(By JD King for Capital Business/By JD King for Capital Business)

A sea change is under way at the nation’s old guard of academic institutions as more degree programs work their way online, fundamentally altering not just the way colleges teach students, but how they make money while doing so.

The movement gained steam last year when private companies such as Coursera and Udacity began to offer online courses to the masses, taught by instructors at elite colleges such as Stanford, Harvard and the University of Pennsylvania.

Their introduction marks a watershed moment in the Webification of higher education, upending the entire business model by making expensive courses at selective universities available free of charge to countless people.

In many ways, Washington serves as a microcosm for trends reshaping the industry. Web-based graduate degree programs are cropping up at area business schools in particular, yet no two universities are taking an identical approach to online education.

The Association to Advance Collegiate Schools of Business, an international accreditation body, found 118 of its nearly 500 accredited institutions in the U.S. offered online-only master’s degree programs during the 2011-2012 school year. That’s up from 99 two years prior.

Dan LeClair, the association’s executive vice president and chief operating officer, said many more universities offer hybrid degrees that integrate online and classroom education. Future AASCB surveys will count those programs as well.

“The real opportunities are in using technology to enhance degree programs, not only make those programs accessible to a wider audience,” LeClair said.

“They’re all asking the question about what our strategy ought to be, which can be anything from, ‘That’s not for us’ to ‘We need to move from bricks and mortar to completely online,’” LeClair said. “Most of the interesting stuff is happening in between.”

University of Maryland business professor Hank Lucas spent two-and-a-half hours filming and editing an instructional video at his home office in Annapolis one morning last week. The end result, a 12-minute lecture for what is known as a massive open online course — or MOOC — that begins March 25.

The university has begun to pilot a handful of classes on Coursera, a platform where universities offer classes free of charge to all who are interested. Lucas’ course, ironically centered around industry-disrupting technologies, has attracted 12,000 prospective students to date, he said.

“It’s really, right now, a course people should take because they’re interested in the course, not for college credit,” Lucas said. “That means I don’t have to be concerned with having exactly the right amount of material in it. I don’t have to worry about testing or as many assignments.”

Still, Lucas sees a future in which such mass courses are offered for credit in exchange for tuition. For that reason, he said the university and its business school have to pursue new online course offerings proactively.

“There’s a sense on campus that we don’t understand everything about this. We don’t understand how it’s going to go. But we don’t want to be the last people in the world thinking about MOOCs,” Lucas said.

The 17 students in the inaugural class of George Washington University’s online MBA, a three-year program that debuted in January, log onto the school’s Web portal from as far away as Afghanistan and Singapore.

All of the students meet online at the same time once a week, but the majority of course instruction happens on individual students’ schedules. The course’s instructional videos depict the professor lecturing to a group of pretend students.

The image mimics the more intimate feel that comes with sharing a classroom with a small cohort of students, said Doug Guthrie, the business school’s dean. Otherwise online education can feel isolating, particularly in massive courses with limited person-to-person interaction.

“I think of us as the anti-MOOCs movement,” Guthrie said. “We really believe that in some cases if you completely strip down a course and totally change the pedagogical approach ...you can both build a better community and interaction between the teacher and the students.”

Guthrie expects subsequent classes of students could grow to about 40. One of its niche online programs, an MBA in health care, has enrolled as many as 80 students, though Guthrie said administrators believe a smaller size is more ideal.

Still, one benefit of the Web is that it allows George Washington to expand its student roster without violating the enrollment cap imposed on District institutions by the D.C. Council, he said.

Georgetown University’s business school intends to welcome its first crop of 50 students for an online master’s degree in finance next January. Online graduate degrees in leadership and international business and policy could soon follow.

The school plans to partner with a yet-to-be-named private company that will support the program’s technological backbone, while the university will dictate academic content and admissions, said Paul Almeida, the senior associate dean for executive education.

“It’s really important that the service provider has a flexible approach and model so we can build in systems and processes that ensure we continue to have control over our brand and student experience,” Almeida said.

Almeida added the school will also control the number of students admitted to the program and the level of interaction with faculty in an effort to ensure the program’s selectivity and academic caliber matches its in-person counterpart.

But working with a third party isn’t without its disadvantages. As more components of higher education move online, a trend Almeida anticipates will continue, he said universities ought to understand and drive their own technological innovation.

“To some extent by outsourcing certain parts of this activity, you limit learning and therefore your journey and progress in terms of where you need to go,” Almeida said.

The debate around third-party operators is playing out at American University right now as the business school looks to create an online version of its long-standing master’s program in taxation.

Talks with a private company to manage the online degree program stalled after a disagreement over revenue sharing, executive director Donald Williamson said. The university may instead pursue a model that blends Web and on-campus instruction, or create an online certificate that can be upgraded to a degree when paired with on-campus courses.

American replaced its part-time MBA program with an online equivalent last fall. That program requires students to come to campus one night a week for class discussion, a template that Williamson said his program could replicate.

But some alumni have expressed concern that an online degree will undermine the quality of the program, Williamson said, and eliminate opportunities to swap business cards and build a broader network in the tax industry.

“You won’t have the same connections and you won’t have the same loyalties and people won’t walk down the street and say, ‘Hi, Professor Williamson, I took your class 10 years ago,’” he said.

So why pursue an online equivalent? Because universities can’t afford not to, he said.

“Your market is going to demand it,” Williamson said. “If you’re out there in Tysons Corner and you could take a course at University of Denver online, you might be more apt to do something like that than take a course on campus and fight traffic across the river.”

George Mason University began an online version of its executive MBA program in January of last year to capture mid-to-top-level managers from around the region. With the exception of a two-week program in either Washington or overseas, instruction and student interaction take place entirely over the Internet.

The online program, created with Colloquy — an online education company owned by The Washington Post Co., parent of Capital Business — provides flexibility for students who couldn’t attend classes that otherwise meet on weekends and provides George Mason with a new stream of tuition revenue, said Jean-Pierre Auffret, director of executive degree programs.

“Then there’s the strategic and competitive aspect to at least have enough expertise in offering online programs very well so that we’re positioned well against others who are doing more and more online education,” he said.

That competition will be key. Well-regarded business schools around the region and country have sought to differentiate themselves and lure new students through faculty, specialized degrees and out-of-class experiences. Online education may well be the next battleground.

“There’s some market uncertainty as to where education is going to go over the next 10 to 15 years, so I think most business schools are at least trialing different things,” Auffret said.