Reinventing the Wheel

While seeking to make college more accessible, the Obama administration has launched a largely unnoticed assault upon the nation's vibrant market in online learning. As part of an ambitious bill designed to tighten federal control over student lending, the House of Representatives included a scant few sentences green-lighting a White House plan to spend $500 million on an "Online Skills Laboratory," in which the federal government would provide free online college courses in a variety of unspecified areas. The feds would make the courses "freely available" and encourage institutions of higher education to offer credit for them. The measure is now before the Senate.

It is not clear what problem the administration is seeking to solve. The kinds of online courses that the administration is calling for already exist, and are offered by an array of publishers and public and private institutions. Online enrollment grew from 1.6 million students in 2002 to 3.9 million in 2007. Nearly 1,000 institutions of higher education provide distance learning.

More than half a dozen major textbook publishers, and hundreds of smaller providers, develop and distribute online educational content. To take one example, Pearson's MyMathLab is a self-paced, customizable online course, which the University of Alabama uses to teach more than 10,000 students a year. Janet Poley, president of the American Distance Education Consortium, doesn't see the need for federal dollars to be spent "reinventing courses that have already been invented."

Rather than addressing these anti-competitive arrangements and cross-subsidies, the administration's "free" courses would hide true program costs from both students and taxpayers.

Tom Allen, CEO of the Association of American Publishers, has noted, "State-of-the-art, market tested and validated educational materials are already available and in use by millions of students at virtually every public and private college campus . . . . Why spend hundreds of millions of taxpayer dollars for the government to attempt to replicate products that already exist?"

If the administration is concerned about tuition, cost-cutting new providers like StraighterLine have made clear that the chokepoint today is not a lack of online materials but the fact that colleges offer them at prices approximating those charged to students enrolled in bricks-and-mortar instruction. Among the causes of price stickiness are credentialing and regulatory practices that impede the emergence of low-cost entrants; state-funded institutions that use new e-learning students to cross-subsidize other units; and proprietary operators that have happily responded to this cozy arrangement by competing on convenience rather than price.

Rather than addressing these anti-competitive arrangements and cross-subsidies, the administration's "free" courses would hide true program costs from both students and taxpayers. Furthermore, it is unclear how students, employers, or colleges would judge the quality of the courses.

Federal law has long buttressed academic freedom and intellectual pluralism by prohibiting the U.S. Department of Education from exercising control over "curriculum . . . or over the selection or content of library resources, text books, or other educational materials by any educational institution." However, once the Department of Education is sponsoring a freely available course financed with taxpayer funds, it will be difficult for any but the most expensive or distinctive institutions or providers to justify paying for an alternative offering.

Any short-term savings will come at the cost of the private sector's ability to keep innovating and improving. The administration and Congress might want to think twice about undercutting publishing and software--which employ a hefty share of the five million Americans employed in the "copyright sector"--when they are already wrestling with intellectual piracy and declining print sales.

Even as his administration has become the majority shareholder in General Motors and endorsed a "public option" to ensure "competition" in a health-care market already populated by more than 2,000 insurers, the president has taken pains to explain that he is acting reluctantly and only under duress--that, as he told Fortune magazine, he continues to be the same "pro-market guy . . . I always have been."

The president explained, "I still believe that the business of America is business. But what I also think is that with all that power . . . comes some responsibilities--to not game the system, to not oppose increased transparency in the marketplace, to not oppose fiscally prudent measures to balance our budget." Fair enough, but that makes it tough to fathom why his administration is moving to undermine productive enterprises, obscure price mechanisms, and spend a half-billion dollars to replicate existing products.

The Senate would do well to protect this "pro-market guy" from the empire-building being attempted by officials in his Department of Education. Does the president really want to add chief of the national Online Skills Laboratory to the list of his burdens?

Frederick M. Hess is a resident scholar and director of education policy studies at AEI.

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