States Take a Look at Online Learning Prices

As tuition and student debt levels continue to rise, so has the political and public pressure on colleges to keep costs for students under control. Online education, still emerging, hasn't escaped those conversations.

Legislatures in several states have taken steps in recent years to curb fees that institutions charge exclusively to online students, or to incentivize institutions to spend less on their online programs. (They're also taking a look at fees charged to both residential and online students, but that's a separate issue with its own nuances.)

As lawmakers debate and implement these policies, they confront the complexity always raised by interlocking issues of cost and price in higher education. Online education in particular tends to raise simple questions with complex answers: Do online courses cost more or less to produce than their face-to-face counterparts? Should students pay more or less to take courses online?

In some cases, institutions are pleased with interventions from states. But new laws bring new challenges as well. Observers of online education believe the piecemeal approach to pricing and value considerations for online programs won't be resilient in the face of increasing competition and stricter pressures.

“I feel like there’s this balloon and it’s just stretched. It’s going to break,” said Tanya Spilovoy, director of open policy at the WICHE Cooperative for Educational Technologies (WCET). “We’re just all waiting for the explosion to happen.”

Spilovoy hails from North Dakota’s system of public institutions, which may soon face legislative tweaks to its fee structure, as policy makers look toward streamlining ancillary costs that students -- both online and otherwise -- incur. But that conversation doesn’t come together neatly, Spilovoy said, when legislators aren’t asking the right questions.

According to Spilovoy, legislators looking to drive down fees often ask education officials for the number of students served by their online programs. But that question prompts more questions than answers, she said: What percentage of a student’s course load needs to be online before they’re considered an online student? Will a simple head count suffice, or will that yield duplicates and other misleading statistics?

“We’re all speaking different languages. They want to know something but they don’t ask it in a way that the institution understands,” Spilovoy said. “Part of the important work is finding a middle group and having them all speak the same language.”

Inching Toward the Solution

Equilibrium might be closer to reality in Florida, which has had a turbulent few years in the area of fees assigned only to online students.

Legislators established the distance education fee in the mid-2000s to offset what they perceived as major expenditures for investing in online education. Institutions largely shared their views at the time. But a few years ago, legislators started taking a second look.

“There was a feeling among policy makers that distance learning instruction should be cheaper than regular face-to-face instruction,” said John Opper, executive director of distance learning and student services at the Florida Virtual Campus, a state-level organization that operates the state’s online catalog and represents institutions’ distance learning student services. Legislators pointed to institutions that weren’t charging distance fees and asked the institutions that were why they couldn’t follow that example, according to Opper.

Florida’s governor, Rick Scott, in 2017 announced strong opposition to distance education fees, urging the Legislature to ban them. With some intervention from institutions, parties reached a compromise, limiting the average distance learning fee at an institution to $30 per credit hour per student. That figure came following a comprehensive survey of the cost landscape for online education.

Pam Northrup, vice president of the division of research and strategic innovation at the University of West Florida, helped write that survey. She found considerable diversity in institutions' approaches to distance fees: some charged a considerable amount, some were more reserved and some charged no fee at all. The $30 cap appeared to Northrup as an attempt to bring some more consistency.

That policy had a one-year expiration date, and lawmakers didn't choose to renew it. Institutions no longer have to abide by a maximum, as long as they cap their fees at an equivalent amount to the costs of producing the online program in question.

Justin Ortagus, assistant professor of higher education administration and policy at the University of Florida, sees merit in the argument that online -- particularly high-quality online -- costs more, given the need for production personnel, web designers and other start-up costs. Tuition alone might not recoup those investments for years; fees can speed the process along, he said.

Institutions like Florida State University that rely heavily on state appropriations have to lean on them more without fees to fill in gaps.

“The distance learning fee revenue helps to offset the costs of developing and deploying online courses,” said Dennis Schnittker, a spokesperson for Florida State. “In instances where the fee restriction has limited revenue for certain programs, the state appropriation must offset a greater portion of the program expenses.”

In some cases, that means programs are more affordable and easier to market, according to Evie Cummings, assistant provost and director of University of Florida Online.

