Online education, signaling, and human capital

•I consider how online education can lower time costs of the less able.•A lower level of education cost for the less able may increase welfare.•Fewer more able individuals implies a greater likelihood welfare rises.•Lower productivity for the more able implies a greater likelihood welfare rises.

Online higher education may lower educational time cost for less able individuals more than for others. If education merely signals ability, decreasing education cost for the less able may decrease welfare by increasing over-investment in education by the more able. When education adds to human capital and may signal ability, decreasing education cost for the less able is more likely to increase welfare the smaller the productivity difference between the more and less able, and the smaller the fraction of the more able in the population.