March 29, 2015

Why are some public universities charging more for online courses?

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Overheads constitute almost 50% of campus-based operational costs

Overheads constitute almost 50% of campus-based operational costs

Haynie, D. (2103) U.S. News Data: Online Education Isn’t Always Cheap, August 28


This report caught my eye: A 2013 survey conducted by the American Association of State Colleges and Universities and the Learning House, which will be published this October and involved 400 public universities, concluded that :

more than 60 percent charged the same tuition for face-to-face courses as they charged for online courses. Thirty-six percent of the schools charged more for online tuition.

This was also backed up by a USNews survey of 300 public universities. 

The average per credit, in-state cost for an online bachelor’s program is $277, compared with $243 per credit at brick-and-mortar schools.

I’m also aware that some Canadian institutions also have a premium fee or an additional charge for the online version of a face-to-face credit course.


According to Susan Aldridge, a senior fellow at AASCU:

The courses cost more to develop, take more time to develop and take more time for the faculty to teach. In order for students to succeed in these online courses, 24/7 technical support, reference librarians, writing labs, automated degree plans and tutoring need to be available.

And Ray Schroeder adds:

schools often have to train their faculty to teach effectively on online platforms – an expensive, ongoing endeavor


Online learning costs more than classroom teaching? Not in my experience. Once again, it depends: on how you cost programs, on how you design your online courses, and how you deliver your face-to-face classes.

John Ebersole, president of Excelsior College, believes that online education is cheaper for colleges to provide because they don’t have to invest in creating or maintaining facilities. Those savings, he said, should outweigh the cost of any initial investment in technology.

If my online students aren’t going to take advantage of the cafeteria, going to the student union, participating in the extracurricular activities and we don’t have the building costs, why isn’t it cheaper?

In other words, the overheads are lower for online teaching than they are for classroom teaching – and since overheads constitute almost 50% of operational costs on a campus-based university, this is a significant factor.

And Ray says:

Most faculty members come prepared to teach face-to-face. They need substantial training and support in order to teach effectively. It’s not a one-time training.

Sorry, Ray, the first part of your statement is the problem. Many faculty do NOT come properly prepared to teach face-to-face. In fact what we are doing is expecting a lower standard for face-to-face teaching by not preparing them properly, while having to do it for online instructors.

In essence, online learning changes the cost structure of teaching. It does need more start-up investment and so there is a cost of change. If you have small online class numbers, it probably will cost more to go online. However, if you have too many students to accommodate on campus, going online will reduce your costs per student and there are some economies of scale as online enrollments increase. This is why it’s important for institutions to track the costs not only of going online, but the real cost of their campus-based classes, including overheads and faculty development (or lack of it).

Lastly, even if online learning is more expensive for the institution (which it needn’t be) there is an equity issue here. Why should students pay more for the same end-product just because it is packaged differently?

What do you think?

Does your institution charge more for online credit courses? If so, why?


  1. To directly answer your question, I have previously worked in UK HEI that charge less for online courses. However, the substantive point I want to make is that we need to be clear about the difference between costing and pricing. The reality is, in my opinion, costings are poorly understood by many HEI, and pricing, in practice, means how much can institutions get away with charging either determined by market demand or local regulations.

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