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How Credit Acceptance Can Jumpstart Education Innovation

Posted in CEO Jose Ferreira on February 26, 2013 by

Education has always been resistant to change. It is such a high-stakes industry — right up there with food, shelter, and medicine in importance — that practitioners are reluctant to try unproven innovations that could possibly lower outcomes.

Regardless of industry, innovation is by its nature nearly always incremental. Tectonic innovation is extremely rare. It is only by adding myriad small innovations that most industries see steady product improvement over time. But, until recently, education has been one of the world’s most difficult industries to measure and, of course, it is especially difficult to measure small changes. Education is also one of the most expensive industries per capita. Especially in so huge and crucial an industry, there has never been and never will be any appetite for widespread adoption of small improvements with little or no data to recommend them.

Historically, this has stifled innovation — both from within the industry and from outside entrepreneurs. Last week, I was fortunate enough to sit down with a small working group of education entrepreneurs and policy makers in DC to discuss ways to promote positive change. It was organized by AOL Co-Founder and Revolution CEO Steve Case. In addition to U.S. Secretary of Education Arne Duncan, Under Secretary Martha Kanter, and Asst. Deputy Secretary Jim Shelton, the group included 2U’s Jeremy Johnson, StraighterLine’s Burck Smith, Chegg’s Ann Dwane, Echo360’s Fred Singer, Blackboard founder Michael Chasen, Knewton COO David Liu, Ujjwal Gupta from BenchPrep, and Donna Harris from Startup America.

During the conversation, I advocated strongly for the government to play a prominent role in encouraging institutions at all levels to expand their credit acceptance policies to accept — without friction — online courses from any other legitimate school. I am convinced that no other one policy would do more to accelerate education innovation.

Right now, nearly all higher education and K-12 schools will readily accept credits from in-person courses that their students have taken at other schools. As the number of online courses from accredited schools continues to grow, it only makes sense that schools accept credits from these courses as well.

I believe that widespread credit acceptance for reputable online courses is in fact inevitable within a decade. But who will get there first? The schools and colleges (and even nations) that do will have a long-term advantage over those who wait. If we encourage schools to start accepting these credits right now, without onerous terms and conditions, we will encourage more schools to produce high-quality online courses — which will encourage more students to take them and more innovators to power them, with ever better features.

So let’s first play out what effects this credit acceptance would have, and then look at how best to implement it.

Students would have access to an exponentially greater number of courses, in subjects they wouldn’t encounter otherwise. A community college student could experiment with courses in subjects her school doesn’t offer, or from four-year schools she’s interested in attending. An ambitious high-schooler lacking local A.P. course offerings could take them online. Elementary school kids would have a huge selection of language courses to choose from (currently, many elementary schools do not offer any on-ground language classes, even though this is the best time for kids to start a second language). A student who, due to her unique developmental path, should be in higher-level or lower-level courses than the rest of her cohort, would be able to do so online without stigma. Home-schooled kids, kids with special needs, kids who just want to do a little extra — all would have a huge online library of classes to choose from.

Schools offering online courses in what they teach best will earn high margin revenue they can put to good use in their on-ground operations. Schools buying those courses will provide increased academic opportunities for their students at relatively low cost. In some cases, those schools could charge the provider school a processing fee and turn the acceptance of online credits into a modest profit center. (Or perhaps they could charge parents and/or receive state financing assistance.) The schools accepting these credits would also free up additional capacity on campus. This would benefit all types of schools: colleges and private schools could accept more on-ground students and generate much more tuition, while public schools could reduce classroom-overcrowding problems. (In New York City, these problems have reached such proportions that students are commonly denied entrance at their neighborhood public school and bussed across town instead.)

This new credit “marketplace” would also solve many of the problems that currently impede innovators. For one thing, it would significantly improve measurability. Online courses are possible to data mine in a way that on-ground courses are not. Knewton can passively measure a student’s concept proficiency down to the percentile. We can also measure a student’s engagement, and see how it directly ties to learning. Other education technologies offer additional data and many other services. With hard student outcomes data, online learning technologies that work will spread quickly, as useful technologies do in every other Internet industry.

Another benefit of such an ecosystem is that it would consolidate activity and buying power. Right now, entrepreneurs are so daunted by selling to schools that many are dissuaded from entering the industry altogether. Of those who try, many cannot raise capital from leery investors, or find that their distribution model (selling to one school at a time, long sales cycles, many stakeholders with veto power…) is impossible to scale. An ecosystem in which the best ideas can be measured and easily distributed would also help the natural entrepreneurs already inside the system — teachers! — whose good ideas and best practices would spread.

The most important concern in promoting an ecosystem of ready online credit acceptance is maintaining quality standards for every online course. So let’s do it in stages. Public schools should accept online credits from other public schools. Colleges should accept them from other accredited colleges. The standard ought to be that if the school would accept another school’s credit from a transferring student, it ought to accept their online credit as well — or at least have a very good reason not to.

Perhaps the U.S. Department of Education could kick things off with a “Master List” of schools from which they encourage other schools to accept credits. It would be more bully pulpit than hard policy, but it’s a start. If desired, schools could at first accept the credit only — not the grade — to guard against students choosing online courses to game their GPA. Schools producing inferior online courses could be removed from the list if necessary — though negative ratings from other schools that had tried their classes would be a better policing mechanism. Eventually, non-traditional schools and for-profit companies could be added to the Master List, but only if they were able to demonstrate comparable quality (perhaps via exit exams).

As the educational landscape continues to evolve rapidly, it’s incumbent upon all of us — policy makers, entrepreneurs, teachers, administrators, students, and other stakeholders — to support the good while minimizing the bad. Encouraging widespread credit acceptance of online courses from reputable schools is the most immediate, and least disruptive, way to turbocharge innovation and demonstrably improve outcomes for students and schools.

This post was originally published in the February edition of Knerd Dispatch, the Knewton newsletter. Subscribe here.