July 22, 2017

What counts when you cost online learning?

Poulin, R. and Straut, T. (2017) Distance Education Price and Cost Report Boulder CO: WCET

This highly controversial report has generated considerable discussion in WCET’s own Forum, and has received a good deal of media coverage. When you read the report you will see why.

Much of the media coverage has focused on the finding that respondents to the survey on which this report is based were by and large of the opinion that distance education costs more than classroom teaching. But you need to read the report more carefully to understand why respondents responded in this way. It all comes down to how you cost distance education or online learning. In particular, you need to understand the context of the report. 

As always, you should read the report itself, not my summary, especially if you disagree with what’s in my summary.

The context

The context for this report is very political and very American (by which I mean USAnian, i.e. applying specifically to the USA). The report is more about price – what institutions charge students – than it is about cost.

The cost of tuition (the fees students or their parents pay to the institution) continues to increase in the USA way beyond the rate of inflation, and many institutions not only charge the same tuition rates for online or distance education courses, but also add additional fees. In other words, many American institutions increase the price for an online or distance course compared to its face-to-face equivalent.

However, the political perception, especially in state legislatures, is that distance education is cheaper than on-campus teaching, so some states (e.g. Wisconsin and Florida) have introduced legislation or initiatives to reduce the price of online learning courses below that of face-to-face programs.

As the authors note:

Historically, distance education’s mission has been to overcome the barriers of place or time. The mission was not to control costs. In fact, to reach some locations is costly. Distance education should not be held accountable to a mission it was never given.

distance education professionals are caught in a higher education economics ethos that shuns open examination of price and cost…and are expected to answer to a “controlling cost” mission that was not given them in the first place.

It is within this context that WCET decided to do the study in order to challenge some of the assumptions about the price and cost of distance education.

Methodology

As always, you need to know the methodology in order to interpret the results. The report indeed is very transparent about its methodology, which is not tucked away in an appendix or not discussed at all (which seems to be a practice that is increasing in many so-called ‘studies’ these days), but is front and centre in the report.

Definitions

The authors provide the following definition:

  • Price – This is the amount of money that is charged to a student for instruction. The components are tuition and fees. In the questions, we will be clear as to which “price” component (tuition, fees, or total price) is being queried. 
  • Cost – This is the amount of money that is spent by the institution to create, offer, and support instruction. 
  • Distance Education – When thinking of “distance education,” we favor the Babson Survey Research Group definition of 80% or more of the course being taught at a distance.

Sample

WCET surveyed mainly its own members and members of other distance education consortia. Overall, 197 responded.

We had hoped for more participation in the survey. It is important to note that the responses provided represent only the institutional representatives who answered the survey questions. Even though we provide comparisons between the responding population and the overall higher education population, we do not assert that the results may be generalized to the universe of all institutions of higher education in the U.S. and Canada that offer distance education courses.

What can be said is that the response came mainly from distance education and educational technology professionals, rather than faculty or senior administrators, mainly in public HE institutions.

Main results

I will deal with these very briefly, although the detailed findings are more nuanced.

  1. The price of DE is generally higher than for face-to-face teaching. More than half (54%) of the respondents reported that their institution charged more for distance education courses than for on-campus courses.
  2. A majority of respondents believed that the cost of DE was higher than for face-to-face teaching on certain defined components (e.g. faculty development, technologies, instructional design, assessments, state authorization – a long and complex process of ‘accrediting’ DE courses unique to the USA).
  3. ‘Experts’ in the costs of DE tended to disagree that costs of DE are necessarily higher
  4. The experts also noted that cost discussions are often avoided by higher education leadership and that more could be done to control costs, not just in distance education.

The reports main conclusions

The conclusions were split into recommendations for legislators and institutions:

For legislators

  • focus questions on future costs and in particular the likely impact of investing in buildings vs distance education in terms of the impact of the cost to students
  • provide more incentives for institutions to reduce the price to students
  • don’t be prescriptive but help institutions develop a vision for state higher education that is realistic and shared

For institutions

  • pay as much attention to the cost to students as to the cost to the institution of various delivery methods
  • be more open about costs and track them for all modes of delivery
  • changing the cost structure requires structural changes in how we design and deliver programs; this requires leadership from the senior administration.

