On a warm spring evening, hundreds of investment bankers, venture capitalists and geeky tech entrepreneurs gathered near the pool at the Phoenician, a luxury resort outside Phoenix, for a high-profile gathering of education innovators. As guests sipped cocktails and nibbled hors d'oeuvres, the mood was upbeat.

And why not? Major innovations — forged by the struggles of the Great Recession and fostered by technology — are coming to higher education.

Investment dollars are flooding in — a record-smashing 168 venture capital deals in the United States alone last year, according to conference host GSV Advisors. The computing power of "the cloud" and "big data" are unleashing new software. Public officials, desperate to cut costs and measure results, are open to change.

And everyone, it seems, is talking about MOOCs, the Massive Open Online Courses offered by elite universities and attracting millions of enrollees worldwide.

As with so many innovations, the technology is bubbling up mostly from the United States, fueled by American capital chasing profitable solutions to American problems. But as with those past innovations, the impact will be worldwide — in this case, perhaps even more powerfully in developing countries where mass higher education is new.

Global demand is surging. And college tuition dollars — including, in the United States, $200 billion annually in federal student financial aid — follow the students where they choose to enroll, making the market more competitive and open to innovation.

The 1,500 attendees here— up from a few hundred in recent years — agreed on the surprising origins of this spring-like moment: the wintry depths of the financial crisis that struck five years ago.

"People started to say, 'How do we do more with the resources we have?'" says Jim Shelton, the U.S. Department of Education's top innovation guru. "Technology has almost always answered that question for other sectors."

Richard Demillo, director of the Center for 21st Century Universities at Georgia Tech, puts it another way: The Great Recession exposed structural flaws in higher education. The system simply cost too much and accomplished too little.

"Everything from cost to price to the mission of universities kind of went under the microscope," Demillo says. "Enter technology."

What does this wave of educational innovation entail? To be sure, it includes the MOOCs and all sorts of "adaptive learning" software that promises to teach and measure some things better and more cheaply than a human teacher. The idea is to free up teachers for what they do best, not replace them, advocates insist, though many people are skeptical.

But in some ways, the innovation is broader than the technology itself, which many call cool but not yet revolutionary.

Recent financial pressures and these new technologies are opening cracks in traditional, age-old structures of higher education. Terms like "credit hour" and even the definition of what it means to be a college are in flux.

Higher education is becoming "unbundled." Individual classes and degrees are losing their connections to single institutions, in much the same way iTunes has unbundled songs from whole albums and the Internet is increasingly unbundling television shows and networks from bulky cable packages.

"The consumer, after five years on a tablet and five years on an iPhone, is just sick of being told 'You can't do that," says Brandon Dobell, a partner at William Blair & Co., an investment bank and research firm based in Chicago. "I can do everything else on my phone, my tablet. Why can't I learn as well?"


We've been here before. Every new technology promises to transform education.

In the 18th century, the U.S. Postal Service brought correspondence courses. In the 1930s, the big radio networks talked about turning the airwaves into a university for the masses. The Open University, launched in Britain in 1971, promised much the same for television. The Internet produced online learning — now 20-plus years old.

All those technologies had some effect. But traditional universities are still around, and still dominant. Technology didn't solve the scale problem: One teacher can lecture millions of students online. But truly "teach" them, with personal feedback and interaction?

"There's an endless faith in education in technology," says John Meyer, a Stanford University sociologist of education, and skeptic of the latest trends. "Right now, there's a kind of binge of belief that the Internet will solve the problem."

But the arrival of MOOCs, barely a year old, has many believing this time is different.

At his desk at a telecom company in the Nigerian capital of Lagos, Ugochukwu Nehemiah used to take his full one-hour lunch break. Now, he quickly devours his meal, then watches his downloaded MOOCs. He's finished three so far, with two more under way — courses in electronics, business and disruptive innovation, taught by institutions like the Massachusetts Institute of Technology and the University of Maryland.

Nehemiah needs a master's to advance at work, but cannot afford the program in England where he's been admitted. The MOOC learning doesn't translate into a widely recognized credential, but he cannot get such teaching locally, and it's helpful regardless.

"It's a form of self-development," says Nehemiah, a father of two. "The way I would speak when I have meetings to attend," he adds, "would be much different than the way I had spoken if I had not taken this course."

Some MOOCs are only a modest step-up from glorified lecture videos. But the star power of famous professors has helped make them hugely popular.