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Emma Bittner initially considered enrolling in a public health master’s program at a local university. However, the high cost of the in-person course exceeded her budget.
Exploring alternatives, she looked into remote master’s degree options, expecting a more affordable price point.
To her disappointment, the tuition for the online program was comparable to, if not higher than, the in-person counterpart.
“I don’t understand why it should be that expensive,” remarked Bittner, a 25-year-old resident of Austin, Texas. “What justifies that cost when there’s no face-to-face interaction with professors or other students?”
One of the key revelations is that many colleges and universities are increasing online tuition prices to support their broader financial needs, according to online education administrators. Substantial funds are being allocated for marketing and promotional efforts, as detailed in various documents.
Kevin Carey, vice president of education and work at the New America think tank, explained, “Institutions view online education as a lucrative opportunity that funds other areas of their operations.”
This year marks a significant milestone in higher education, where for the first time, more students will be enrolled entirely online than those attending traditional in-person classes.
Bittner’s concerns reflect a broader sentiment, with 80% of Americans believing that post-secondary online education should be less expensive than in-person programs, according to a survey conducted by New America in 2024 with 1,705 participants.
As technology has generally driven down costs across various sectors, many consumers expected the same trend with online education. Online courses typically incur no requirement for physical classrooms and can theoretically accommodate a larger student population, thereby enhancing cost efficiency.
Despite criticisms of remote learning during the pandemic, enrollment in online programs has surged, surpassing pre-Covid projections.
However, the latest data reveals that 83% of online programs in higher education are priced similarly to or more than their in-person equivalents, according to an annual survey of chief online learning officers across campuses. Approximately 25% of institutions also impose a “distance learning fee,” further increasing the cost burden on students.
Universities claim that they require funding from online programs to cover unexpected support services for remote learners, who statistically perform worse than traditional students.
Richard Garrett, co-director of the aforementioned survey and chief research officer at Eduventures, noted that affordability was initially viewed as a compelling advantage of online education. “We expected it to be disruptive, widen access, and reduce costs. But this has not materialized as anticipated,” he stated.
Currently, in-state tuition for online students at four-year public universities averages $341 per credit, exceeding the roughly $325 per credit for in-person courses. This results in an estimated total of $41,000 for an online degree versus approximately $39,000 for a traditional degree.
In the realm of private four-year institutions, around two-thirds with online offerings charge more for their virtual classes than for their face-to-face offerings. The average online tuition in private universities amounts to $516 per credit.
Community colleges, which enroll the highest proportion of fully online students, also charge the same or higher rates compared to in-person classes, a finding echoed in the online education managers’ survey.
Discontent over these pricing structures is prevalent on social media, with many expressing confusion over why online courses can be even more expensive than those conducted in person. A typical comment questions the reasoning behind this discrepancy: “Can someone please explain to me why taking a course online can cost a couple $1,000 more than in person?”
Online program administrators cite the necessity for considerable startup investments and the requirement for advanced technology support as driving expenses. A survey by Ithaka S+R found that 80% of faculty reported it took comparable or more time to develop online courses than traditional ones due to the integration of new technologies.
Moreover, online programs must offer resources such as faculty office hours, online advising, and academic support tailored specifically for remote students who often face more challenges, leading many programs to cap enrollment numbers.
“Support systems like advising, writing centers, and tutoring services are crucial, and those must now be extended to students who are learning at a distance,” stated Dylan Barth, vice president of programs at the Online Learning Consortium.
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Despite these factors, 60% of public and over half of private institutions find they earn more from online education than they invest in it, with many reinvesting those funds back into their general budgets.
This practice of subsidization isn’t new; it has historically been a fixture in higher education financing, where students in less expensive majors often help fund more costly programs. For example, English students may inadvertently assist in subsidizing engineering or nursing students.
“Online education is simply another revenue stream targeting a different market,” explained Duha Altindag, an associate professor of economics at Auburn University.
Carey further criticized existing models, suggesting that universities are not reorienting to become more efficient but rather are layering online education onto the traditional model without cost adjustments. “Regulatory oversight does not impose necessary changes to drive down costs,” he remarked, “leading to a continuation of the existing pricing structures.”
The perception of high prices correlating with high quality often influences students’ decisions, especially regarding well-known institutions.
Garrett emphasized that market dynamics, rather than actual costs associated with delivering online courses, significantly affect pricing strategies.
