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Are Online Degrees Worth It? – Cost, Perception & Downsides

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According to a 2014 Pew Research report, Millennials – those born after 1980 – are the best-educated generation in the history of the United States. More than one-third have bachelor’s degrees, compared to one in four of their parents and grandparents.

This statistic may surprise many readers, considering the exponential increase in the cost of education during that period. According to the National Center for Education Statistics, a graduate in 1979 incurred less than $10,000 in education costs (in 2012 dollars), including room and board. By contrast, according to COLLEGEdata, a 2013 graduate spent almost $120,000 for the same degree and owed more than $33,000 in school debt as of graduation.

In an effort to stem the rising costs of higher education, colleges, universities, and for-profit institutions have turned to technology. Many now offer online classes, bachelor’s degrees, and even master’s degrees in which some or all work is done over the Internet. According to a Pew Research Report, 90% of public four-year colleges and universities and 60% of private universities offer courses online. And in 2011, one-third of all students were enrolled in an online course.

Perception of an Online Degree

The question of whether an online degree has less value than a traditional degree has smoldered for years. While online courses certainly have advantages and disadvantages as compared to their traditional counterparts, employer “gatekeepers” – receptionists, HR recruiters, and resume screeners – tend to be most concerned about the reputation and quality of the educational institution.

A 2013 study titled “The Market Value of Online Degrees as a Credible Credential” concluded the following:

  • Employers generally perceive that an education which includes classroom instruction is more credible than an online education
  • An employer’s attitude about online education is considerably more positive if the employer has had experience with online education
  • Employers remain uncertain about hiring candidates with online degrees

Another 2013 study confirmed that 56% of employers continue to value a traditional classroom education over online courses, indicating that they would prefer a candidate with a traditional degree from an average school over an applicant with an online degree from a top university.

Other findings include the following:

  • 61% of community college students agree that online classes require more discipline than classroom offerings, but 40% believe that students learn less
  • Many of the students taking online classes wish they had taken fewer of them

The conflict in students’ minds reflects many employer attitudes, although it is uncertain which group influences the other. In any event, the various reports indicate that online education continues to have a questionable image in the minds of many employers and students.

Online Degree Perception

High-Demand Jobs

Fortunately, this view is changing where some fields of study are concerned. A 2013 survey by the Society for Human Resource Management indicated that 87% of HR professionals in nursing and healthcare had much more positive views of online degrees than they did five years previous. In fact, 79% hired a candidate with an online degree in the past year, according to the SHRM.

As Megan Graham, vice president of workforce strategy and planning at children’s Healthcare of Atlanta, said, “We’d never look at someone’s degree and say, ‘Oh, it was online.’ We’d be more apt to say, ‘Wow, you got your bachelor’s.'”

Does an Online Degree Cost Less?

Students pursue online degrees for a variety of reasons. Many adults work full-time jobs to support families, eliminating their ability to attend school full-time. Others have all-consuming parental duties. Some students are located in areas where classroom instruction is not easily accessible, while others cannot assume the costs of attending a traditional brick-and-mortar college.

Generally, the total cost of a degree – tuition, fees, room and board, and books – is lower for an online education than a traditional full-time college. However, some universities charge more for online courses since they frequently cost more to develop and maintain. In addition, an online student incurs costs for a computer, software, and Internet fees that may not be necessary when learning in a traditional classroom setting.

In other words, tuition and fees are likely to be the same whether attending a school remotely or onsite, although there may be savings for an online student because of the elimination of lodging and board expenses. On the positive side, many employers reimburse staffers for all or a portion of college costs, without distinguishing between online or in-person attendance. New York University School of Continuing and Professional Education, among other institutions, recognizes that employers often reimburse after completion of a course and are therefore willing to defer payment of tuition until grades are distributed.

The Dark Side of Online Degree Suppliers

The desire for college degrees combined with the high cost of education led to an explosion of unaccredited “diploma mills,” where anyone who was willing to pay the fee was given a diploma. Accreditation is the process by which an independent, publicly recognized third-party organization validates or verifies that specific standards have been met and followed in granting a degree or certificate of competency. It is a quality assurance process intended to maintain the integrity of an institution’s instruction and mastery of the material by the student.

