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MOOCs are now for credit. At first, MOOCs seemed harmless enough. Yak herders in Tibet could “audit” courses at Yale or MIT: elite universities were giving away an important resource, but one that leveraged the internet to provide more for less and did not threaten our standard revenue models.

While it is clear that anyone with the tiniest desire can learn a great deal on the internet, this learning didn’t “count.” What still counts in higher ed are credits! Credits which are largely determined by the amount of time you sit on your rear in a physical classroom. The “credit” here is clearly going to the wrong part of the body.

It is impossible to stay current on what is happening in the MOOC world. In October Antioch U said it would offer MOOCs for credit through Coursera . Then Blackboard joined in.

Then last week, the American Council on Education agreed to start reviewing MOOCs, offered through Coursera, for possible inclusion in the council’s College Credit Recommendation Service, that currently certifies many non-traditional courses for transfer credit. Most of us already take many different types of transfer credit (mostly community college courses and AP scores). Get ready to add MOOCs.

MOOCs are now being offered to huge numbers of students, and they will only improve in quality. Soon, students will have lots of low-cost or even free options for most basic courses. These are the courses, Econ 1, Basic Chemistry, Calculus, Introduction to Anthropology, or History 101, for example, that most schools offer in a huge room with an army of TAs. With a dynamic lecturer, carefully designed assignments and close supervision of TAs, these courses can be good, but we know that much of the time these are a necessary evil. We offer them because they offer an economy of scale. It is also often our most vulnerable students (freshmen) who are subjected to most of these courses and we tolerate this, because we have not had a better option.

Now comes a new report from the National Student Clearinghouse on student persistence to graduation. Perhaps not surprisingly, 71% of students who first attain an associates degree and then transfer to a 4-year school, graduate with a BA. Kay M. McClenney, director of the Center for Community College Student Engagement at the University of Texas at Austin, said the report “debunks some myths” about the quality of instruction in community colleges.” The same will surely be true of MOOCs. The point is that success leads to success.

I suspect that we will soon have lots of MOOCs that are at least as good, or substantially better than the large freshmen courses most of us endured. So if I am a HS senior and I can take a couple of my freshmen courses before I start college at a much lower price (or even for free), and the quality (or success rate) is better, AND they transfer to my four-year college? Why would I not take a year off and live at home for free? Yes, some will want to join a fraternity or climb on your new rock wall, but they will still have the option of taking an “extra” course as a MOOC or doing a short course at the holiday or over the summer.

Colleges will have three choices.

One choice would be simply to stop offering the large lecture courses and essentially outsource them to MOOCs (sort of like we do AP and community college credits). This will work for some, but it has a problem. Most of those courses are cash cows. It is the small courses (hopefully where most learning occurs occurs) that also cost more money. How will we sustain this model without the cheap high volume courses?

Two, we could offer our own MOOCs. But, oh yeah, they are free. They are useful for branding, but even if we charge for the certificate, this is not likely to be a money maker, at least not for most schools.

Or three, we could make sure that our freshmen Econ 1 course is better than the MOOC. This would involve measuring learning (and not just giving grades) to truly demonstrate the extra value, but this will probably also cost more. On a simple level, it is probably easier to design and deliver a more effective course if it is smaller, but that immediately raises cost. (Of course, MOOCs have the same problem. At the moment they are being subsidized by elite universities and external philanthropy. If that continues, most schools will not be able to compete.)

Any way you slice it, colleges are going to have to pay more attention to cost and benefit, and especially to being able to define that benefit (LEARNING in my view).

I’d buy stock in start-ups offering new proctoring software.

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