Online courses can end higher education’s financial crisis
Numerous articles and commentaries from inside and outside of academia are raising the alarm that American public higher education faces an unprecedented financial crisis.
For years, state legislatures have been disinvesting in public colleges and universities. The result: rising debt, deferred maintenance for aging facilities, reductions in programs and course offerings, dismissals, elimination of many student and faculty services, and loss of talented faculty — many of whom haven’t received raises in years — to private universities.
To try to offset these challenges, universities are raising tuition and fees to historically high levels. The cost of tuition alone has soared from 23 percent of median annual earnings in 2001 to 38 percent in 2010.
Given the demands on state budgets, it is unlikely that funding for higher education will return to pre-2007 levels any time soon. In fact, analysts predict that financing levels will continue to decrease, to the point where a number of colleges and universities may be forced to close.
In some states, campuses are being consolidated. In others, enrollments have been capped. With the average cost of providing one year of on-campus education at a public university now topping $32,000 and the average tuition covering only 20 percent of that, the problem is real and it isn’t going away.
In addition, enrollments are declining for the first time in 15 years, student debt is topping $1 trillion, parents are questioning why their children are struggling to find jobs, and employers are complaining about the costs of retraining college graduates.
Some universities are finding a way out of this morass through online classes. Growth in online education is now outpacing traditional enrollments. Why? Because it is well-suited to the needs of an increasing number of learners, extending access and allowing students to both work and study.
In addition, learning measures for online students have matched or exceeded those for on-campus students. Although graduate programs have seen the largest growth in online learning, significant increases in online undergraduate programs are expected over the next decade. Unfortunately, many universities remain averse to such change and hold to tradition and a classical notion of education.
In a recent hearing before state legislators, university officials questioned the value of moving online, testifying that there would be little, if any, savings from such a shift. These conclusions don’t hold up. Traditional university costs and services for students that a quality online education doesn’t require include: dormitories, student lounges and food courts; building maintenance, personnel and service vehicles; utilities; landscaping and campus beautification projects; mail service, supplies and procurement services.
Such facilities and services consume as much as half of what it takes to send a student to college. Including such costs for online students in this type of comparison only serves to cloud the huge value proposition that web-based learning represents. The real numbers tell a different story: Online education holds the promise for universities to not only shrink their deficits but also extend their programs to a vast number of students, all at significantly lower costs.
So what is the true incremental cost of serving an online student at a state university? A study by the University of Texas, comparing online versus on-campus instruction across 15 institutions serving more than 150,000 students, demonstrated a 30 percent to 50 percent cost savings for the web-based approach.
On-campus tuition will continue to rise, to cover increasing costs for services and facilities. This, in turn, will further reduce enrollments, and campuses will become less diverse, accessible only to students from affluent families. Online education presents a huge opportunity to reverse these trends and improve the economic health of public colleges and universities.
Those institutions that recognize this and move their programs online will succeed. They will ensure job security for their faculty, find themselves able to reduce tuition, and extend access to underserved and under-represented students who need education to advance in their jobs, raise a family and provide a quality education for their children.
Online education isn’t a solution for all that ails our public universities, but it must be a major component in solving the financial crisis facing higher education.