Waypoints in the MOOC Debates, Part III: The Udacity-Georgia Tech Contract

Photo: Edu-Factory Congress, U Paris VIII, February 13, 2011
I have spent some time trying to understand the MOOC business model, and yesterday Inside Higher Ed published one result, my 2000 word study of the Udacity-Georgia Tech contract, "Where are the Cost Savings?"   There I try and fail to use two public spreadsheets to discover where Udacity saves money for Georgia Tech's Computer Science department-- beyond what it could save with its own "blended" online master's program.  I focus on a MOOC company's cost claims because these have turned the heads of politicians and academic managers across the land. 

Yesterday afternoon, Udacity founder Sebastian Thrun blogged on the Georgia Tech deal and commented on some of the points of my article. My MOOC research has been motivated by a concern about the gap between MOOC rhetoric and MOOC reality, and I certainly stand to learn from Dr. Thrun's explication of his own contracts, about which he knows quite a bit more than I do.

I haven't found Dr. Thrun's post so helpful about the numbers.  But it does offer an important retrenchment in MOOC rhetoric.

The first of these consists of Dr. Thrun's remarks that online education is "nothing new" and "will not replace face to face education."  This is an about-face from six months ago, when Dr. Thrun told The Economist that the coming of the MOOC meant that "in 50 years there will be only ten universities left in the world."

The second retrenchment is Dr. Thrun's repudiation of Daphne Koller's claim at the UCLA MOOC summit in January that MOOC's can teach at "effectively zero dollars marginal cost per additional student."  This challenges the promise that Udacity and its rivals will disrupt the cost structure of a higher education sector, though this promise was the basis of the international passion for MOOCs.

The third retrenchment is the post's claim that "meaningful and high quality education" requires "human contact and mentoring."  The MOOC pedagogical revolution turns on powerful kinds of instructional automation, and yet here we are back in the familiar world of colleges and universities where "blended" courses use technology as a supplement to labor-intensive hands-on contact.

The fourth is that Udacity's technology won't furnish Georgia Tech with a super-cheap yet excellent infrastructure. Year 1 costs are as high as I said--which is indeed normal for a product that still needs lots of customization labor.  Cost stay high in Years 2 and 3, a fact that I would have preferred Dr. Thrun to discuss.  His remark about "variable costs" in out years doesn't specify what those later per-student costs might really be.  Costs in years 1-3 still sadden me: in exchange for offering up 20 courses worth of intellectual content, faculty might like to get a true labor saving device, which has been the promise of MOOCs, as of all  technology. They don't get this.

The fifth retrenchment is that Udacity is going to get non-degree students to pay tuition, who will furnish Udacity with "the majority of tuition revenue."  The original MOOC claim to democratize global higher education access, however, depended on MOOCs being free.

These concessions, taken together, mean that MOOCs haven't solved "Baumol's cost disease" in universities. They mean MOOCs will be less than free and thus less globally democratic than claimed. They also mean that Udacity isn't going to be a MOOC after all, but some kind of MOOC-online college hybrid. 

Perhaps I have misunderstood. In any case, my first instinct is to welcome Sebastian Thrun and the Udacity crew back to the real world of educational problem solving. I  am moved by Dr. Thrun the educational humanist, who expresses a desire to use his company to help "educate 1% of underemployed Americans to become proficient in computer science."  Truly open access has and is the best part of the MOOC agenda.

On the other hand, Dr. Thrun is the founder and CEO of a startup company.  Since he operates in a capitalist economy, he is obligated to maximize returns to his company and not to other people, including his partners and the public.  He must also market his products as of enormous benefit to every customer and to all mankind.  To simplify, this business context commits him to the following positions, which are liabilities in his post.

1. Budgetary nontransparency. Dr. Thrun doesn't work through the contradictions in the budget and enrollment models. The main new information is (a) that Udacity will be controlled the costs of contact hours by possibly doubling them; and (b), as mentioned,that they will have very high enrollments while nonetheless charging tuition.  If we're being offered transparency, we should get the full spreadsheets on this deal, including out-year cost estimates.  But such spreadsheets are considered proprietary information, trade secrets retained for the advantage of Udacity over its competitors--including public universities. It's economically logical that Dr. Thrun isn't offering real transparency here. He is of course functioning as a businessman.
2. No public funding crisis.  Dr. Thrun makes no mention of the dramatic funding cuts that have degraded the educational services he claims to fix. Nor, naturally, does he mention his own role in convincing major state politicians like California's governor and Senate President Pro Tem that they don't need to reverse cuts to improve public university quality. The Georgia Tech spreadsheets are (incomplete) proof that online technology cannot make up for massive public funding cuts. So now, in many states, public universities are in limbo--not saved by a MOOC cost revolution that has not materialized, and yet impoverished by a MOOC-fed consensus that the "traditional" college is dead. For example, Iowa's governor invoked online technology in vetoing capital expenditures for pharmacy, biosciences, and education buildings ( (h/t Teresa Mangum).
3. No detente with the labor to be replaced.  Large MOOC savings will occur only if tenure-track faculty are fired and/or not replaced, either in existing colleges or new quasi-universities.  MOOC marketing has turned in large part on descriptions of faculty as having put their vested interests ahead of students and progress in order to protect professional skills that technology has made obsolete.  It has paralleled attacks on "teachers' unions" in K-12 "reform," and appeals directly to executives in academia and government while ignoring grounded descriptions of current instructional practice even from a department at Udacity's most important university partner (Philosophy at San Jose State University).  Now Dr. Thrun grants the importance of "human" teaching, but still not of faculty teachers.

This is to say that although the financial claims of online technology are being hollowed out, the MOOC storyline will continue as it has. This is to be expected of Dr. Thrun: it is his job. 

Yet though we shouldn't expect a company CEO to protect the public interest, we can and should expect it of public officials. After 18 months of MOOC-promises of a cost revolution, the public discussion of MOOC budgetary detail boils down to one intrepid reporter, Ry Rivard, who got the spreadsheets through a public records act request, one professor who spent hours thinking about them, and one company executive who replied.

If I err, please enlighten me.  But Harvard and MIT committed $60 million to edX, tens of millions have gone to other companies, and yet university managers have failed to provide concrete, public due diligence. Before SJSU or UCSD or Georgia Tech go further, their administrations need to quantify the workforce implications and the precise expected cost savings for their communities.

Dr. Thrun ends his post with a dig at existing universities: so maybe Udacity isn't that cheap, but neither are you. He asks rhetorically, "Where does all the tuition money and the state support go?"

This is easy to explain.  The state funding and tuition money go to:

• "Human contact." The student services and personal, individualized instructor responses that increase retention and success
• Research.  This is expensive for creators and cheap for free riders. But somebody still has to pay to do this, and to maintain, administer and upgrade the infrastructure, which are noble and necessary activities.
• Innovation. For instruction and research, this means time and effort on top of the task at hand.
• Middle class academic jobs.  This means good wages, plus benefits and retirement, which allow stability and the freedom to be creative, to try new things, to do exploration rather than just the self-justification and defense that public colleges have been saddled with. 

I completely reject the ambivalence of this society--and especially of Silicon Valley--about whether we need and can afford these things. We do and we can.