Edtech Companies Weigh In On Obama’s Free Community College Plan

Two years of community college for free? Education watchers and politicos have been debating about that proposal from President Obama since he announced it early this year. Is it worth the estimated $60 billion that would be spent over 10 years by the federal government? Will the America’s College Promise program really help students break into middle class jobs, as Obama hopes?

But a different question interested me as a business reporter. If this ambitious proposal passes, would it be a bonanza for educational technology companies? If the first two years of college tuition cost nothing to students, would the nation’s more than 1,100 community colleges need the edtech industry’s help to handle a tidal wave of new students?

Dennis Yang, CEO of San Francisco-based online education marketplace Udemy, applauded Obama’s proposal even though he has doubts about its chances given the current contentious mood in Congress.

“I think it’s a great step in the right direction for all of us even to be talking about this,” Yang (pictured above) says. “We all need to develop new skills, and we need more accessible, affordable means to get these skills.”

Pearson Education, the huge global textbook publisher with an expanding digital learning business and thousands of online courses, already has many partnerships among the nation’s public two-year colleges, says the company’s Jonell Sanchez, vice president of global employability and career success. Sanchez welcomed Obama’s initiative, which was inspired by new tuition-free community college programs in Tennessee and Chicago.

“It aligns very much with where we have been,” Sanchez says. “Pearson works with most of the community colleges in the country.”

Pearson’s partners include Indiana’s multi-campus Ivy Tech Community College, which was cast into the spotlight by the president’s public campaign for his free tuition proposal. Obama chose Ivy Tech’s Indianapolis campus as the site for a Feb. 6 forum where he touted the plan.

Under Obama’s program, the federal government would pay 75 percent of the average community college tuition while participating states would cover the rest. If all states join in, the program would assist 9 million students, and save full-time community college students an average of $3,800 in tuition per year, the White House said in a statement when Obama’s proposal was announced Jan. 8.

“Students should be able to get the knowledge and the skills they need without taking on decades’ worth of student debt,” the administration said in the statement. The nation’s student debt from attending colleges of all types now exceeds $1 trillion.

The Obama proposal has become the focus of an ongoing national discussion about the fundamental value of college, and community colleges in particular, as affordable training grounds for the careers of the future. Members of the edtech industry take varied positions in this debate. While edtech companies are partnering with community colleges, some industry players are also competing with those schools to offer low-cost programs.

One advocate for online education says the Obama plan will funnel students into established community colleges instead of supporting innovative programs that could cut the cost of tuition for both students and taxpayers. In a commentary for CNN, Michael Horn, co-founder of the Clayton Christensen Institute for Disruptive Innovation, says the actual cost of community college is about $13,000. Horn says that’s roughly four times as much as tuition at a community college that charges students $3,300 a year. Government aid is already covering the difference, he says.

By comparison, Horn points to Oakland, CA-based Patten University, an accredited institution operated by the for-profit San Francisco social venture company UniversityNow. Patten offers self-paced, two-year associate’s degrees in business and criminal justice for a tuition of $350 per month, for as many courses as the student can handle per term. That amounts to $1,400 a term. Patten hasn’t sought to qualify its programs for federal student loan programs. UniversityNow’s investors include Kapor Capital, University Ventures, Novak Biddle Venture Partners, and Bronze Investments.

Horn says community colleges, as a class, can’t point to high success rates among their students. Only 28 percent graduate from two-year programs within four years, and of those who do earn an associate’s degree, Horn says, many would profit more by pursuing a professional certification instead.

Udemy’s Yang makes a related argument. Although he thinks the federal government should do more to support post-secondary education, Yang says the Obama administration should first invest in a careful study of its goals and the best means to achieve them in a fast-changing job market. That might mean funding novel, affordable solutions outside the college system, and credentials other than a degree, he says.

“It’s getting harder and harder to actually predict where the economy is going, and what the jobs of the future will be,” Yang says. “People are calling into question whether a college degree is the guaranteed, risk-free ticket to the middle class.”

The Udemy marketplace allows anyone, from traditional college instructors to workplace experts to hobbyists, to offer online courses and set their own price—which can be zero. If there is a charge to students, Udemy shares part of the fee. A student could design a course of study to include, say, programming in the computer language Java, beginning Chinese, time management skills, critical thinking, and an “elective” in yoga or Spanish guitar lessons. The fee per course can be as little as $20.

The idea behind such direct-to-consumer edtech marketplaces is … Next Page »

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Bernadette Tansey is Xconomy's San Francisco Editor. You can reach her at btansey@xconomy.com. Follow @Tansey_Xconomy

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