"We’re able to give our students the Tesla experience at Ford prices," Cummings said.

Cutting fees isn't always universally popular among students. At UF Online, some local students were frustrated that they couldn't access certain recreational and health services on campus because they weren't paying fees that residential students pay, according to Cummings. Now the fee package is optional.

One of the central questions in the debate over the cost of online programs revolves around who should pay for quality. The answer to that question determines the volume of fees incurred by students.

“They took some of the cost off of the student and put it on the taxpayer,” said Andy McCollough, associate provost for teaching and technology at the University of Florida. “If you’re going to deliver a high-quality program, it’s hard to do it without appropriate funding. And that was, I think, recognized.”

In North Dakota, eliminating the distance education fee isn't simply a matter of cutting an excessive requirement. Institutions there would experience a "significant revenue impact" if the fee were eliminated, according to Tammy Dolan, vice chancellor for administrative affairs and chief financial officer at the North Dakota University System. Raising tuition is a possibility, but not an immediately feasible one, as the necessary increase would exceed the legally mandated limit in the state, Dolan said. Lawmakers and institutions aren't sure where their deliberations will lead.

"We need to determine if the fees are the best way to cover those costs, or if we have to find another way," Dolan said. "I don't really have an answer."

An Unusual Approach

Administrative efforts to re-examine the price of online programs came in a different form in Wyoming. The Wyoming Community College Commission -- a “strong coordinating” but nongoverning agency, according to Executive Director Jim Rose -- allocates an annual appropriation from the state according to an established set of definitions distinguishing types of courses.

“Delivering a history course in lecture to 45 students is different from delivering a welding lab,” Rose said. Until 2016, the law divided courses into three categories:

1. Level one (funding multiplied by one): A class guided by an instructor through course material delivered via lectures, field trips, readings, written assignments and one-on-one tutorial. The instructor leads the class and assigns homework based on lectures.
2. Level two (funding multiplied by 1.25): A class taught in a laboratory setting; lectures, readings, written assignments and multimedia serve as supplement.
3. Level three (funding multiplied by 1.5): A highly technical class that requires significant equipment and hands-on activities.

The question of how to fold online classes into those categories proved divisive, according to Rose. Most agreed that online courses shouldn’t be level one by default, but decision makers struggled to reach consensus on a proper formula.

The situation is particularly murky because the system’s online population includes several thousand high school students who take community college courses through dual enrollment. Those students naturally receive different provisions than residential students.

Legislators ultimately landed on reimbursing institutions for 80 percent of the cost of producing online classes, despite calls from several members for a substantially lower percentage.

Though the reimbursement change has had a less severe impact than an overall decline in funding for the system, according to Rose, some institutions with large online portfolios could feel financial pressure to reduce their online presence, Rose said. Eastern Wyoming College, for instance, has seen a slight reduction in state funding because of its high percentage of online courses.

Rose said decisions about the cost of online programs are often based on anecdotal evidence or assumptions unchecked by rigorously collected data. In this case, he said, legislators were drawn to the notion that online programs are less costly because they don't require use of a classroom space and its associated maintenance and upkeep. But critics of that argument point to the need for high-quality support from instructional designers that outweighs similar needs for face-to-face courses.

"We’ve not seen this completely wrapped up into a nice package," Rose said of the debates raging well beyond Wyoming. "I think we’re going to see continuing change."

Distance education fees can still be appealing for institutions, though. Thanks to rapid growth in online enrollment, the University of Tennessee at Chattanooga has accumulated a surplus from distance education fees that it plans to reinvest to support technology and training on campus, as reported this week in The University Echo, the institution's student newspaper.

Northrup, of West Florida, believes distance education fees are a small but important part of the conversation about improving affordability. Eliminating them won't work for everyone, but maintaining the status quo seems increasingly untenable.

"People are trying hard to do due diligence to ensure that students aren’t just paying such exorbitant prices to attend college," Northrup said. "That happens in the textbook arena and anything that’s a variable cost. We're trying to look at where we can stabilize and reduce costs, but also recognize that there are real costs."