My comments on the report

The report is right to draw attention to the creeping costs to students (e.g. price) resulting from institutional policies in the USA. What is also apparent is that there is a large disconnect between institutions and government about the cost of distance education. Many educators believe that DE is more expensive; government thinks it should be cheaper. Somewhere in the middle is a discussion about quality: does cheaper mean worse?

Cherry-picking costs

Unfortunately, though, for methodological reasons, I fear the report has confused rather than clarified the discussion about costs and price. In particular, by focusing on components that are specific to distance education, such as faculty support, the use of technologies, and the cost of state authorization of DE, the report has clearly given the impression that most educators believe that distance education is more expensive. It can be, but it doesn’t have to be.

It is unfortunate that the report has given this impression because you cannot just look at the costs of specific components of distance education without looking also at specific components of face-to-face teaching that are not represented in the costs of distance education, in particular the very substantial ‘sunk’ costs of buildings, parking, etc. There are better ways of measuring the costs of distance education and online programs – see Chapter 7 in Bates and Sangra (2011).

Making DE cost-effective

While we can develop cost-effective fully online programs, this normally depends on generating new revenues from new students. Offering online courses as an alternative to already existing students on campus, while increasing access and student flexibility, is much more financially risky.

Again, this can be managed cost-effectively, but it depends on having enough students taking both on-campus and online versions of the course, and the use of additional adjunct professors for online courses with more than 30 students. Bringing in new students who you wouldn’t get without the courses being online is the best bet to ensure economic viability. ‘Diluting’ your on-campus students by offering the same course online will add costs unless the numbers can justify it.

What about the costs of blended learning?

One last point. I think we are going to have a period of considerable cost turmoil as we move to blended learning, because this really does add costs unless there are dramatic redesigns, especially of the large first and second year classes. Carol Twigg of the National Centre for Academic Transformation for many years has been able to bring down costs – or more often increase effectiveness for the same cost – for these large lecture classes by using blended learning designs (although there are some criticisms of her costing methodology).

By and large though, while fully online courses can maybe increase enrolments by 10-15% and therefore help pay their way, we will have major cost or academic time problems if we move to nearly all courses being blended, without increased training for faculty, so they can manage without the same level of support provided by instructional designers, etc. that are normally provided for fully online courses (see ‘Are we ready for blended learning?‘).

Moving forward 

I’m glad then that WCET has produced a report that focuses not only on the costs of distance education to institution but also on pricing policies. There is in my view no economic justification for charging more for an online course than a face-to-face course as a matter of principle. You need to do the sums and institutions are very bad at doing this in a way that tracks the cost of activities rather than throwing everything into one bucket then leaking it out at historical rates to different departments.

Institutions need to develop more rigorous methods for tracking the costs of different modes of delivery while also building in a measure of the benefits as well. If the report at least moves institutions towards this, it will have been well worth it.

In the USA, fully online enrollments continue to grow in 2014

Image: WCET, 2015

Image: WCET, 2015

Straut, T.T. and Poulin, R. (2015) Highlights of Distance Education Trends from IPEDS Fall 2014, WCET Frontiers, 21 December

Source

WCET (the Western Co-operative for Educational Technology) has once again done an excellent job in analysing the U.S. Department of Education’s National Center for Educational Statistics (NCES)’  Integrated Postsecondary Education Data System (IPEDS) data that reports Distance Education (DE) student enrollment for the Fall of 2014.

Results

Enrollments by students ‘Exclusively in Distance Education’ continued to rise in 2014. There were 2,824,334 fully online enrollments in 2014, compared to 2,659,203 in 2013, representing a 6% increase in just one year, or just under 13% of total enrollments.

Students taking at least some fully online courses but not an entirely fully online program also increased, from 2,806,048 in 2013 to 2,926,083 in 2014 (a 4% increase). [Note: these are not students taking blended or hybrid courses, but taking some fully online courses as well as campus-based courses.]

At the same time overall enrollments dropped slightly (just under 1%). Thus online learning continues to grow faster than conventional higher education. Taken together at least 28% of all U.S. higher education students are taking at least some fully online courses.

Image: WCET, 2015

Image: WCET, 2015

However, perhaps more interesting is where this growth occurred. The biggest increase in fully online courses came from the more prestigious private, non-profit sector (22% increase), while the for-profit sector (UofPhoenix, etc.) actually declined by 11%.  Indeed, the for-profit sector now accounts for less than one third of all fully online enrollments.

