MOOCs, The Dip, and Performance Funding

Thanks to everyone for leaving such kind notes yesterday.  It meant a lot to me.  Now, back to the regularly scheduled blog...

Two of the major trends in higher education are on a collision course with each other.  But their respective partisans don’t seem to notice.

On one side, MOOCs are gaining steam at an amazing rate.  They started as non-credit distance extensions by elite universities; now, the Gates Foundation is funding attempts to develop MOOCs for low-level, high enrollment Gen Ed courses of the sort that comprise the core of most community college curricula, and to give students academic credit for successful completion.  All of this in a year.

Some predictable battle lines are already forming.  Faculty are eyeing MOOCs warily, fearing a high-tech Trojan horse that will destroy their jobs.  Techies and politicians are looking at MOOCs as disruptive in a much more positive sense: done well, they offer a level of scalability and cost efficiency that’s hard to beat.  In a sense, the two sides are assuming the same thing: MOOCs are cost-saving.  They disagree on whether that’s good or bad. Anyone who remembers the battles over distance education ten years ago can recite the arguments.

As with distance education, the first round of results from MOOCs isn’t encouraging.  Plagiarism is a problem, peer grading is unrefined, and the completion rates are low.  Whether this is the “dip” before the payoff, or simply the nature of the beast, isn’t yet clear.

On the other side, states are playing with performance-based funding for colleges.  The idea is to prod colleges to get better results -- usually defined as more graduates -- by recasting operating funding as a reward.  Incentives matter, the thinking goes, so by building the right incentives, states can get colleges to do what states want them to do.

Performance-based funding is likely to be relatively volatile, especially in the early years when the formulae are being tweaked annually to address this political imperative or that one.  That’s a major problem for colleges, because colleges usually have high fixed costs, mostly in labor.

To see the contradiction, imagine that you have to manage a college budget.  The budget is tight already, and you find out that if you don’t make significant short-term gains in graduation rates, it will soon get much tighter.  Then you hear about the wonders of MOOCs and how cheap and disruptive they are, with their single-digit completion percentages.

Ouch.

I don’t know whether MOOCs are the next big thing, a passing fad, or version 1.0 of something that will be really great by version 3.0.  (If I had to guess right now, I’d pick the third option.)  But for a college with performance-based funding to put much into them right now would be madness.  They’re high-risk, especially in the short term.  When your margins are already thin, there’s just no room for that magnitude of error.

At a system level, this is penny wise and pound foolish.  Experimentation is messy, wasteful, and expensive.  It has to be.  That’s how it works.  And it’s the only reliable source of real progress.

I don’t think the choice is between safety and risk.  It’s between certain decline and the possibility of tremendous improvement.  But getting to the latter requires having the risk capital now to try new things.  If the first few rounds of MOOCs involve catastrophic attrition, then I want no part of them unless my budget can handle it.  By the time the bugs are fixed -- or the next thing has come along -- we’ll be that much tighter and less able to adapt.  This is how Kodak declined, and this is how public higher ed could go.

Moments of technological breakthrough are not the times for austerity or jamming the brakes.  They’re the times for risk capital and taking chances.  I hope the states figure that out before we have to start yet another round of cuts.