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Are Universities Gouging Online Students?
Several hundred incoming Georgia Tech students made history this spring as the first cohort in the institution’s online master’s program in computer science. While today it is hardly noteworthy that a prestigious university like Georgia Tech is offering a graduate degree online, the university’s decision to price it more than 80 percent less than the on-campus option is truly groundbreaking. At $6,600, the online program is one-sixth the cost of the on-campus one, a fact that higher education leaders should be examining closely.
Georgia Tech’s decision is indeed significant, given that more than 60 percent of large public U.S. universities typically charge online students a campus-equivalent tuition rate, while 36 percent command a premium, according to a 2013 report from the American Association of State Colleges and Universities and the Learning House. Not only is Georgia Tech challenging the status quo in online tuition pricing, but it is also shedding new light on the true cost of serving online students.
These days, two out of three students attending on-campus programs receive some form of generous subsidy or discount, while their online counterparts, generally ineligible for such assistance, foot the full sticker price even though they do not benefit from all the amenities of the revered campus life, do not take up parking spaces, inflict wear and tear on facilities, or take up as much instructor time. Instead of embracing these online learners who produce considerable incremental revenue for institutions, colleges and universities are penalizing them, which has troubling implications not only for students’ bank accounts, but also for universities’ own vaunted views of fairness. By introducing e-tuition, which is appropriately lower than the on-campus price tag, universities could easily capitalize on the scale, brand extension, and new revenue synonymous with online learning while maintaining far more equitable pricing for online students.
In his book Generation on a Tightrope, Woodrow Wilson Foundation head Arthur Levine writes that most nontraditional, online students shop around before choosing a university at which to enroll. He says they look for low tuitions and fees, but more importantly, they want to be treated fairly and pay a fee commensurate with the benefits they obtain from an institution. However, this is not what is typically happening. For example, students in the Villanova University’s online MBA program will pay nearly 25 percent more for their education than their on-campus counterparts, $1,240 per credit hour versus $1,000 for residential students. While the differential may be less profound at other institutions, the fact that such a disparity exists is confounding and unfair.
Although a rapidly increasing number of universities see online programs as a means of expanding their footprint and a way to capitalize on the principles of scale — adding more students without adding more on-the-ground resources to serve them — the pricing dilemma has not been fairly addressed.
Some universities, including several in Texas that Academic Partnerships represents, have found another way. Early adopters of online degree programs, Texas public universities have enrolled thousands of students at prices far lower than comparable on-campus options, substantially increasing their market share within two years and retaining that lead six years later. One such institution now boasts the nation’s largest online public nursing program, while another is home to one of the largest online education programs in all of American public higher education.
Several of these universities have seen their online enrollments increase the total student body by more than 30 percent, with the new revenue generated by online programs allowing some of them to offer faculty raises as other campuses in their systems have tightened budgets.
Though there is some cost associated with launching online degree programs, it pales in comparison to the benefits they can bring as students from all over the world converge through the cloud. Program enrollment of a few hundred can scale by five- or tenfold at a very low incremental cost to the university, while, at the same time, on-campus enrollment increases due to universitywide brand-building driven by intense online marketing effort associated with a successful online rollout.
While higher education is struggling with leaner budgets, the growing wave of digital students creates a meaningful financial opportunity for institutions, especially when online programs are priced at fair e-tuition rates that drive scale. Online learning allows institutions to expand into new markets, extend their brand and prestige beyond regional borders, while at the same time allowing them to tap into legions of new students, building their global alumni base and seeding future fund-raising efforts.
The benefits of online learning are many, and so too are the beneficiaries. E-tuition is both a boon to students and a potential windfall for higher education.
Randy Best is the chairman and CEO of Academic Partnerships (AP). AP strongly encourages its partner universities to offer e-tuition rates to students enrolled in online degree programs.