Notes on Tuition and Online Higher Education (A Response)

Derek Newton generated considerable attention in his article, "Why College Tuition is Actually Higher for Online Programs" (Forbes, June 25 2018). Newton is right to bring more attention to the cost of online education and whether these costs are reflected in the tuition charged online students. But the article inadvertently misrepresents two important issues.

Credits, Not Engagement

First, the author describes MOOCs as a “disaster” which "proved that simply putting content online was not going to work". Students, he argued, need interaction and be engaged - not just online content. While student engagement is obviously a marker of learning, it has little to do with the capacity of the model to catch on as NMC, for example, predicted in 2013.

The people behind MOOCs made the supremely optimistic assumption that colleges and universities would accept these courses for credit. But these institutions are disincentivised to provide university credit for courses produced and managed by other parties - for two reasons:

  1. The practice of accepting MOOCs as credits by institutions conflicts with how institutions and their faculty understand and promote their value to the outside world. Higher ed professionals define their institutions - to themselves and the public - as a source of intellectual capital. Universities hire and reward faculty on this basis, as do research grants. Using courses produced by faculty at other institutions directly conflicts with this logic - and in a loud and very public fashion. (MOOCs are one of the few things about higher education that caught the attention of major news organisations over the last twenty years. A variation on the "man bites dog" story.)
  2. An institution reduces its revenue when it accepts for credit produced and offered by another institution (or a MOOC provider like Coursera, directly). If, for example, a student enrols in 20 courses during the life of a Bachelors’ degree, the institution is giving up 1/20 or 5% of tuition. However, the total loss of revenue is greater because (a) the bulk of MOOC courses/programs target large enrolment courses (for obvious reasons) and (b) many students don’t complete their degrees. (Note: Calculating the financial impact will depend on the institution’s retention rate, the enrolment of the specific courses involved, and the funding formulas of the relevant jurisdiction. Public funding formulas can be calculated by discipline (e.g., STEM v Humanities), course level (e.g., first-year v fourth, and performance-based measures). The results are similar if the institution produces the MOOC itself and offers it for free or at a reduced price.

I should note, too, the question of credits (to offer the course for credit or not) is also at the heart of the oft-repeated criticism that MOOCs are not suitably engaging. Yet, if we're entirely honest, we need to ask ourselves what might be the completion rates of the courses and programs our institutions offer each if, like MOOCs, they were non-credit, free of charge.

It's these kinds of challenges that knee-capped the potential of MOOCs to change the economics of online higher education, not the student experience, as Newton suggests. It's also the reason why most well-known MOOC providers scurried off to the corporate market where no such conflicts exist. (Does anybody remember University Next?)

Currently, MOOCs operate primarily as a marketing tool. Institutions will accept MOOCs for credit if it is produced by the home institution AND it is part of a student's more substantial, multi-course commitment (e.g., part of a Bachelors' degree). This is a lead generation tactic, then; a marketing strategy to attract students to a particular institution by offering them something at little to no cost. If the student wants the course to count as a credit, they must enrol in a full program of study. Lead generation isn't exactly consistent with the "spirit" of MOOCs as first advertised.

Distinguishing Cost Models

The author states that "designing new courses on new platforms can cost hundreds of thousands, even millions of dollars. That’s before the first student enrols.”

“While that’s pricy (sic), it’s significantly less than it used to cost. Not too long ago, a new online program could run up to $15 million. Some schools that jumped in the online game early and shouldered those higher costs are still paying them down, leveraging today’s tuition to pay yesterday’s bills.”

Here, I suspect the author is referring to the development costs under the online program management model (OPM), a unique model which accounts for a small fraction of the total online courses offered in the US. Online program management typically includes marketing and many other investments. The typical online course offered at a non-profit, brick and mortar institution costs very little; $15,000 to $25,000 is common. Stipends for the instructor for developing the course run from $0 to $10,000. Staff involvement runs $1,000 to $10,000, and overhead falls between $4,000 and $8,000. This inexpensive approach isn’t often the best approach, but it’s by far the most common.

P.S. We need to be careful not to compare apples and oranges: OPM’s invest in programs. There’s often no direct, upfront costs for the institution. MOOCs, as noted above, may be more accurately categorised as marketing costs, rather than (or solely) course development.

Keith HampsonComment