Welch Bets Education Will Thrive Online

According to the Wall Street Journal former GE CEO, Jack Welch, is paying $2 million for a 12% share in the Chancellor university System LLC, which will convert the formerly bankrupt Meyer University of Cleveland into Chancellor University. Chancellor University aims to exploit a rising interest in online education by offering most of their classes online, including an online MBA program.

This news is in line with some notable trends; after years of serving the non-selective, unbranded college-going market, the for-profit schools are muscling into the turf of non-profit schools. And students are increasingly excited about learning online.

Boston research firm EduVentures Inc. estimates that 11% of the roughly 18.5 million U.S. college students took most of their classes online in the fall of 2008, up from 1% a decade ago. Online higher education will generate revenue of $11.5 billion this year, EduVentures says. But “there is a concern about quality,” says EduVentures Chief Executive Tom Dretler, because there’s “much, much less selectivity” of students in the admissions process.

This long standing issue of selectivity and quality has plagued online education programs since the very beginning. The way around it is to associate online education with reputable, competitive universities and rigorous, comprehensive course materials. It’s about offering a brand that people can trust and backing that up with the kind of educational program they would expect from such an institution.

Half the expense of graduate school is the opportunity cost of leaving a job. As students look for the convenience and savings of an online degree, schools with a top-notch program and reputation are poised to benefit. People like Jack Welch jumping into online education provides evidence that this shift is proceeding, and underlines the risks to and potential for existing schools.