The costs of College/Corporate partnerships



For a variety of reasons (including daunting costs such as those mentioned above and lack of technical expertise among most college administrators), many universities have begun contracting with a variety of companies to assist in expanding online programs.[23] These for-profit companies, such as Pearson, Embanet, Learning House, Bisk, Deltak, Academic Partnerships, 2U and scores of others are known as “enablers” or BSPs (Bundled Services Providers). They provide a wide variety of online learning services to universities, such as course development, marketing, and IT support.

Paying for these services can also drive up a college’s costs–significantly. According to Paul LeBlanc, President of Southern New Hampshire University, the companies usually take about 50% of all tuition revenue generated by the online courses using their services.[24] One for-profit company, Academic Partnerships, collects a full 70 percent (down from an original 80%) of the tuition revenue from one “partner,” Lamar University.[25]

Even more recently, established public and non-profit private colleges and universities are beginning to partner with MOOC providers, such as Udacity, Coursera, and EdX. Since MOOCs themselves are “free,” it might be reasonable to expect real “bargain basement” deals for colleges and universities, but that is far from the case.

Perhaps the most extensive analysis of costs of these partnerships for colleges is provided by Christopher Newfield, who has examined the contract between Udacity and Georgia Tech to offer a Master’s degree program in Computer Science. In “Where are the Savings?” he concludes that there are no significant savings for Georgia Tech in this deal.

Laboriously unpacking spreadsheets and contractual details, he discovers that Udacity and Georgia Tech will spend roughly $3.1 million for a projected 200 students the first term at a cost of roughly $15,700 per student per year.[26] Hardly a savings.

Further, to realize the $19 million in revenue projected for Year 3 of the program, the project will need 8,700 full-time paying students, an unreasonable number actually “larger than the total number of computer science master’s degrees granted in 2009-10 in the United States.”

Not only will this deal fail to save the university money; it could, according to Newfield, actually cost the university money over the long run while bringing huge benefits to Udacity:

Udacity gets the intellectual content for a master’s program of 20 courses at an upfront cost of $400,000. It borrows Georgia Tech’s reputation as its own, at a huge discount (no training of graduate students, no support for labs, no decades of accumulated know-how through which Georgia Tech earned its reputation). It acquires these courses for a proprietary platform: Georgia Tech cannot offer these OMS CS courses, created by its own faculty, to a competing distributor.

Udacity expects Georgia Tech faculty members to maintain and update course material, and can use their latest version. While requiring that Georgia Tech not compete with it, it can take Georgia Tech-created courses and offer them to tens or hundreds of thousands of non-registered students — and sell a program certificate for those courses. These courses will differ from Georgia Tech’s in being “minimally staffed to rely on course assistants only for student assessment,” but will use Georgia Tech’s content to compete with Georgia Tech’s and all other masters’ programs. With these courses, Udacity enters the master’s certification business, selling a complete degree program without a degree’s intellectual ecology, physical infrastructure, interpersonal venues, and sunk costs.

As uneven as it seems, the Udacity deal with Georgia Tech is not outside the norm in the MOOC arrangements with non-profit colleges that have been made public.[27] EdX, another MOOC provider that could be expected to offer better deals since it is a non-profit entity, requires that EdX get paid first—and paid handsomely. Even for courses developed by the home institution and simply delivered through EdX’s platform with no other services provided, EdX gets the first $50,000 from the course, an additional $10,000 for each repeat plus 50% of all revenue generated above that. Any services, of course, cost extra.[28]

The bottom line for public and private non-profit colleges and universities? While online service providers and “enablers” often promise and elected officials and others often believe that online learning will decrease a college’s costs, that is not what is happening.[29] If anything, we can expect even more pressures on colleges to increase tuition to cover the ever-expanding array of costs associated with the rush to go online.[30]

Why the push?

If online education isn’t saving money – and may actually be costing students and colleges more, why is there is such a push for more of it? The reasons are complicated, to be sure; but the fact is that snappy slogans, massive amounts of corporate money, and a great deal of wishful thinking have created a bandwagon mentality that is hard to resist.

Faculty who raise questions about costs, student success, or educational quality are often ridiculed as Luddites; and college administrators who weigh pros and cons can find themselves pushed to the curb.[31]

It is just much easier to join the crowd. Faculty, staff, and administrators who do so with enthusiasm and without question are regaled as “innovators.” Online supporters in state legislatures get credit for “doing something” about the higher education crisis and offering “solutions” that don’t require significant state investment.[32] Add to these pressures (as discussed in “The ‘Promises of Online Higher Education: Profits,” a parade of savvy corporate leaders promising unprecedented educational opportunity just around the corner (while making staggering sums of money along the way), and it’s little wonder the push is on.

But the real bottom line for students, their parents, and our country is this: There is simply no substitute for public investment in higher education, and there is no single cheaper teaching modality or low-cost “magic bullet” that will meet our need for qualified college graduates.

With all that is at stake for the futures of millions of students and for our society, a harder look at the real costs of online higher education is long overdue. At a minimum, there should be more complete accounting by universities of the costs to produce online courses, more comparative data on tuition prices for face-to-face and online credit-bearing courses, and greater openness and transparency about the terms of contracts between public colleges and online providers.