With online programs vying for students nationally, higher education institutions are increasingly investing heavily in marketing and advertising campaigns.
For instance, a review obtained through public records revealed that the University of Arizona Global Campus spent an astounding $11,521 in advertising for each online student enrolled.
Similarly, the online University of Maryland Global Campus committed to phase in $500 million for marketing to attract out-of-state students over six years, as noted in a state audit.
“What if we redirected some of that expenditure to reduce tuition rates?” questioned Carey.
Students in online settings are simultaneously encountering the challenge of poorer academic outcomes compared to their in-person peers. Research indicates that online instruction produces lower grades than traditional formats, despite a narrowing of the gap in some cases. These discrepancies manifest in higher rates of course withdrawals and prolonged time to graduation, increasing overall costs for students.
Research by the University of Central Florida Institute of Higher Education points out that pursuing an entirely online curriculum significantly reduces the likelihood of community college students eventually graduating.
Particularly concerning are the outcomes for lower-income students, who often come from under-resourced educational backgrounds and may juggle multiple responsibilities such as work or family care.
Data from the National Center for Education Statistics shows that students engaged exclusively in online formats have a lower likelihood of graduating within eight years compared to the overall population, which boasts a 66% graduation rate.
For-profit institutions, which cater to a significant share of online learners, often exhibit particularly low graduation rates. For example, the American InterContinental University System reported only 11% of students graduated within eight years, while the American Public University System recorded a rate of 44%. In 2022, these figures represented the most current data available.
Several private, nonprofit colleges also experience lower graduation rates among students learning online exclusively; this includes Southern New Hampshire University at 37% and Western Governors University at 52%.
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Although online graduates may see a slight earnings advantage in their first year after graduation—potentially due to being older than their in-person peers—this trend diminishes after four years when in-person graduates typically earn more.
Despite the rapid expansion of online education, employers are often hesitant to hire graduates from these programs. A study from the University of Louisville revealed that job candidates with online degrees were less likely to receive callbacks than those with degrees obtained in person.
The strong belief that online education should be more affordable than traditional formats has led to legal actions against universities that charged full tuition during the pandemic when teaching shifted to remote delivery.
Several institutions, including the University of Chicago and Penn State, reached multimillion-dollar settlements to refund students.
Despite these controversies, online enrollment continues to rise. An analysis of federal data suggested that the shift toward online learning accelerated during the pandemic, causing a 12% uptick in enrollment beyond what was expected prior to the onset of Covid-19.
Online programs often save students from the costs of living on-campus and typically offer more flexible schedules than traditional classes.
Reportedly, 60% of online program officers indicate that online classes tend to fill up more quickly than in-person sessions, with nearly half asserting that enrollment in online programs surpasses that of in-person courses.
Certain widely recognized programs, such as the $7,000 online master’s degree in computer science at the Georgia Institute of Technology, illustrate significant price differences when compared to in-person counterparts, which can be nearly $43,000 for a two-year program, attracting a large student body.
There are early indicators that conclusive data on online tuition pricing may shift downward as competition among nonprofit providers like Western Governors University, which charges approximately $8,300 per year, increases. Southern New Hampshire University has slightly below-average online tuition at approximately $330 per credit hour.
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Many universities are discontinuing relationships with for-profit online program managers that take significant cuts of up to 80% of revenues. In 2023, around 150 such contracts were terminated or not renewed, according to market research by Validated Insights.
As more online programs emerge, the need for high initial investments will diminish, allowing for potential cost savings in the future.
“There’s a chance to reduce expenses on longer term operations if the same course is offered repeatedly,” observed Justin Ortagus, a director at the Institute of Higher Education at the University of Central Florida.
Although recent surveys indicate a slight decline in the proportion of universities charging more for online courses compared to in-person classes, this change is statistically minimal. As student enrollments continue to decrease, educational institutions find it increasingly necessary to rely on the revenue generated by online programs.
Bittner ultimately enrolled in a newly launched online public health master’s program at a private nonprofit university, which offered a more affordable option compared to her initial research.
Working for the national nonprofit organization Young Invincibles that advocates for young Americans’ rights in education, healthcare, and economic security, she remains puzzled by the pricing trends in online education.
“I find it so perplexing. Even in my current program, the level of access to resources is not the same as it is for on-campus students,” she shared. “What justifies such high costs?”
Source
hechingerreport.org