Room for a Value Play in Online Education?

The cost of an associate's degree at Axia (UOPX's associate degree program) is just shy of $20,000. Compare this to a typical community college - Oakland Community College (OCC), located in the Detroit suburbs, charges $3,856 for an associate's degree.

So why would anyone possibly go to UOPX once schools like OCC get online? In my post, High Tuition as a Sales Tool, I discuss how high tuition can bring a certain exclusivity to a college and even increase demand. However, core customers of the for-profits - those looking for a basic no-frills college education - would choose OCC over UOPX any day if all else were equal. But will resource constrained community colleges like OCC will ever be able to offer students the same level of flexibility as Phoenix - high number of starts per year, accelerated programs, easy accessibility? Even big state schools that come online with a lot of resources charge much more than OCC - University of Maryland University College  or University of Illinois charge $12K - $15K for the first two years of an undergrad program.

What all this tells me is there is room for a value play in online education. Twenty years ago KMart stores canvassed the country but somehow Walmart found a way to turn KMart's business model on its head - doing it faster and cheaper.

Is UOPX today's KMArt? UOPX Online has operating margins exceeding 30%, sales and marketing expenses of around 20% of revenue and substantial G&A costs to boot. Can an ambitious school (non-profit or for-profit) strip out costs/margin and find a way to offer a degree for $5K-$10K with the same flexibility and options as UOPX? I think ten years from now it will have already happened!