The Future of Online Learning

The Economics of Online Learning

Two different schools of thought dominate discussion on the economics of online learning. On the one hand, there is the hope that online learning will reduce costs by increasing the number of students an instructor can manage. This would be accomplished by such means as auto-marking and automized record keeping. Additionally, on this view, online learning would eliminate the need for expensive classrooms and infrastructure.

On the other hand, there is the empirical data, which suggests that online learning is more labour intensive than traditional classroom learning, which drives costs up. Online students typically interact to a much greater degree than traditional students, and they tend to expect more detailed and individualized comments. Additionally, the cost of developing online courses is high; it is not uncommon to see course development costs in the range of $50,000 to $100,000.

These appear to be contradictory trends, however, the resolution of that contradiction may be found in the following observations: first, while online learning will be more expensive in the short term, it will be cheaper in the long term, and second, while educational institutions will realize some savings by offering courses online, the greater share of the saving will be realized by students.

In the short term, costs will be high. There is no getting around that. Significant startup costs may be identified.

The cost of internet infrastructure, including an internet server with software, and a high speed internet connection. These technologies are currently expensive, but will drop dramatically as computers and internet access become cheaper.

The cost of online course development is higher initially than in the long run. Even though course modules may be re-used, they must be created in the first instance of their use. Similarly, instructional management software must be purchased and designed, and configured.

The human cost, both as needed for course development, and also, as needed for training and learning how to work in the new environment, is higher at first..

Additionally, costs will remain high so long as the internet is used to provide course delivery as it is traditionally conceived. So long as students are grouped in classes, and offered standardized courses, costs will remain high because of the inefficiencies inherent in traditional course delivery.

Improved Automation will also result in savings, especially over the long run as automation improves, however again, automation will not result in the significant savings projected in some quarters, for the following reasons:

Instructors will still be needed - a lot. Although automation will make it possible to deeply personalize instruction, the personal aspect of personalized instruction will in the short term only be deliverable by the instructor, both because of students' psychological needs for human intervention, and instructors' superior capacity to communicate with humans.

While many proponents of automation are thinking in terms of auto-marked assignments, and while indeed some savings may be found in this area, auto-marked assignments are not the panacea they are often perceived to be.

Automation is not automatic. As institutions which have installed management systems have discovered, automatic systems need a lot of maintenance and configuration. Online tests must be designed and routinely evaluated to ensure their accuracy. Offline testing in skills development and higher cognitive achievements will still be required. Testing must still be proctored, at least for as long as no good means of establishing student identity can be found.

In the longer term, as online course delivery and internet technology matures, costs will drop dramatically.

Capital savings will be realized over the long term as classrooms need not be built or maintained.

High speed internet access and server computers will decline dramatically in cost. Online course development will get cheaper as designers and institutions are able to use previously developed resources. Designer and instructor efficiencies will improve as they become more familiar with the online environment.

The cost of course offerings will decrease as courses are increasingly personalized, because instructor communications will become less frequent and more focused. The most significant savings will be realized as the class and course based models are abandoned.

Hiring and Payment for online instructors will little resemble the model in place today. This will cause a lot of controversy, especially among staff at traditional institutions.

As class based learning is displaced by traditional learning, instructors will no longer be assigned classes, but rather, individual students. Permanent, full-time staff will be assigned a teaching load consisting of a certain number of students. More common will be instructional contracts where the number of students is variable, and instructors paid according to the number of students they actually teach.

Staff at traditional institutions do much more than teach students. Especially at universities, but in educational institutions generally, they conduct research, prepare course and lesson plans, attend policy meetings, and participate on committees. Even in class, a significant proportion of their time is spent, not teaching, but rather, attending to administrative and student management details.

All of these functions will be eliminated to a large degree from the duties of instructional staff. And while the rate of pay for teaching will remain high (in fact, it will likely increase), instructors will not be paid at that rate for time they are not actually teaching.

This will be only one consequence of the coming fragmentation of educational tasks. Some tasks, especially administrative tasks, will be handled by online systems staffed by clerical staff. Payment for research will be separated from payment for instruction; more research will be paid for directly though government or corporate grants, or conducted at separate research institutions.

Student payments of fees and other expenses will vary on an institution by institution basis, but several components may be identified.

First, students will be required to pay for local facilities, such as their community learning centre and facilitator. Models here will vary, tending from community supported facilities, paid for by government or corporate grants, to user pay facilities, paid for on an as used basis.

Students will also be expected to pay for their internet access, and their PAD.

As students sign up for instruction from provider institutions, they will be assessed fees comparable to tuition fees today. Typically these fees will be paid online or at the community learning centre.

Finally, built in to the cost of the course or added as a surcharge will be the cost of educational resources offered by private providers. For example, if they are required to use the The Road Not Taken resource, the cost for using this resource will either be charged to the educational institution, or charged directly to the student.

Student Savings. As mentioned above, the largest beneficiary of online education will be the students, for a variety of reasons.

First, students will no longer need to travel for education. This may be only a small savings if the institution attended may be reached by the crosstown bus. It is a significant savings if the student does not need to travel to, and find lodgings in, a distant city.

And second, students will no longer need to give up their earning potential while studying. Today, a college or university degree is a full time commitment, during which the greatest expense is not tuition or even housing, but rather, the cost in lost wages. Online learning allows a student to continue to work while learning.

Finally, third, online educational offerings ought to get cheaper as institutions pass on the savings realized to students.

The Bottom Line for educational institutions is this: even though savings will not be as great as anticipated, it will be necessary for institutions to offer their courses online - and sooner, rather than later - because the costs of not doing so are too great.

As more and more courses are offered online at costs equal to or less than traditional delivery, community learning centres will begin to support these courses, and students will begin taking this. This will cause a drift in attendance from traditional classroom based course offerings. Institutions which do not offer online learning will lose a significant percentage of their student base.

It is easy to say - and surveys continue to reinforce - the idea that classroom based education is the best form of learning. As online technology improves, that will be increasingly less so, and as the savings to the student begin to improve, the classroom method will look less and less appealing.

Once committed to online learning, institutions will have to measure well against global competition. One factor in this will be cost, and it is for this reason the class-course model will be abandoned, as described above. And the other factor will be service. Students will want personalized, humanized instruction.

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Copyright 2004 Stephen Downes
This work is licensed under a Creative Commons License.