Shamus Ian Fatzinger -- Washington Post

Four hundred million dollars. That's how much was invested in education technology companies last year, according to Kevin Carey's excellent new piece in the Washington Monthly. Higher education is one of the hottest growing sectors in Silicon Valley, and with good reason. The college premium is enormous. College-educated men have seen their wages increase since the 1960s even as wages for men with some to no college education have dropped. College grads face much lower unemployment rates than other educational groups. The gains among advanced degree holders are even larger. So, unsurprisingly, demand for higher education is increasing.

But despite being a great investment, the upfront cost to college in terms of tuition is as high as ever, with real costs increasing by a third over the 2000s. So companies like Minerva, Coursera, and Udemy that promise high-quality courses delivered online are attracting a lot of investor attention. To date, online education has provoked a lot of sneering from folks who doubt it can deliver a product of similar value to brick-and-mortar educational establishments. But behind that is a real economic worry. If employers don't treat online coursework the same as traditional coursework, that would limit the gains to graduates in terms of higher wages and greater employment prospects.

Education researchers have actually conducted a number of studies about this. As of a few years ago, the findings were pretty bleak for the industry. A literature review in 2009 found that "all scholarly research to date has concluded that the 'gatekeepers' [human resources managers, executives, etc.] have an overall negative perception about online degrees." But online teaching has gotten a lot better in the past three years, and the results are starting to show up on surveys of employers. One study found that half of executives viewed MBAs earned online as no different from ones earned in person. That's still substantial stigma, though. If half of employers don't think your degree is worth as much as those of other people applying for the same position, that's not a great position to be in.

The hope of investors in these new firms is that they'll be able to reach people in developing countries who don't have access to any traditional university education, and whose college premiums will likely be much greater as a consequence. Also as more universities adopt online curricula and develop alumni networks, the employer stigma may start to dissipate. We have a remarkable way of getting comfortable with online activities (like credit card purchases, or dating, or book reading) that were previously dismissed as unworkable or creepy. But for the moment, online colleges haven't gotten to that point yet.

(The Washington Post owns Kaplan, which runs an online college service.)