Do online degrees pay off? It depends, experts say

Particular programs may be better than others

According to a new study, online education programs may not pay off for their students. 

The working paper, conducted by Stanford University economist Caroline Hoxby and distributed by the National Bureau of Economic Research, aims to measure the value of online degree programs for their students. To conduct the study, Hoxby analyzed Internal Revenue Service data of Americans who attended online college programs between 1999 and 2014.

Hoxby found that after completing these online programs, students receive an earnings increase of more than $16,000 annually. But the cost of loans and grants can exceed $10,000 annually—and loan default rates for these students can exceed 10%.

However, Hoxby did not compare the outcomes of individual programs. Experts say this makes it difficult for colleges to act on the findings.

"It's hard to say whether online education in and of itself is inherently problematic or whether certain models can be successful," Joshua Goodman, a professor at Harvard University's Kennedy School of Government told MarketWatch. If done right, Goodman argues, online programs "can provide a decent education at a fraction of the cost."

According to Goodman's research, Georgia Institute of Technology found success with online education by setting admissions standards comparable to that of the brick-and-mortar school. This is unusual among online programs, Jillian Berman writes for MarketWatch.

Jarrett Carter of EducationDive writes that colleges should focus on the industrial value of online degrees and align them with areas where demand for credentialed workers is growing (Carter, EducationDive, 2/28; Berman, MarketWatch, 2/28).

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