However, accounts of for-profit, unaccredited, predator online or correspondence schools have become front page news, especially where schools have encouraged and assisted students to obtain government loans to pay for their education. Such institutions knowingly defraud students enrolled in educational and vocational courses for the sole purpose of collecting fees and tuition, mainly through the three following tactics:

  • Misleading or overstating the commercial value of the training or education
  • Failing to qualify or address a student’s ability to handle course requirements
  • Delivering inadequate, incomplete, or incorrect course materials and instructions

As a consequence, naive, though diligent, students frequently wind up either dropping a course or receiving a worthless degree. If they have guaranteed payment, they are obligated to fork over tens of thousands in student loan debt. Many people erroneously believe that such abuses have been curtailed, even eliminated.

However, as recently as October 2014, at least one website currently offers “fast Bachelor, Masters, and Doctorate degrees” from privately owned universities for life experiences. The degrees can be issued as quickly as seven days after paying the fees – $389 for a bachelor’s degree, $409 for a master’s, and $419 for a PhD.

The most surprising claim of the organization granting such degrees is that “all member universities are privately accredited.” Such scams continue to bedevil the reputation of online education, especially for graduates of little-known or foreign colleges and universities.

The maxim “you get what you pay for” is not always accurate in the education world, but whenever a deal appears too good to be true, it’s probably not legitimate. The best advice when considering either a traditional or online setting for a degree is to avoid unaccredited institutions or institutions with accreditation from unknown agencies.

Online Degree Suppliers Dark Side

Student Loan Debt and Bankruptcy

Every potential applicant of government-sponsored student loans should be aware that since the passage of the Bankruptcy Amendments and Federal Judgeship Act of 1983, private student loans cannot be discharged or forgiven, even in bankruptcy. Even the student borrower’s death may not stop collection proceedings against spouses or guarantors. It pays to be extremely diligent in your decision to pursue an online degree, especially if you’re borrowing money to do so.

Acceptance of Online Degrees Varies Among Employers

Even as online education is becoming more appreciated and accepted by employers, Jason B. Huett of the University of West Georgia warns in the Atlanta Journal-Constitution, “Online degrees are not all equal.” A candidate seeking an online degree in order to become employed should consider all of the following.

1. Field of Study

Science, technology, engineering, and math (STEM) are likely to remain in great demand. However, many employers prefer a traditional setting for a STEM degree, believing that the experience produces a better-rounded, better-educated graduate.

At the same time, many online schools work directly with large employers to create a curriculum and experience that these employers would like their new hires to undergo. For example, HCA Healthcare, which owns hundreds of hospitals across the nation, consults with private, not-for-profit Western Governors University to be sure graduates have the skills the company needs. UPS is working with several community colleges to develop online logistics and supply chain programs, and the University of Phoenix is currently developing online programs in retail and hospitality management in conjunction with several national employers.

2. Sponsoring Institution

Name recognition and familiarity may be the most important factors in the evaluation of an online degree. When referring to schools that offer such degrees, reputation is as important to the student as location is to a retailer. Generally speaking, an online degree from a traditional, accredited university has more employment value than a degree from a solely online institution, even if it’s accredited and more difficult to achieve.

Online Degree Sponsoring Institution

3. Accreditation Agency

Avoid any institution whose educational programs are not accredited if you intend to use the diploma for more than a wall hanging. While students may not be familiar with accreditation agencies, employers know their value, particularly those with designated HR departments. They are likely to simply discard resumes featuring online degrees from non-accredited institutions.

The following agencies are recognized by the U.S. Department of Education as “reliable authorities concerning the quality of education or training offered by institutions of higher education or higher education programs they accredit”:

  • Accrediting Commission of Career Schools and Colleges
  • Accrediting Council for Continuing Education and Training
  • Accrediting Council for Independent Schools and Colleges
  • Council on Occupational Education
  • Distance Education and Training Council, Accrediting Commission

In addition to the above, there are a number of official accrediting agencies whose authority is limited to specific geographic regions and institution types:

