cannot prove their academic edification in their job, or job interview, then they might as well not present themselves as a graduate of an institution of higher learning. All their attempts of "proving" themselves are actually hurting their fellow alumns. Especially in the case of schools that are not well known. Not only did these individuals cheat themselves out of really learning something, but they also hurt the rest of us by souring our real accomplishments to a prospective employer. I have not had an issue with my degree (Ashford BA) from industry or academia, and I am saddened by the ideals of some of the elitist "smartchik"'s in our society. They might as well proclaim the world to be flat.

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