Cautions

The IPEDS data is relatively new (this is the third year of reporting). There are problems of definition (‘distance education’ and ‘fully online’ are not necessarily the same), and there appears in past years to have been inconsistent reporting across institutions.

WCET will be following up on this initial report with more detailed reports in 2016, including an analysis of the reliability of the data.

Comment

Despite the cautions, this data, based on a census of all U.S. higher education institutions, is probably the most reliable to date.

Despite the (assumed) growth in blended learning, fully online learning appears to be more than holding its own. One reason is clear. Many of the more prestigious private, non-profit institutions have room to grow in their adoption of online learning, being slower initially to move in this direction.

To what extent this growth of online learning in the private, non-profit sector is owed to the publicity from or experience with MOOCs remains to be assessed, but the growth of for-credit online learning in this sector is an indication of the increasingly broad acceptance now of fully online learning.

What is needed now is more data on – and clearer definitions of – blended learning, as it seems reasonable to assume that as on-campus programs become more flexible through blended learning, this will impact eventually on fully online enrollments. But kudos to the U.S. Department of Education for setting up these surveys and to WCET in helping with the analysis. Now if only Canada…….Justin?

Online learning and a knowledge-based economy

Knowledge-based industries include entertainment, such as video games design

Knowledge-based industries include entertainment, such as video games design

Florida, R. and Spencer, G. (2015) Canada has two growth models, but we’ve been neglecting one Globe and Mail, Oct 7

Boyd, D. (2015) Canada’s party leaders neglecting renewable energy in election talks Globe and Mail, Oct 7

If you are not Canadian, please bear with me in this post, as although these articles focus on Canada, what I have to say will apply to many other economically advanced countries – and I will get to the online learning bit eventually.

The Canadian election

Three parties are running very close in the Canadian federal election, which takes place on October 19. All three parties (Conservatives, who form the current government; the NDP, the official opposition; and the Liberals), have made the economy a central plank of their campaign. In essence the election is being fought primarily on which party is best able to advance the Canadian economy.

Surprisingly though all three parties are very backward looking in their economic strategies. The Conservative government has based its economic strategy primarily around the resource-based industries of oil and mining extraction, and agriculture. It is also supporting free trade through free trade agreements with Europe (CETA) and 22 countries around the Pacific (TPP) as well as the 25 year old North American free trade agreement between Canada, the USA and Mexico (NAFTA), but still with high tariffs and protection for the Canadian dairy industry. Interestingly, there has been almost no discussion by the major Canadian political parties about the copyright and intellectual property agreements in these pacts, yet these have tremendous implications for developing home-grown innovative industries.

The Conservative economic strategy has recently run into severe problems due to a crash in commodity prices, and the oil industry in particular is in trouble due to excess capacity, low prices and increasing environmental and aboriginal land claim pressures that have resulted in difficulties in getting the oil to market.

The NDP, which has its roots in labour and the union movement, is pushing to support manufacturing industries, such as auto production. The Liberals are focusing on taxation and funding policies that are aimed at encouraging small businesses and protecting the current economy. The Liberals though have pledged a small increase (around ($100 million) to support incubators and new start-ups.

These are all very 20th century approaches to the economy, and frankly are not very different from one another at a strategic level. Where are the long-term strategies or plans that will support new knowledge-based industries?

The knowledge economy

Richard Florida, an urban economist at the University of Toronto’s Rotman School of Management, and Greg Spencer, a research associate, have pointed out in their article in the Globe and Mail that:

the real sources of sustained prosperity and rising living standards are knowledge, innovation and creativity. Canada has neglected the development of its knowledge-based economy….Cities are the central organizing unit on the knowledge economy, with knowledge and creativity concentrated in Canada’s largest city regions.’

Florida and Spencer then go on to define five key ‘pillars’ that are needed to build Canada’s knowledge economy:

  • increased urban density
  • a shift from investment in roads to an investment in transit and high-speed rail, to make communication quicker and easier
  • more compact and affordable housing in cities to encourage young knowledge-workers to come together
  • increasing the minimum wage and replacing low-wage service jobs with more creative approaches to service provision
  • increased taxing and spending powers to cities.

Noticeably they do not mention high quality post-secondary education.

