Offering massive open online courses (MOOCs) could benefit a university so much that they might raise the school’s credit rating, according to a report by Moody’s Investor Services.
“We expect positive credit effects to develop for the higher education sector overall,” Moody’s said in the report. MOOCs cost universities a fair amount of money to create and administer to students, but they also represent a great potential revenue opportunity and a way to increase brand recognition to students throughout the world. These courses give universities a chance to experiment with online teaching methods, measure student learning outcomes and assess market demand for specific course subjects, according to Moody’s.
Massive open online courses are free courses that can teach thousands of students at once using collaborative online networks and video lectures. Schools can offer these courses to a virtually unlimited number of students around the globe. These types of courses are typically offered by elite universities that can afford the significant upfront costs involved.
The first MOOC, sponsored by the University of Manitoba, was offered in 2008. Since then, the popularity of these unlimited-enrollment courses has risen to over 100 offered in 2013, according to Ed Tech Magazine. The biggest course providers include Coursera, edX and UDACITY. Each of these platforms have millions of dollars in funding.
The Georgia Institute of Technology announced in May that it will offer a master’s degree in computer science using Udacity’s MOOC platform. It will offer the entire two-year master’s degree for just $7,000. Moody’s said this offering created positive credit for the university because the costs involved with the course would likely be outweighed by the long-term benefits to the university, which include the opportunity to diversify enrollment and increase revenues.
The Moody’s report only spoke about the potential impact of MOOCs on a school’s credit rating; offering the courses have not resulted in any actual changes to credit ratings. The report indicates that MOOCs are “credit positive” for the universities that are able to participate in the global education revolution by offering these kinds of courses to students. The massive online courses will have a potential positive impact for those schools.
But the MOOCs are “credit negative” for the schools that are not offering them. Their existence has the potential to reduce the credit rating on the majority of schools that are unable to afford the considerable investment required to offer a course to thousands of students at no charge. This does not mean that the schools have experienced a credit rating reduction at this point. No university’s credit rating is actually being downgraded for not offering these courses.
Moody’s reported last year that the MOOCs’ long-term impact on credit ratings will vary considerably from school to school. It said that, while the traditional residential college model remains viable, some of the smaller schools will experience lower student demand and credit stress if they are “unable to join emerging networks or carve out an independent niche.”
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