An interesting analysis of MOOCs in a National Bureau of Economic Research working paper by Stanford economist Caroline M. Hoxby suggests that heavy dependence on online ed won’t work for what she terms highly selective post-secondary educational institutions. In essence, such institutions depend in important ways on alumni loyalty which is hard to obtain if students take courses online that come from anywhere.
Abstract: I consider how online postsecondary education, including massive open online courses (MOOCs), might fit into economically sustainable models of postsecondary education. I contrast nonselective postsecondary education (NSPE)in which institutions sell fairly standardized educational services in return for up-front payments and highly selective postsecondary education (HSPE) in which institutions invest in students in return for repayments much later in life. The analysis suggests that MOOCs will be financially sustainable substitutes for some NSPE, but there are risks even in these situations. The analysis suggests that MOOCs will be financially sustainable substitutes for only a small share of HSPE and are likely to collapse the economic model that allows HSPE institutions to invest in advanced education and research. I outline a non-MOOC model of online education that may allow HSPE institutions both to sustain their distinctive activities and to reach a larger number of students.
Full paper available at http://www.nber.org/papers/w19816.pdf