Renewable energy

David Boyd, an environmental lawyer, in a separate article argues that Canada’s government to date has ignored the potential of renewable energy, focusing instead on trying to extract and move carbon-heavy oil, gas and coal, through pipelines and tankers. Instead, he argues, future economic growth will be driven by developments in renewable energy such as solar, wind and geo-thermal power. He argues that Canada has the potential to generate 100 per cent of its electricity from renewable sources within two decades.

Canada has an unenviable reputation as being a major emitter of greenhouse gases, particularly through its production of heavy crude and bitumen from the oil sands. It is increasingly clear that there will be an increasing charge on the production of such carbon, mainly through direct carbon taxes (as has been the case here in British Columbia for a number of years, with success in driving down carbon emissions) or indirect cap and trade schemes (which are coming in Ontario and Quebec). Even major investment funds are now looking at carbon-emitting industries as high risk investments for the future. As a result the Canadian oil industry must now find cleaner ways to extract and treat oil and petroleum.

Renewable and clean energy however depends on invention and innovation to develop economically efficient sources of energy. In other words, it needs a heavy investment in developing new knowledge that will drive the development of new, clean technologies.

The increasing demand for high level knowledge workers

Neither article in the Globe and Mail made the link to the need for high level knowledge workers to grow the knowledge economy. It is as if it is almost taken for granted that Canada’s universities and colleges will develop such workers. However, although Canadian institutions may train academic researchers, engineers, media designers and developers and entrepreneurial business people, they need to have the right skills to work effectively in a knowledge-based economy. We are talking about a highly competitive market here. All advanced developed countries want to be leaders in innovation. Will Canada produce the researchers, engineers and managers with the right skills for a knowledge-based economy? In particular will they develop people skilled in knowledge management, creativity, problem solving, design, entrepreneurialism, critical thinking, etc.?

Online learning and the knowledge economy

This is where online learning becomes critically important. In my online open textbook, Teaching in a Digital Age, I focus specifically on the kind of skills that will be needed in a knowledge intensive economy, and demonstrate that online learning has a key role to play in developing such skills (although of course it is not the only way).

However, this is just one person’s contribution. Canada needs to focus much more on identifying the knowledge and skills that will be needed in knowledge intensive industries and ensure that our educational institutions know how to develop such skills. In particular are we using the appropriate teaching methods and technologies that will help learners develop these skills and knowledge?

Those countries that can harness new knowledge to clean and innovative industries will surely be the economic drivers of the future. I just wish that our political parties would pay more attention to developing strategies that support a knowledge-based economy, because the fate of Canada as a prosperous country with an enviable standard of living and quality of life absolutely depends on this.

 

A New Zealand analysis of MOOCs

NZ MOOCs 2

Shrivastava, A. and Guiney, P. (2014) Technological Development and Tertiary Education Delivery Models: The Arrival of MOOCs  Wellington NZ: Tertiary Education Commission/Te Amorangi Mātauranga Matua

Why this paper?

Another report for the record on MOOCs, this time from the New Zealand Tertiary Education Commission. The reasoning behind this report:

The paper focuses on MOOCs [rather than doing a general overview of emerging technologies] because of their potential to disrupt tertiary education and the significant opportunities, challenges and risks that they present. MOOCs are also the sole focus of this paper because of their scale and the involvement of the elite United States universities.

What’s in the paper?

The paper provides a fairly standard, balanced analysis of developments in MOOCs, first by describing the different MOOC delivery models, their business models and the drivers behind MOOCs, then by following up with a broad discussion of the possible implications of MOOCs for New Zealand, such as unbundling of services, possible economies of scale, globalization of tertiary (higher) education, adaptability to learners’ and employers’ needs, and the possible impact on New Zealand’s tertiary education workforce.

There is also a good summary of MOOCs being offered by New Zealand institutions.

At the end of the paper some interesting questions for further discussion are raised:

  • What will tertiary education delivery look like in 2030?

  • What kinds of opportunities and challenges do technological developments, including MOOCs, present to the current policy, regulatory and operational arrangements for tertiary teaching and learning in New Zealand?

  • How can New Zealand make the most of the opportunities and manage any associated risks and challenges?

  • Do MOOCs undermine the central value of higher education, or are they just a helpful ‘updating’ that reflects its new mass nature?

  • Where do MOOCs fit within the New Zealand education and qualifications systems?

  • Who values the knowledge and skills gained from a MOOC programme and why?

  • Can economies of scale be achieved through MOOCs without loss of quality?

