The University of Massachusetts is planning a major expansion of its online education programs, turning to a highly paid executive as it challenges more-entrenched competitors across the country.
Facing a decline in college-age students in Massachusetts and uncertainty about state funding of higher education, the university system believes it can find new money by serving out-of-state students willing to enroll in online programs.
Currently, the University of Massachusetts markets its online offerings only regionally.
“We’re not capturing [students] out of the market,” said Don Kilburn, who was recently hired as chief executive of UMassOnline, starting in January. “There’s room for growth.”
Kilburn, 61, is a former executive with United Kingdom-based Pearson PLC, an education publishing and assessment firm that has worked with US public universities to expand their online offerings. He ran the company’s North American division from 2014 to 2016.
UMass will pay Kilburn a salary of $403,000 in his first year, with the opportunity to earn as much as a 30 percent annual bonus, or more than an additional $120,000, if he meets the goals he set with University of Massachusetts president Martin Meehan.
Kilburn’s contract is similar to those the chancellors of UMass campuses across the state receive, said Jeff Cournoyer, a spokesman for the university system.
“We are elevating the UMassOnline CEO role to be more consistent with the leadership on the bricks-and-mortar campuses,” Cournoyer said in a statement. “The board imperative is to grow UMassOnline to ensure the financial sustainability of the entire system.”
Cournoyer added that Kilburn’s salary will be paid for by the online program’s revenue, which for the first time this past year exceeded $100 million. But UMass officials want to see revenue grow to about $400 million, with much of the new revenue coming from out-of-state students, Cournoyer said.
In the 12 months that ended June 30, about 30,000 UMass students took at least one class online; two-thirds of them were Massachusetts residents. The number of students taking only online classes at UMass is about 10,000, according to the US Department of Education.
Breaking into the national market will be challenging, said Peter Shea, an associate provost for online learning at the University at Albany, State University of New York.
Public higher education institutions, such as Arizona State University and the Penn State World Campus, have staked out significant ground and have a headstart.
Arizona State, for example, reported that about 30,000 students were taking online-only classes this fall, about three times UMassOnline’s enrollment.
Arizona State expanded rapidly several years ago, as an alternative to online, for-profit schools, which were under fire by state and federal regulators for predatory consumer practices, Shea said. “There is continued room for growth, but it’s going to be harder to achieve the growth with the competitive landscape,” Shea said.
Scaling up requires universities to invest in marketing, faculty, and advisory services to help ensure that students don’t just enroll, but have the tutoring and help they need to complete their classes and graduate with a degree, Shea said.
“It’s an ambitious initiative, for sure, to see that kind of revenue; there’s a significant investment they’ll have to make,” Shea said. “But they have a firm foundation to build on.”
UMass officials said they haven’t yet determined the investment they’ll have to make to expand the online offerings.
In the upcoming year, Kilburn plans to meet with officials at the five UMass campuses to develop a strategy for the future, he said.
The campuses currently host their own online classes and degree programs. UMass offers 150 online degrees and certificates, in subjects ranging from graduate nursing and business to a certificate in game-based teaching with technology. Students pay from $150 to more than $1,000 for each course.
The costs of running online classes are unclear, because each UMass campus spends money from its own budget to offer courses, Cournoyer said.
However, the trade magazine Inside Higher Ed has reported that about three-quarters of the total revenue from UMassOnline goes to operating expenses.
Kilburn and University of Massachusetts officials will determine in the coming months what programs to expand and how to increase enrollment. For example, it’s unclear whether UMass will continue to handle the marketing and recruitment of students on its own or hire a private company, such as Pearson or 2U Inc., to provide those services in exchange for a share of the revenue — as Arizona State and Simmons College in the Fenway have done.
“UMass has a great brand,” Kilburn said. “We will do everything possible to maintain that brand and not dilute it.”