Community Colleges Online

The Community Colleges Online Programme is the working title for a National initiative by President Obama of the US to foster the development of e-learning in the Community Colleges sector. It is part of a much larger $12 billion initiative to revitalise the whole Community College sector and in particular to boost graduation rates, improve facilities and develop new technology. This in turn is part of the $100 billion stimulus package for education.

A recent report by the Brookings Institution, as quoted in the Wall Street Journal, estimated the US (federal) government provides community colleges with about $2 billion a year in direct support, about a tenth of what it spends on public-four year universities.

The broader initiative

This has three main aspects:

• Access and completion fund ($9 billion): This is designed to spur community colleges and states to launch projects designed to raise graduation rates and produce graduates who are ready for the workplace or for a transfer to a four-year university. Administration officials say such measures could include forming partnerships with major employers or bolstering counseling and remedial-education programmes.
• Renovations ($2.5 billion): Many colleges are outdated, short on class space and ill-equipped to handle IT. The funds are to be used as seed money to help raise private funding or to pay the interest on construction bonds and loans.
• Online curriculum ($500 million): This will be used to develop online curricula for community-college students.

The president said the programme is inspired in part by a Michigan programme that offers displaced auto workers tuition assistance at community colleges to seek retraining for alternative careers, such as in the health-care industry, which until recently has been expanding in the state.

Background on community colleges

(This is sourced from AACC material at http://www.aacc.nche.edu/Advocacy/aginitiative/Documents/talkingpoints.pdf)

• There are approximately 1200 community, technical, and junior colleges across the United States - 988 of them are public community colleges.
• Community colleges are everywhere - and they enroll more than 46% of all the nation’s college students. The most recent fall enrollment was 6.7 million students.
• Although final national figures are not available, community college enrollments nationally have increased by close to 10% in calendar 2009 in comparison to 2008.
• Community colleges enroll more than 50% of all African-American students and more than two-thirds of all Latino students. 39% are the first in their families to attend college.
• Community colleges are the fastest growing segment of higher education. As a sector, they have added more than 2.5 million students over the last five years.
• Community colleges educate 50% of all the new Registered Nurses, 80% of all first-responders (police officers, fire fighters, paramedics, and EMTs), and play a critical role in the K-12 teacher training pipeline.

Impact on for-profit sector

The community college initiative could have an impact on the fortunes of for-profit education companies that offer associate degrees, but analysts say funding for the program is not big enough to make much difference. The programme for community colleges could make them more competitive against firms such as Apollo Group Inc , Corinthian Colleges, ITT Educational Services Inc and Lincoln Educational Services Corp. However, they said the amount of money earmarked for the program would result in only a marginal increment in budgets for community colleges and have a small impact on these companies in the short term.

Analyst Trace Urdan of Signal Hill said, "I think, in general, though the amount of money is very large in the aggregate, it really amounts to only about a 3 percent increase in total operating budgets for community colleges."

In the for-profit sector, companies such as Apollo, Corinthian, ITT and Lincoln offer associate degrees, which have gained popularity as they offer flexibility to students looking to retool their skills in a tough economy. Most of these universities also offer bachelor and masters degree programmes. Analysts say community colleges lack facilities and flexibility that companies like Apollo offer. According to a filing with the U.S. Securities and Exchange Commission on June 29, Apollo's associate degree enrollment represented about 44 percent of its degreed enrollment at May 31, 2009. "We think for-profits will continue to outshine community colleges on student support services, flexible schedules, and lower teacher to student ratios," J.P. Morgan Securities' Andrew Steinerman wrote in a note dated July 14. However, if the dollars are applied to making these programs more successful, at some level it could eat into Apollo's business, Urdan said.

Obama's initiative to increase the number of graduates in the United States is likely to have little bearing on companies such as Strayer Education Inc, Capella Education and Grand Canyon Education. These universities are more focused on bachelors, postgraduate or doctoral degree programs. However, some say increasing the number of community college graduates could result in more students chasing bachelor's degrees offered by companies like these.

Funding

The US government plans to fund the new initiative with savings that result from proposed changes in the federal student loan programme. They have proposed eliminating private lenders from the programme and making the federal government the sole lender. Such a change would save $87 billion over the next decade, although it still faces opposition from private lenders.

Of the nearly 19 million graduate and undergraduate college students, about 6.7 million, or 36%, attend two-year colleges. With an average age of 29, they tend to be older than students at four-year universities and work longer hours at jobs outside the classroom. Many need remedial classes; fewer than a third earn their associates degrees in three years or less.

The initiative is designed to produce an additional five million community college graduates by 2020.

Community Colleges Online - details

Commentary

AACC comments that:

• Community colleges have been at the forefront of distance education. More than 90% of all two-year public institutions offer on-line programmes. More than two million community college students take on-line education courses each year.
• Distance education enrollments continue to grow on community college campuses - they increased by 11.3% in 2008, (according to the Instructional Telecommunications Council).

Analysts comment (reported from analysts for the London Stock Exchange):

• "Considering the online market was about $12 billion in 2008, that ($500 million) is not a big impact," Jeffrey Silber of BMO Capital Markets said. "It is my understanding that for-profit providers may be eligible to participate in this," Silber said.
• "It is premature to speculate at such an early stage on how this initiative will impact students' decisions on post-secondary education," a Universal Technical Institute spokeswoman said.
• Credit Suisse, however, said in a note dated July 15 that although the execution risks associated with the president's plan are high, it increases the risk that growth of the community college system's capacity could hurt for-profits' enrollment growth and pricing power in coming years.

References

1. U.S. Push for Free Online Courses, Inside Higher Education, 29 June 2009, http://www.insidehighered.com/news/2009/06/29/ccplan
2. Obama Plans Community-College Initiative, Wall Street Journal, 14 July 2009, http://online.wsj.com/article/SB124753606193236373.html
3. Background on President Obama's Community College Initiative, American Association of Community Colleges, 14 July 2009, http://www.aacc.nche.edu/Advocacy/aginitiative/Documents/talkingpoints.pdf
4. President Obama, Community Colleges, and Online Education, TerenceOnline: An eLearning Resource Center, 20 July 2009, http://terenceonline.blogspot.com/2009/07/president-obama-community-colleges-and.html
5. London Stock Exchange, STRAYER EDUCATION INC, 21 July 2009, http://www.londonstockexchange.com/exchange/prices-and-news/news/market-news/market-news-detail.html?announcementId=10116787
6. Community colleges go to the head of the class under President Obama's plan, The Star-Ledger, 23 July 2009, http://blog.nj.com/njv_editorial_page/2009/07/community_colleges_go_to_the_h.html

Related initiatives

For a somewhat similar but much smaller programme in the UK see the Online Learning Innovation Fund.

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