Do online colleges make the grade?
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Cost of an online education
Getting educated by a for-profit online isn't cheap, but evidently it's not more expensive than the market will bear.

According to the College Board, the average sticker price for tuition and fees for in-state students at public four-year schools in the 2007-2008 academic year was $6,185; for private four-year colleges and universities, average cost was $23,712. Tuition and fees at for-profit institutions fell between the two extremes: $12,089.

"Tuition costs tend to be more expensive than at public, nonprofit institutions," says EduVentures' Gallagher, "but less expensive than at private nonprofit schools. But there is value in that students may be paying a premium for an accelerated program. They might be able to complete a degree within half the time it would take at a traditional university."

Because a school without a physical campus doesn't have to support sports venues and student centers, a much higher percentage of their resources are dedicated to instruction, he adds.

"A faculty member doesn't have to be located where the college is based," Gallagher says, "so they can use a national or even international pool. They tend to rely largely on adjunct faculty, so in the majority of cases the instructors have other jobs. The vast majority have degrees from a nonprofit school and have taught at a nonprofit."

Problems of credit and credibility
One of the biggest difficulties for online students is getting their credits transferred to another school -- a problem for many community college students, too, Gansler says.

"Credit transfer is such a subjective thing that there's never a guarantee," he says. "If someone attends a university that has national accreditation and wants to transfer to a regionally accredited school, sometimes there will be a problem."

But for the working adults who make up the majority of the online student body, Gansler says it's not an issue. "They're getting a degree to advance their career, not to be a professional student. So the notion of transferring credits would only occur if they went on for an M.A. or a Ph.D."

There's a similar dynamic at work in getting credibility in the job market, Breneman says. He finds that for most online graduates, their degree "helps them in their jobs internally, but they don't use them to launch a new career. That is true of most adult programs. In many cases, their employers pay the tuition, and they're not expecting they will go work for somebody else. It's almost like a fringe benefit of employment."

The challenge of using an online degree in the job market is greater for entry-level positions, says EduVentures' Gallagher. They are more commonly accepted for continuing education credits, though it varies by industry, he adds.

But beyond entry level, says Gansler, "Life experience is what counts, not the school you went to, which is a very rough proxy for whether you will be able to perform in a work environment."

Online education doesn't suit everyone, Gallagher says. "It's widely accepted among educators that online courses are more difficult in most cases because you need to be a self-directed student. We estimate that it's a good fit for between 33 percent and 50 percent of students."

"This is a niche market that largely focuses on adults," says Breneman. "They don't kid anybody that they are doing general education or liberal arts studies. What they offer is closer to training than education. So they're not going to take over from traditional universities, but they are substantial players. They're here to stay."