Colleges Using Online Courses Is Credit Positive, Moody’s Says

A quarter of students at U.S. universities use online courses toward their degree, signaling an adaptation to technology and student preferences, Moody’s Investors Service said.

Online courses remove geographic barriers to education, expanding the potential applicant pool and can help colleges that have capacity constraints, the ratings company said in a report this week, calling their use “credit positive” for the higher education industry.

“Although educational outcomes for online education are closely scrutinized, advancements in technology, online curriculum, and quality controls have made online education a more accepted and marketable tool for educational delivery,” New York-based Moody’s said. Still, schools must balance enrollment gains with increased competition, investment costs and reputational risks, it said.

More than 60 percent of students at four-year for-profit colleges exclusively use online courses, the highest rate in the industry.

At large public universities with enrollments of more than 20,000, more than 30 percent of students use some online courses, compared with about 10 percent at small liberal arts colleges with student bodies of less than 1,000, Moody’s said. Capacity concerns, greater economies of scale and a higher proportion of students requiring flexible schedules contribute to the higher use at large schools, it said.

“The entry of elite universities into distance learning, albeit primarily through non-credit granting courses, will help legitimize this form of delivery and reduce the stigma that has historically been associated with distance education,” Moody’s said.

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