by Michael Cronin

Created on: January 19, 2011   Last Updated: January 23, 2011

For working adults, online education has provided an option for returning to the classroom that is not only a more practical option, but is also the only option that some full-time employees and parents have. An adult learner with no previous college experience could spend up to eight years attending a traditional college on a part-time basis to earn a four-year bachelor’s degree. It is nearly impossible to work full-time and attend college full-time unless the student has an incredibly flexible work schedule. For many, attending school online offers a practical flexibility that makes continuing education more realistic.

Online universities have developed a bad reputation over the years because of the target market that they cater to. Many online universities are for-profit businesses that market their product to students that qualify for the most financial aid dollars. This type of guaranteed funding provides a great revenue stream for these online entities that are, on average, vastly more expensive than their brick and mortar counterparts. All of this funding goes from the federal government to the for-profit school and the student is then responsible for repaying the government and the school keeps the cash. In this way, it is in the best interest of the school to keep the student enrolled regardless of their performance.

The technology is there to make online learning just as competitive, but the regulation of online universities has recently been called into question. Congress and the US Department of Education are fearful that the default rate on student loans could be the next major default crisis and rival the sub-prime mortgage debacle. The outstanding student loans in the US are equivalent to the outstanding balance of the entire credit card industry - $750 billion. While online universities only enroll 10% of all of the students currently attending college in the US, students that attend online universities are responsible for almost 50% of student loans in default. This has caused congress to urge the passage of new regulation and what they call a “gainful employment” stipulation.

The idea is that because so many students attending online universities cannot pay back their student loans, the online schools are either charging too much or they are not preparing students for the workforce once they finish school. Often times, even when a student finishes with a degree, the wages that they thought they could earn are nowhere near what employers are offering. This type of regulation is in direct conflict with president Obama’s plan to have degrees in the hands of as many people as possible by the year 2020.

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