An Online Tax for Rural Students

When it comes to education, Colorado is a state of paradoxes. The state has one of the most educated adult populations in the country, yet young people who grow up there are less likely to go to college than those from many other states.

The Colorado Community College System faces a paradox of its own -- how to keep the doors of its smallest and most remote colleges open, without shutting out rural students.

For Joe Garcia, chancellor of the college system, it’s a challenge with no easy solution.

Dotted across Colorado’s varied landscape are thousands of students who live many miles from their closest community college. For these rural students, online learning is not just a convenience, but a necessity. Small colleges in remote areas don’t have the funds to offer all the programs students want on-site, said Garcia. It is typical for students at these colleges to take at least some of their classes online, either through the college itself or through Colorado Community Colleges Online -- a shared resource for online education that has been offering online classes to CCC students since 1998.

But in the CCC system, the price of learning online is “considerably” more than learning in person, said Garcia. Students who are Colorado residents pay a baseline of $148.90 per credit hour for traditional instruction at a campus. The price for online learning is $263.90 per credit hour -- a difference of just over $114. Some of the 13 colleges in the system charge students more.

It’s not a price Garcia likes charging.

“I sometimes refer to it as a rural tax,” he said. “A rural student would end up paying more to complete virtually any academic program, as they have to take some classes online. A student in an urban area wouldn’t have to do that.”

Garcia and members of the system’s State Board for Community Colleges and Occupational Education are looking for ways to close the price gap, but there’s no simple fix.

“It’s an economic modeling question, as well as an access and equity question,” he said.

“If we were to reduce our online rates and just charge the same for online as we do for the traditional classroom, candidly, we would give up 30 million dollars a year in revenue,” Garcia said. “We’re not a big enough system, nor a well-funded enough system, to be able to absorb that.”

Another option would be to raise the price of traditional instruction so that the price of online instruction could be reduced without affecting the system’s net revenue, said Garcia. But in moving to charge the same amount for online and in-person instruction, prices would no longer be based on the actual costs of instruction; rather, they would be “based on what it costs to run a college system.”

It can cost colleges in the system more to run online programs than equivalent traditional programs, said Garcia, particularly if the programs are new or do not have many students enrolled. But online program costs vary by college, program type and sophistication of technology used.

Revenue generated by CCC Online is shared back to colleges in the system to supplement their operating budgets, said Garcia. "The more money we take in through our online tuition, the more we can pay out to colleges to allow them to keep their doors open and lights on for traditional classes."

It is unlikely that the state would step in to plug the $30 million in revenue that is generated by online learning, said Garcia.

“Our state has never funded higher education particularly well compared with other states,” he said. “The level of state funding is low.” According to a report by the State Higher Education Executive Officers Association, Colorado public institutions received $4,194 per full-time student in state and local education appropriations in 2017, which was down from $4,697 in 2008. The average U.S. educational appropriation for 2017 was $7,642 per student.

Garcia said that while rural students may be getting a raw deal, students “across the board” complain that tuition is too high -- regardless of where they live or what mode of instruction they choose.

“It’s becoming increasingly difficult for them to pay for college without getting into debt,” he said.

A Problem of Scale

A central mission of community colleges is to ensure access and affordability for students. But affordability was not top of mind when the CCC system started launching online programs -- “the mission was overcoming the barriers of place and time,” said Garcia.

There’s a widespread misconception that online education is cheaper for colleges to provide than traditional education, said Garcia. But keeping online costs down is not always possible. Online programs incur large start-up costs and can be expensive to run for a small number of students.

“It’s just like running a rural college,” he said “The cost is more on a per-capita basis than running an urban college because we don’t have the economies of scale.”

The CCC system is certainly not alone in charging students more to study online. A 2017 report by the Western Interstate Commission for Higher Education Cooperative on Educational Technologies (WCET) found that more than half of colleges surveyed charged more to study online than in person when course fees were taken into account.

It is typical for colleges to charge essentially the same tuition for in-person classes as for online classes, but some add hefty distance learning fees on top of the tuition, said Rob Robinson, senior principal partner and strategy consultant at Civitas Learning. Robinson, who wrote a dissertation on the cost of online learning, said the $114 cost differential for CCC system students is unusually large, particularly as a percentage of the in-person tuition, which is low.

