Is online education saving money for colleges and universities?



There’s an assumption that online courses must be cheaper for colleges and universities to offer; but once again, there is no evidence that online courses, done well, are cheaper than face-to-face classes. In fact, there is considerable evidence that good online courses can be expected to cost even more than face-to-face courses.

Who says?

College presidents around the country, for one, are skeptical that MOOCs will help their bottom line. In a 2013 Gallup survey only 2% strongly agreed that MOOCs will be a solution for “the financial challenges colleges face.”[16]

Richard Ekman, President of the Council for Independent Colleges, offers one reason why: “Advocates … insist that [online] courses are more cost-effec­tive. This argument, too, is overstated: The presumed price advantage of the non­traditional approach all but disappears because the higher attrition rate and longer time-to-degree overwhelm any savings.”[17]

E-learning experts agree.

In fact, saving money is “one of the worst reasons” to get into online education, according to Joel Hartman, vice provost and chief information officer at the University of Central Florida.[18]

Phil Hill, an e-learning expect who has advised universities about developing online programs, has also cautioned: “Quality online education costs real money – registration systems, instructional design, course instructors, academic oversight and quality assurance, LMS and collaboration systems, student services, marketing and enrollment support. Someone has to pay.” [19] Many of these costs (and others such as IT infrastructure, technology maintenance, help desks, for instance) aren’t always obvious to non-experts in online learning and can often function as costly “financial gotchas” for institutions once programs are underway.[20]

Saul Fisher has provided perhaps the most detailed analysis of costs associated with online courses.[21] He begins by addressing the common belief held by the public, elected leaders, and even college administrators that online courses must be cheaper to produce than face-to-face courses. On the face of it, Fisher admits, the notion seems uncontestable. After all, there is no need for classrooms (and their associated costs); more students can be put in a class since space is no barrier; and fewer instructors are needed as a result. Fisher shows, however, that this “no-brainer” scenario is actually an unrealistic ideal because the efficiencies assumed to follow in online courses are either elusive or else offset by new costs that can outweigh any savings.

For instance, while there is an assumption that higher initial production costs for online courses can be recaptured through repetition of the course, all quality courses have limited shelf life that cuts into those presumed savings. What actually happens is that while short-term iterations of online courses may be cheaper (after high initial costs for production), costs rise sharply when it is necessary to re-create or retool the course.

As for the claim that more students can be enrolled in an online course than a face-to-face one, Fisher responds that this apparent “efficiency” has to be weighed against effectiveness or “quality of output.” As the dismal completion rates for MOOCs suggest, that “output” is uneven.

Even labor savings, Fisher shows, are an unfilled promise in online courses: “Instructional technologies MAY cut the need for INSTRUCTORS, but they ALMOST ALWAYS increase the number of persons needed to design, develop, deliver, support, and sustain instructional technologies—not to mention the costs of licensing software, obtaining rights to intellectual property, and training faculty and staff. When we add all these costs up, he concludes, “The comparable cost of the all-in-one faculty member found in traditional teaching environments begins to look far more attractive.”

Fisher could hardly be firmer in his conclusion about cost savings in online courses: “There can be no guarantees—or even rational expectation—that online instruction either becomes very inexpensive over time, or costs much less than traditional instruction.” In fact, “the ideal scenario is simply a pipe dream.” [22]