Open content and the costs of online learning

Tony Bates, Managing Technological Change, Oct 27, 2010
Commentary by Stephen Downes

Tony Bates, in what is effectively a reprise of the statistical picture in Managing Technological Change, describes the costs of offering a fully online master's degree program from a major research university using open content over a span of seven years. His points is that "Open content is not going to lead to major cost savings in online learning" and "What universities and colleges are really supplying with online learning is not content but service." Tellingly, "If we want to bring the costs of online teaching down, without sacrificing quality, we need to focus on administration and overheads. These indirect costs still exceed 40 per cent of all costs."

According to Bates, "The ‘true' cost per student for this program is $12,500 per student by year 7." This may be, as he says, cost-recoverable, but I wouldn't agree that it is sustainable. To me the most telling feature of this analysis is that it demonstrates that online education in traditional institutions remains far too costly. More than a third of the cost is 'delivery', for example. Indeed, by year four, delivery and administration account for 90 percent of all costs. It should not cost $4000 per student per year to deliver an online program. Reducing these overheads will bring the cost of an MBA - and other degree programs - within the reach of the majority of the population.

As I have been saying for some time, if change in education happens, it will happen outside the educational institutions. As George Siemens says, the university lacks the capacity to change education. This post seems to confirm that.
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