  • Middle States Commission on Higher Education. Delaware, the District of Columbia, Maryland, New Jersey, New York, Pennsylvania, Puerto Rico, and the U.S. Virgin Islands
  • Middle States Commission on Secondary Schools. Delaware, Maryland, New Jersey, New York, Pennsylvania, the Commonwealth of Puerto Rico, the District of Columbia, and the U.S. Virgin Islands
  • New England Association of Schools and Colleges, Commission on Institutions of Higher Education. Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont
  • New York State Board of Regents, and the Commissioner of Education. This agency is restricted to degree-granting institutions in New York
  • North Central Association of Colleges and Schools, The Higher Learning Commission. Arizona, Arkansas, Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, South Dakota, West Virginia, Wisconsin, and Wyoming
  • Northwest Commission on Colleges and Universities. Alaska, Idaho, Montana, Nevada, Oregon, Utah, and Washington
  • Southern Association of Colleges and Schools, Commission on Colleges. Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Texas, and Virginia
  • Transnational Association of Christian Colleges and Schools, Accreditation Commission. Christian post-secondary institutions in the United States that offer certificates, diplomas, and associate, baccalaureate, and graduate degrees
  • Western Association of Schools and Colleges, Accrediting Commission for Community and Junior Colleges. California, Hawaii, the United States territories of Guam and American Samoa, the Republic of Palau, the Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands, and the Republic of the Marshall Islands, which offer certificates, associate degrees, and the first baccalaureate degree
  • Western Association of Schools and Colleges, Senior Colleges and University Commission. California, Hawaii, the United States territories of Guam and American Samoa, the Republic of Palau, the Federated States of Micronesia, the Commonwealth of the Northern Mariana Islands and the Republic of the Marshall Islands

Prospective students should be aware that these accrediting agencies are continually inspected to ensure that they meet required standards. Before enrolling in an online course, verify both accreditation and the accrediting agency, and confirm with any potential employer that the course work or degree you’re considering is acceptable. If you’re taking online courses to be transferred to another post-secondary school, confirm that the school recognizes the accreditation agency and accepts the online credits.

4. School’s Alumni Network

While online schools offer few opportunities for personal interaction, many have extensive graduate networks across multiple industries. For example, the University of Phoenix has an alumni network of 860,000 members in 30 chapters across the United States, a larger number of members than Penn State (616,000), Indiana University (580,000), University or Michigan (540,000), or the University of Texas (100,000).

Even though the value of an alumni network is difficult to quantify, there are reams of anecdotal evidence in which fellow graduates make favorable introductions, provide mentoring and counseling, become significant customers and suppliers, and, for many, offer access to entrepreneurial opportunities. The value of the network increases proportionally with the number of members, senior positions, diversity of industries, opportunities for interaction, and the degree of adherence by members within the network. As online universities build their alumni associations, graduates are sure to reap the benefits of association.

5. Employer Attitudes

Many employers, especially small and medium-sized companies, favor traditional degrees, likely because they’re more familiar with them. All things being equal, employers are probably going to judge your education based upon their own familiarity with the institution granting the degree. It is always easier to be hired at companies where other online graduates work than to have to break down the barrier yourself.

Employer Employee Attitudes

Final Word

Though fortunately views are changing, a degree from a traditional university with a focus upon classroom instruction continues to have more value in employers’ minds than a degree from an online, accredited institution of learning. In addition, physically attending a school allows the student to make valuable contacts with peers and instructors that are likely to pay future dividends.

Students seeking undergraduate degrees should carefully consider the factors that affect a school’s reputation, as well as their personal circumstances, before committing to one. Full-time classes are not possible for everyone, and online alternatives are certainly warranted – and, in some cases, even desirable. While a diploma may be necessary for consideration, it is rarely the most important factor in the decision to hire one candidate over another. Work history, references, appearance, personality, and interviewing skills are factors that can weigh as much in the final hiring decision as a degree.

Are you considering an online degree?

Michael Lewis
Michael R. Lewis is a retired corporate executive and entrepreneur. During his 40+ year career, Lewis created and sold ten different companies ranging from oil exploration to healthcare software. He has also been a Registered Investment Adviser with the SEC, a Principal of one of the larger management consulting firms in the country, and a Senior Vice President of the largest not-for-profit health insurer in the United States. Mike's articles on personal investments, business management, and the economy are available on several online publications. He's a father and grandfather, who also writes non-fiction and biographical pieces about growing up in the plains of West Texas - including The Storm.

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