These days, online education is more popular than ever before.
About a third of students who are working toward their bachelor’s degree are taking at least some of their courses online. And the share of students taking online courses has increased 50% over the past six years.
At first glance, online education does look like a cost-effective option. At schools where 80% of students take all their courses online, students’ median federal loan debt is $10,638. Meanwhile, schools with no online focus report a median federal debt of $18,750 for students.
SOURCES:When it comes time to pay off those loans, students at online-focused schools seem to have a more difficult time. Half of the heavily online-focused schools have at least 10 percent of their former students give up on paying back loans within three years.
Students at schools without an online focus are more than half as likely to default on their federal loans. That’s no small matter. Default doesn’t just hurt a student’s credit score, it can damage future job prospects.
SOURCES:Why are these online-focused students defaulting on their loans?
The problem may be that they didn’t finish their program. Our analysis found students are much more likely to successfully complete a bachelor’s degree when they attend colleges with few, if any, online classes.
Students who complete a degree or postsecondary certificate are significantly more likely to start paying down their loan principal compared to noncompleters, reports Third Way.
The following graph compares the number of students, including full-time, part-time, those who began as freshmen, and those who transferred in, who are able to complete a degree within 6 years. At schools where 80 percent of students take only online courses, the median completion was only 26 percent.
SOURCES:Disadvantaged students bear a greater burden
Unfortunately, students who can least afford the setbacks of lower graduation and higher default rates are the most affected by these trends in online-focused higher education.
To illustrate this, let’s consider Pell grants: the percentage of students receiving Pell grants can show a rough, comparable estimate of student financial need by school because eligibility is determined by the federal government.
When you compare the share of Pell grant recipients between online-focused schools and schools with no online focus, it’s evident that schools with online offerings are serving a greater proportion of students with financial need.
SOURCES:Students with financial need are more likely to have attended high schools that left them under-prepared for college, and they can benefit greatly from academic intervention and personal attention.
But there’s reason to believe that the students who choose an online-focused school aren’t getting the same level of support as a more traditional school — Online schools spend significantly less money on student instruction.
SOURCES:In aggregate, our analysis finds that online-focused education may have some pitfalls for undergraduate students. Not all schools are the same though. For some of our measures, the top-performing online school may be better than the lowest traditional school. If you’re considering an online-focused program with a college or university, search through the schools in the chart and table below to see how they fared.
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