Who Will Online Higher Education Help?

Tyler Cowen and Alex Tabarrok, proprietors of one of the finest economics blogs on the Internet, are launching a cool new venture that they’re calling Marginal Revolution University aimed at doing online economics education and launching with a course on development economics.

It’s pretty clear that big change is coming to the higher education space through digital technology, but it’s also worth asking who’s going to really benefit from this kind of change. The key winner, it seems to me, is someone who’s intelligent, focused, and motivated but whose parents don’t happen to have much money. If you’ve got the inputs that make you a promising college student—the kind of person who selective universities would love to add to their roster—being able to learn at radically lower cost through online means is going to be a huge win. For starters, you might get an education on the cheap! But for second, the traditional college experience is still going to have lots of appeal and now selective schools will have to bid harder in terms of merit-based scholarships to try to get kids like you since you have a much better fallback option.

A related winner is conservative politicians who want to keep public spending low, but don’t want to say that low-income kids are permanently locked out of higher education. There’ll be much less need to pony up for Pell Grants if you can say smart poor kids should just get a cheap-but-functional education online instead.

Conversely, the student loan industry is going to have a big problem.

Unfortunately, what’s harder to see is how these trends are going to benefit the marginal college student in the United States. The kind of person, in other words, who these days tends to start a college career—typically at an unselective school—but all-too-often ends up dropping out. These are people who typically haven’t been incredibly well-prepared by their K-12 experience, who probably aren’t in the IQ elite, whose social and family networks aren’t full of college graduates, and who are only average in terms of motivation and discipline. That’s why they’re dropping out under present conditions. And they’re ending up not just with student debt, but with student debt that hasn’t purchased them much of anything in terms of valuable skills or credentials. Developments that help people like that are a real game-changer, but it’s not clear to me that anything that’s happening in the education technology space right now will really get us there.

Last but by no means least, some of the biggest winners here will be people living in poor countries where the basic logistical barriers to accessing quality higher education are often very high. I suspect it’s no coincidence that development economics—a subject likely to be of particular interest to that demographic—is where MRU is starting.