The MOOC That Roared

How Georgia Tech’s new, super-cheap online master’s degree could radically change American higher education.

Computer science students at Northeastern University, Palo Alto, California.
Computer science students from all over the country may soon be able to get a Georgia Tech degree without stepping foot on campus.

Photo by John Tlumacki/Boston Globe via Getty Images

Georgia Institute of Technology is about to take a step that could set off a broad disruption in higher education: It’s offering a new master’s degree in computer science, delivered through a series of massive open online courses, or MOOCs, for $6,600.

The school’s traditional on-campus computer science master’s degree costs about $45,000 in tuition alone for out-of-state students (the majority) and $21,000 for Georgia residents. But in a few years, Georgia Tech believes that thousands of students from all over the world will enroll in the new program.

The $6,600 master’s degree marks an attempt to realize the tantalizing promise of the MOOC movement: a great education, scaled up to the point where it can be delivered for a rock-bottom price. Until now, the nation’s top universities have adopted a polite but distant approach toward MOOCs. The likes of Yale, Harvard, and Stanford have put many of their classes online for anyone to take, and for free. But there is no degree to be had, even for those who ace the courses. Education writer and consultant Tony Bates recently noted that until top institutions begin putting a diploma behind their MOOCs, “we have to believe that they think that this is a second class form of education suitable only for the unwashed masses.”

While many universities now offer online degree programs (which don’t have the massive numbers of students as MOOCs), they are almost always priced at the level of their traditional on-campus programs. George Washington University’s online MBA Healthcare degree, for example, costs the same $1,485 per unit (52.5 units gets you to the finish line) as the standard program. The reasons for this are many, but perhaps the most important is that universities are terrified of debasing the value of their diplomas.

Drop the price of the online degree, the logic goes, and you could have a Napster-like moment sweeping college campuses. Revenues spiral down as degree programs are forced to compete on tuition. That’s a terrifying prospect for universities, which have depended on steadily rising tuition—growing at more than twice the rate of inflation—to cover costs.

Georgia Tech’s new program, though, throws a monkey wrench into the system by reordering the competitive landscape. U.S. News & World Report ranks the computer science department among the nation’s top 10. The new degree—which is a partnership with MOOC pioneer Udacity—is intended to carry the same weight and prestige as the one it awards students in its regular on-campus program.

John Backus, the chief executive of Atlantic Ventures, which invests in a number of higher-education companies, asks: “Why would you go to XYZ college, pay three to four times the amount, when you can get a master’s degree more cheaply and from a better school?”

Across town from Georgia Tech, Emory University, with a less prestigious computer science department, offers a master’s degree for around $40,000 in tuition. Plenty of other mid-tier schools also could find themselves struggling to justify their high sticker price. A year of tuition at Boston University’s graduate school costs in excess of $43,000; Washington University in St. Louis is $44,000. Living expenses and other fees can drive those figures up even more. At most programs, Georgia Tech’s included, a few master’s students get teaching or research fellowships, but financial aid opportunities are usually hard to come by. Many master’s students finance their tuition by taking on debt.

There are still a lot of questions about whether an online program with thousands of students can measure up to a campus-based program that enrolls about 130. Chip Paucek is the founder of 2U, a firm that provides online course platforms to universities, such as Georgetown University’s Master of Nursing program. He insists that even with an online program, you can’t just add students without compromising quality. “Nearly 1,000 students receive live training each week in classes of 10–15 students,” he says, adding, “Could we reduce the cost of instruction by doubling or tripling the size of the live classes? Sure. But we are confident that doing so would undercut the learning experience.”

Even Zvi Galil, the head of Georgia Tech’s school of computing who is launching the new program, is wary. “This is uncharted territory,” he says. But, he warns, if Georgia Tech doesn’t do this someone else might come along and do it first—grabbing the notoriety, the students, and the revenue. “There is a revolution. I want to lead it, not follow it,” he says.

The idea for the program first came about last fall when Udacity founder Sebastian Thrun met up with Galil, and, with typical Silicon Valley swagger, proposed creating an online master’s program for $1,000.* The pair got to work on it. Both Thrun and Galil recite the well-worn MOOC talking points. “How can we reach people we can’t reach today?” asks Thrun. “Online is one way. Price is another.” They also say that offering a computer science degree on a massive scale can help alleviate the demand for talent in the job market.

Currently, Georgia Tech receives about 1,400 applications for its computer science master’s program and accepts less than 15 percent. Galil insists that more than half of the applicants, however, could actually handle the work. He says there is no reason why the online program, by its third year, shouldn’t be able to admit all the applicants who meet the minimum standards. Many applicants are from overseas. With the new MOOC-style program, hurdles such as obtaining student visas melt away.

As currently configured, MOOCs have plenty of failings. According to one recent study, the completion rate is generally under 10 percent. Cheating can be rampant. Neither of those would do for a program that costs money and delivers a prestigious degree. So Thrun and Galil began building what they call “MOOC 2.0.” That means baking in a lot of human oversight and interaction into the system. It includes student advising, some tutoring, and even the hectoring to turn in homework on time that happens in a traditional course.

However, another consequence of Georgia Tech’s exercise is to lift the kimono on the crude math that universities use to figure out what to charge. (The site Inside Higher Ed obtained documents that outline the cost breakdown and did an analysis.) A $2 million initial gift from AT&T—which plans to enroll some of its employees—helped defray the start-up costs. That means that even with the bargain-basement tuition, both Georgia Tech and Udacity expect to split a modest surplus of $240,000 from year one.

As the program scales up, the costs increase, but the anticipated revenues grow faster. By the third year enrollment is estimated to hit more than 2,000, more master’s students than the department has graduated in the past 20 years. That year, costs are projected to be $14.3 million, revenues $19.1 million.

Georgia Tech’s current on-campus program also brings in revenue that exceeds its costs, though the university says it is difficult to put a hard figure on how much. In recent years, universities across the county have rolled out new master’s programs—particularly in subjects that are required for state licenses, such as teaching or psychology. Often, these turn out to be cash cows because of the high tuition and low levels of university financial aid. But Georgia Tech’s MOOC master’s, with its ability to scale up dramatically, could potentially dwarf the returns the university has seen previously.

“It’s a complicated formula,” says Thrun. “The bulk of the costs are the face-time. The platform itself is the cheapest component.”

Some of those costs have big implications for the campus pecking order: The plan calls for hiring course assistants who aren’t drawn from the ranks of graduate students. Instead, they will be people with some expertise in the subject matter. Galil said that some could even be recent graduates of the online program; others might not have master’s degrees.

As Georgia Tech moves ahead, one of the first casualties may be the university’s own on-campus computer science master’s program. Charging an out-of-state student $45,000 to show up to class on time might be a tough sell when the same degree can be had for a fraction of the cost.

Galil guesses that some students might be willing to pay extra for the in-person contact or the chance to connect with corporate recruiters visiting campus. But he assumes that many others won’t. The on-campus program could shrink, he says, but adds, “So what?”

Correction, July 23, 2013: This article previously misspelled the surname of Sebastian Thrun. (Return.)