Response to: "Why College Tuition Is Actually Higher For Online Programs"

In response to . . . "Why College Tuition is Actually Higher for Online Programs" (Derek Newton, Forbes, June 25 2018), which can be found here


I appreciate the author drawing attention to the neglected topic of costs in online higher education. And the notes on marketing costs are very helpful. More discussion about costs is needed; once the sector has a better grasp of costs, we can hopefully move on to the question of value.

However, the article inadvertently misrepresents two important issues.


The author describes MOOCs as a “disaster” that "proved that simply putting content online was not going to work". Students, he argued, need interaction, engagement, et - not just online content. While interaction is critical, this isn't why MOOCs failed to become mainstream within higher education - as NMC, for example, predicted in 2013. MOOCs were unable to take hold in higher ed for many reasons. First and most importantly, the people behind MOOCs made the supremely optimistic assumption that colleges and universities would accept these courses for credit. Colleges and universities, though, 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. 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 are research grants. Using courses produced by faculty at other institutions directly conflicts with this logic - and in a loud and 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. Try to imagine the completion rates if our colleges and universities offered their courses as non-credit, free of charge, and there was no penalty for dropping out.

It's these kinds of challenges that knee-capped the potential of MOOCs to indeed change the economics of online higher education, not the student experience. Moreover, it's the reason why most well-known MOOC providers scurried off to the corporate market where no such conflicts exist. (Does anybody remember University Next, back in 2001?)

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 no cost or low 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. Originally, MOOCs from the likes of Udacity and Coursera were understood as . . .

- free courses from elite/expensive institutions available to the masses

- a vehicle for taking advantage of economies of scale to drive down costs

- a means of democratising access to the highest profile subject matter experts.

Today, though, MOOCs have more in common with the content marketing industry than traditional higher education.

*I suspect it's still too early to say whether the lead generation capacity of MOOCs provides a good return on investment for the institutions.


The author states:

“And 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 confusing the development costs under the OPM model (which includes marketing and many other investments) and high-profile MOOC initiatives with what happens on a daily basis in the vast majority of cases.

Colleges and universities produce most online courses (not MOOCs or OPM) for $15,000 to $25,000. Stipends for the instructor for developing the course run from $0 to $10,000. Staff involvement is between $1,000 and $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.

What’s more, 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