The Economics of Digital Classrooms: How Digital Learning May Change Kindergarten to College

By BenardF. Pettingill, Jr PhD and Federico R. Tewes, BA

The primary concern of high school students today is the high cost of a college education. In fact, more than 66 percent of college dropouts come from low-income homes, with family adjusted gross income (AGI) under $50,000. Nearly 75 percent of first-generation college students become college dropouts, accounting for more than one million students dropping out of college each and every year. Additionally, this group of low-income students must often work 12 hours a week or more, with every additional hour of work beyond 12 hours a week tends to reduce graduation rates because employment takes too much time away from studies. On the other hand, if the student comes from a family with AGI greater than $100,000 (high-income student), then they are 50 percent more likely to graduate from college. According to the 2020 Current Population Survey (CPS), the median income of this study ranged between $78,537 (females) and $85,414 (males) from a sample size of 326,063 total households. In other words, more than half of the American households are finding college prohibitively too expensive for the average family. According to student loan expert Mark Kantrowitz, “the student loan debt at graduation, including capitalized interest, should be less than the borrower’s annual income so that the loan can be repaid within 10 years or less.” If the total student loan debt is more than the annual starting income, the borrower will need an alternative repayment plan that becomes affordable by stretching out the term of the loan to 15, 20 or even 30 plus years. The total interest paid over the life of the loan will be significantly

burdensome, perhaps pushing the borrower to be less likely to have saved for their own children’s college education and will be less likely to help their children pay for college. The authors will show that the “traditional college education” with instructor-led classrooms is no longer a viable solution for more than half of all American households. Digital learning over the Internet is the quickest growing market in the education industry, with a whopping 900 percent growth since 2000. Statistics from this sector prove that online student enrollment in the United States has increased for over 13 consecutive years, while traditional college enrollment in the United States has been declining over the last 10 years. Five primary reasons for this explosive growth in digital learning are described below. First, digital learning via online courses saves educational institutions between$12 to $66 per credit hour, a saving that ranges from 3 to 50 percent of the average cost of one college credit hour. Second, digital learning can increase student retention rates by 25 to 60 percent, with 39 percent of American undergraduate students and 52 percent of American graduate students now considering online college-level education to be far superior to traditional classroom learning. Third, 22 of the top 25 United States universities now offer online courses for free, through a digital learning method style Massive Open Online Courses(MOOC). From 2020 to 2025, the global MOOC market is projected to grow at an annual rate of 29 percent, making it the fastest-growing market in all of education.

Fourth, 73 percent of global students are unaware of the existence of MOOCs, while North America represents nearly 30 percent of the global MOOC market. Fifth, more than half of MOOC digital learners have been educated at a degree level or even above, i.e. masters. For example, there is a non-profit MOOC platform called “edX” that was created by Harvard and the Massachusetts Institute of Technology (MIT)in 2012. As of this writing, it reports over 34 million learners globally, more than 100 million enrollments, more than 2,800 course subjects (in the humanities, math, and computer science), and nearly58 top-tier university partners from around the world. In the United States, digital learning is taking place as early as elementary school, with 45 percent of American elementary school students using digital learning tools on a daily basis. Furthermore, 45 percent of elementary school students state that their favorite learning methods are playing digital learning games and watching online educational videos. For middle school students, this use of digital learning tools accounts for 64 percent of all students respectively. The most common learning materials used in K-12 classrooms are online educational videos, apps, and software. Among American high school students, over 63 percent use digital learning tools daily. Given that the technology industry is such a significant player in the American economy, it is no wonder that 46 percent of females and 62 percent of male high school students say that they are now interested in studying computer programming.

Because of this early adoption plus the cost efficiency of this type of learning, the authors have no doubt that digital learning will replace traditional college classrooms within the next decade or less. Even big international corporations are taking note, for example, 87 percent of millennials and 69 percent of non-millennials consider career development to be an important part of a professional career, but 58 percent of employees prefer self-paced learning over instructor-led learning. Corporations are seeing impactful returns on investment, with $30 of increased productivity for every $1 invested in digital learning courses. We found data supporting the use of corporate digital learning at Dow Chemicals, Royal Dutch Shell, and Airbus, three giant companies from different industries. Dow Chemicals transferred from physical classrooms to online training courses and saw significant savings, reducing costs from the original $95 per learner to as low as $11 per learner, for a total savings of $34 million in 2021. One of the largest oil companies worldwide with 86,000 employees as of 2021, Royal Dutch Shell created a library of more than 12,000 virtual lessons to reduce the cost of their priciest training programs by 90 percent and save over $200 million. The world’s largest airliner, Airbus, employs nearly 132,000 staff members across 35 countries. Since establishing a virtual library with more than 6,900 online training courses, Airbus reported millions of dollars in savings and a positive effect on employee engagement and morale levels. In 2021, traditional college classrooms have witnessed the largest two-year enrollment drop in the last 50 years. Last year, tuition and fees plus room and board for in-state public colleges rose to $27,330 according to new data from the College Board, which tracks trends in college pricing and student aid. For low-income college students whose family AGI is under $50,000, this price is almost out of reach and may even require this group of students to supplement their family AGI with full-time employment in addition to full-time academics. This trend is unsustainable, and it helps explain why there are more than one million college students dropping out every year. Given the student retention and cost efficiency of MOOCs, it is becoming a realistic solution for more than half of the American households.

Like shopping malls of the 80’s, 90’s and 2000’s, traditional university settings are soon becoming the wastelands of further education. Endowments now seek to award digital scholars, professors who can teach remotely through face-to-face conference calls like Zoom and others, and proving to be more cost-effective than traditional classroom structure learning. As the cost of e-learning equipment and supplies becomes more and more reasonably priced, as digital textbooks replace bulky often expensive paper books, and as more and more students become aware of MOOCs and similar programs at more highly qualified colleges and universities, traditional colleges established in the 1900’s will vanish from the earth like the dinosaurs of old.

Champions of self-taught learning like Elon Musk, Bill Gates, Pieter Thiel, and thousands of others are paving the way for this transition every day. We need to embrace their futuristic leanings and fully embrace e-learning.

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