This weekend Kim Weeden tweeted that the most common myth about higher ed that she runs into is that teaching online is cheaper. It isn’t.
She’s right, with one minor asterisk.
Most of a college’s budget is labor. When a physical campus moves to online teaching, it doesn’t save much labor at all. Grading an online student’s paper takes the same amount of time as grading an on-site student’s paper. That’s why it’s silly when the Scott Galloways of the world proclaim that an online class can reach hundreds of students at a time and that therefore the cost savings should be passed on to the consumers. Leaving aside the “students as consumers” idea, the core of a class is the interaction of students with the instructor. Galloway’s model isn’t new; it’s the large-auditorium-with-teaching assistants model that many of us went through in grad school, if not earlier. It’s reminiscent of the MOOC craze of 2012. Yes, technology allows a single presentation to be shared with many more people at once, but viewing a presentation isn’t education. Actual learning occurs in the engagement with the material, and that still requires human interaction.
Longtime readers know that I like to cite Baumol’s cost disease here. I do. It’s true, it explains a lot and it’s rarely considered, let alone understood. The core of it is that certain kinds of work are harder to automate than others, and that over time, the ones that are harder to automate become more expensive relative to the ones that are easier to automate. Teaching is hard to automate, as is health care. Without human interaction, you get the attrition rates that MOOCs got.
But it goes beyond labor. We still have facilities to maintain. We still have library databases to purchase. We still provide academic advising, counseling and financial aid processing. And at a really basic level, tuition has never fully covered the cost even of instruction alone, let alone the entire budget. Tuition covers slightly over half of the operating budget. That’s higher than the model was built to handle -- it was supposed to be one-third, with another third paid by the county and the last third paid by the state -- but it’s far short of profitable. Incidental savings on printing and lighting don’t come anywhere close to making up the difference.
And that’s before factoring in reduced state contributions, or the increased costs associated with Zoom licenses and the various social distancing measures for the few classes that are on-site.
Galloway’s model fails to consider that tuition covers less than the cost of production. Once you grasp that, it quickly becomes clear that the business model of a for-profit enterprise is inapplicable.
I say that having worked at a for-profit college. You know what its secret was? Yes, it ran classes 12 months a year, and yes, it marketed aggressively. But its single biggest breakthrough, as opposed to what we do, is that it charged more than the cost of production. We charge less. It was more “efficient” in that sense, though it achieved the opposite of passing savings on to students. It passed much higher student loans on to students. The massively higher default rates from the for-profit sector suggest that this kind of “efficiency” is actually quite expensive.
The one asterisk I’d apply to Weeden’s claim is that it’s conceivable that a college that’s exclusively online -- without a campus to maintain -- might see some savings in that area. But that’s not most existing colleges. We still have to heat and maintain empty buildings.
So with that minor quibble noted, Weeden is right. It’s frustrating to see quick, glib and false panaceas get airtime while the truth is relegated to blogs, but that seems to be where we are right now. Here’s hoping enough of us can get the truth out there while there’s still time.