  • Can MOOCs lead to better learning outcomes at the same or less cost than traditional classroom-based teaching? If so, how might the Government go about funding institutions that want to deliver MOOCs to a mix of domestic and international learners?

  • What kinds of MOOC accreditation models might make sense in the context of New Zealand’s quality-assurance system?

Answers on a postcard, please, to the NZ Tertiary Education Commission.

Comment

Am I alone in wondering what has happened to for-credit online education in government thinking about the future? It is as if 20 years of development of undergraduate and graduate online courses and programs never existed. Surely a critical question for institutions and government planners is:

  • what are the relative advantages and disadvantages of MOOCs over other forms of online learning? What can MOOCs learn from our prior experience with credit-based online learning?

There are several reasons for considering this, but one of the most important is the huge investment many institutions, and, indirectly, governments. have already made in credit-based online learning.

By and large, online learning in publicly funded universities, both in New Zealand and in Canada, has been very successful in terms of both increasing access and in student learning. It is also important to be clear about the differences and some of the similarities between credit-based online learning and MOOCs.

Some of the implications laid out in this paper, such as possibilities of consortia and institutional collaboration, apply just as much to credit-based online learning as to MOOCs, and many of the negative criticisms of MOOCs, such as difficulties of assessment and lack of learner support, disappear when applied to credit-based online learning.

Please, policy-makers, realise that MOOCs are not your only option for innovation through online learning. There are more established and well tested solutions already available.

Kuali Foundation goes commercial

"No, you idiot, Kuali, not Koalas" 'But isn't kuali a Malaysian way of cooking?"

“No, you idiot, Kuali, not Koalas” ‘But isn’t kuali a Malaysian way of cooking?”

Straumsheim, C. (2014) Kuali Foundation: If you can’t beat them….., Inside Higher Education, August 25

While there are several providers of open source learning management systems for education, Kuali is the only provider of free, open source administrative software specifically built for higher education. In a blog post on August 22, it announced that while its software will still continue to be developed, open source and freely available, it will be creating a commercial company to provide for profit commercial services, such as hosting and contracted software development.

What is Kuali?

Kuali started as a consortium of mainly U.S. research universities which paid to join the Kuali Foundation, with the aim of developing free administrative software software systems designed specifically to meet the needs of higher education/post-secondary institutions.

What does Kuali do?

So far it has developed the following software systems:

How is it doing?

So far nearly 60 HE institutions are using Kuali products. However,  each product is at a different stage of development/usefulness. The financial system is the most advanced and most stabilized.

Why does it matter?

Although the days when Peoplesoft nearly bankrupted several major HE institutions are now long gone, commercial administrative systems such as Oracle and SAS are extremely expensive, designed primarily for a business rather than an educational environment, and as a consequence are often financially risky when it comes to adaptation and implementation within a higher education context. The development of administrative systems for higher education by higher education is a worthy goal, if it can be accomplished.

The ‘if’ though is still in some doubt. The financial system seems to be a success, the Student system is described as a ‘monster’ development project, and the HR system lacks enough investment. So Kuali as a whole is still very much a work in progress.

What are the changes? How is Kuali 2.0 different from the Kuali Foundation?

Kuali is now essentially a for-profit company, rather than a community consortium, although its governance is actually more complex than that. Universities and colleges paid to join the Foundation and contributed investment towards product development. The Foundation will continue to exist but members will not have votes or shares in the new company, although members can continue to contribute to projects that they want done. Other sources of revenue will come from charging for software as a service for cloud-based services.

Comment

I’m not in anyway involved with Kuali, so it is difficult to give an informed comment. I thought it was a good idea when it started, but making a consortium approach to sustainable software development and services work is a major challenge. It requires dedication, goodwill, and continuity from a large number of institutions. In these circumstances, any benefits for the participating organizations need to direct and substantive.

Changing it to a commercial organization is a major disruption to this model. In particular, even if the same people are involved in the investment in product development, governance and operation, it radically changes the culture of the organization. I’m not a governance expert, but I don’t understand why full members who invest substantially in product development don’t have shares or voting rights in the board.

I do hope it succeeds in its goal of providing reliable, sustainable open source solutions for administrative software for HE institutions. I wouldn’t bet my own money on it now, though.

For more on Kuali, see:

A student information system monopoly?

Open source software for research administration

Open source software for administrative systems