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This report has been updated from the original version.
In the past two decades, one of the most important innovations in the US higher education system has been the steady increase in distance education through online courses. College administrators have expressed strong support for online education, signaling that the current online expansion will likely continue. Based on a national survey of college administrators, almost half of all postsecondary institutions now include expanding online learning as a crucial component in formal strategic plans. Almost two-thirds of college administrators believe that developing online courses is crucial for the long-term strategy of their institution. Today, more colleges are offering online education courses, and more students are taking them than ever before.
While the supply and demand for online higher education is rapidly expanding, questions remain regarding its potential impact on increasing access, reducing costs, and improving student outcomes. Does online education enhance access to higher education among students who would not otherwise enroll in college? Can online courses create savings for students by reducing funding constraints on postsecondary institutions? Will technological innovations improve the quality of online education?
This report finds that, to varying degrees, online education can benefit some student populations. However, important caveats and trade-offs remain. Existing experimental and quasi-experimental studies on semester-length college courses typically find negative effects on student course persistence and performance. Research suggests that students in online courses are between 3 percent and 15 percent more likely to withdraw, compared to similar students in face-to-face classes at community colleges. This report examines distance learning’s effect on access, cost, and quality and concludes with a discussion about how strategies and policies can improve the effectiveness of online learning in higher education.
Distance learning generally refers to education that is delivered to students in remote locations. It includes a wide variety of learning environments that are different from the traditional brick-and-mortar classroom setting, such as telecommunication courses (in which instruction is delivered on videotape or through cable distribution to students studying at home), correspondence study (in which the instructor mails or emails lessons to students who work independently), and online courses (in which course content is delivered via the internet, sometimes through modules or websites). However, with advances in technology, online courses have become the primary format of distance education at postsecondary institutions.
The growth of distance education was once intentionally constrained by the “50 percent rule” of the Higher Education Act (HEA) of 1992.1 This rule denied federal funding for institutions with predominantly or exclusively distance education programs. Specifically, the rule dictated that institutions that offered more than 50 percent of their courses through distance education or enrolled more than half of their students in distance education courses would not be eligible for federal student aid programs such as Pell Grants, subsidized loans, and work-study funding. Since the 50 percent rule applied to institutions instead of programs, an education program could be composed entirely of traditional face-to-face courses and still lose its eligibility to federal student aid if it was offered at an institution that ran afoul of the 50 percent rule. Similarly, the HEA also denied access to certain types of federal financial aid and loans for students who took more than half their courses through distance courses.2
While all institutions and students were subject to the 50 percent rule when offering and enrolling in distance education, the rule particularly affected nontraditional students who often balance coursework with other job and family commitments. The rule substantially constrained the growth of for-profit institutions, which had pioneered distance learning to allow individuals to pursue further forms of education.3 Since the for-profit sector disproportionately serves adult learners, women, underrepresented racial minority students, and low-income students, educational opportunities for the most disadvantaged populations were substantially compromised due to the 50 percent rule.4
To promote new advances in distance education and to address the increasing demand, the HEA was amended in 1998 to create the Distance Education Demonstration Program (DEDP), which granted colleges waivers from the 50 percent rule. The DEDP-granted waivers grew from 15 institutions or university systems in 1999 to 24 in 2003, and the number of off-site students enrolled in distance learning programs more than doubled during the same period.5 In 2006, the HEA was amended again to discontinue the 50 percent rule, thereby spurring the growth of dedicated online institutions.6 The share of bachelor’s degrees awarded by institutions that offered exclusively online courses grew from 0.5 percent in 2000 to over 6 percent in 2012.7
At the state level, funding for online education programs and students enrolled in online classes varies. In 2015, the Education Commission of the States, through its State Financial Aid Redesign Project, analyzed statutes and regulations for the largest 100 state financial aid programs across the country.8 The report indicates that all states, except Pennsylvania, have eliminated the 50 percent rule from state-level policies. Several states have also explicitly promoted the growth of online education in their state budgets. For example, California committed $100 million in 2018 to create an online community college that will offer certificate and credentialing programs to primarily serve workers in need of new skills. The California state budget further committed another $20 million to expanding existing online offerings in the current brick-and-mortar campuses.9
Now that higher education institutions are generally unconstrained by state and federal policies from offering online and distance education courses, it is opportune to evaluate the benefits and drawbacks of online courses. How much has the expansion of online learning affected access to college, reduced costs, or improved student outcomes?
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