Vernon Smith, provost of the American Public University System, a private for-profit online institution, said shrinking resources are making it difficult for many large state systems to educate students in rural areas.

“Community colleges cannot fill the need alone,” said Smith. “Providing access to rural students, but charging more for online programs, is antithetical to access.”

Initially, it might cost an institution the same to run an online program as it does to run a traditional program, said Smith. However, as online enrollments grow, costs should come down. As a result, online programs can be a good source of revenue for institutions -- “which is why many traditional institutions are now flocking to it,” he said.

Smith believes Colorado and other state education systems with tight budgets may face tough choices in the future.

“Is access to higher education the priority, or should states make the hard decision to be excellent in some areas, but not others?” he said. “If a state is unable to support the development cost of an online division that can provide access to higher education for rural students, should it partner with an online program from another state to provide that access?”

Carol Twigg, president and CEO of the National Center for Academic Transformation, a nonprofit that helps colleges reduce instruction costs through the use of technology, said the cost of online learning to an institution is not inherently higher than the cost of traditional instruction. Higher prices for online learning are “the result of decisions made by leadership,” she said.

She said while the financial burden placed on rural students who have to pay more to study is unfair, institutions should be working to reduce the cost of higher education for all students, regardless of where they reside. Twigg agrees that some institutions may benefit from exploring partnerships with other providers. Alternative education provider StraighterLine, for example, offers college credit for around $150 per course.

Colleges Under Pressure

Linda Lujan, president of Lamar Community College in rural southeast Colorado, said her college relies on courses from CCC Online to round out its curriculum.

For some students with healthy financial aid packages or families that can afford to pay, the price differential between online and in-person classes is not a barrier to access, said Lujan. But as the college attracts more first-generation students from lower-income families, this is changing, she said. “Students are having to make hard choices -- do I take the course online or do I try and take an alternative?”

Affordability is an urgent issue for rural students, said Lujan. “Local students are already coming to us from economically depressed areas. If I could wave a magic wand and drop tuition without negatively impacting the college’s financial health, I would do it tomorrow,” she said. The college is currently offering some scholarships to students to help them offset the higher cost of online learning, but these funds are not guaranteed in the long term.

Matching online rates with in-person rates would cost the college $148,000 a year -- money the college can’t afford to lose as it “operates on such a tiny margin,” Lujan said.

Curt Freed is president of Morgan Community College in the northeastern corner of Colorado, which also serves a large rural population.

“Many students are making at least an hour drive to get to one of our locations to be able to take courses on a face-to-face basis,” he said.

Despite the long commute, the percentage of students who study purely online at the college is relatively low at 16 percent. Fourteen percent of those enrolled in fully online programs study through CCC Online, and 2 percent through programs developed by the college itself. But these figures don’t tell the whole story, said Freed.

A year ago, the college decided it needed to better serve its rural students and started offering videoconferencing so students could watch faculty teach on campus from home. This method of instruction, which the college calls Global Classroom, now accounts for 22 percent of total enrollment. Though students are technically studying online, Morgan Community College charges face-to-face rates for Global Classroom, said Freed.

Like Lamar Community College, Morgan also offers some scholarships to students studying online. This year, Morgan is offering $100,000 in scholarships for students in the most financial need. This scholarship fund also helps high school students in dual-enrollment programs study online with Morgan, said Freed. It was not always possible to provide this type of assistance in the past and costs were passed on to public school districts, according to Freed.

“They really felt it,” he said. “I’ve had some pretty tough questioning about why our online courses cost so much from superintendents.”

If the system were able to figure out a way to reduce the price of online learning, Freed predicts his college’s enrollment would grow. Additionally, the college “would not be out $100,000 a year,” he said.

Freed and Lujan are confident that the system will be able to find a solution under Garcia’s leadership, but neither is sure what this will look like.

“We can figure this out,” said Lujan. “But we’ll do it in a thoughtful and measured way -- we want to avoid any unintended consequences.”