Brian M. Morgan
Determining the Costs of Online Courses 3
Table of Contents
Table of Contents 3
Table of Figures 6
Background of Online Courses 10
Definition of an Online Course 10
Why this Type of Education Is Important 10
Costs Involved in Developing and Teaching Online Courses 13
Determining Categories for Costs 13
Technology Specific Costs 14
Support Personnel Costs 15
Faculty Development Costs 16
Hidden Costs 16
Costs of Developing Online Courses 18
Costs of Teaching Online Courses 19
Sample of Marshall University’s Costs 20
Table 1: Costs of Developing Online Courses 21
Table 2: Costs of Teaching Online Courses 21
Table 3: Technology and Infrastructure Costs 22
Table 4: Revenue from Online Courses (Tuition) 22
Table 5: Summary of Costs and Revenues 22
Figure 1: Distribution of Costs for Online Courses at Marshall University 23
Explanation of Costs 23
Figure 2: Costs and Revenue Streams for Online Courses at Marshall University 25
Revenue for Online Courses 26
Determining the Costs of Online Courses 4
Sources of Revenue 26
Why an Institution Would or Would Not Want to Do This 26
What is important for this type of education to be successful 29
Using Technology as a Strategic Asset 29
Centralization of IT Support 32
Instructional Technology Support 32
Table 6: Analysis of results from faculty teaching online courses at Marshall University 34
Faculty and Online Courses 34
Administration and Online Courses 35
Students and Online Courses 38
Interactive Web Site for Determining Costs 40
How the Site Works 40
Figure 3: Data Flow for Determining Costs Web Site 41
How Costs and Revenues are Calculated 43
Online Development/Teaching Surveys 45
Developing Online Courses Survey 45
Table 7: Summary of Results from Developing Online Courses Survey 45
Figure 4: Breakdown of Compensation Types for Development of Online Courses 47
Figure 5: Participation Percentages for Developing Online Courses 47
Selected Comments from Developing Survey 47
Teaching Online Courses Survey 49
• Table 8: Summary of Results from Teaching Online Courses Survey 50
Figure 6: Breakdown of Compensation Types for Teaching Online Courses 51
Figure 7: Participation Percentages for Teaching Online Courses 51
Selected Comments from Teaching Survey 51
Determining the Costs of Online Courses 5
What Do the Results Represent? 55
Online Student Survey 58
Aggregate results 58
Table 9: Summary of Results from the Flashlight Current Student Inventory 58
What Do the Results Represent 59
Appendix A Developing Online Courses Survey 66
Appendix B Teaching Online Courses Survey 69
Appendix C Comments Received from Developing Online Courses Survey (names withheld) 71
Appendix D Comments Received from Teaching Online Courses Survey (names withheld) 99
Appendix E Faculty Gap Analysis Survey 121
Appendix F Flashlight Student Current Inventory Survey 122
Determining the Costs of Online Courses 7
Before an institution of higher education ventures into online education, a complete understanding of costs to be encountered is essential. Although dozens of methods for delivering courses through distance education have been utilized for years, the offering of online courses through the World Wide Web has existed for less than a decade. Many institutions at this time may not understand the full impact of the costs of online education. This paper will assist institutions in realizing these costs, whether they are tangible or perceived. The paper and accompanying web site
(http:/webpages.marshall.edu/~morganl6/onlinecosts/) will discuss what areas must be considered, what effects online courses may have on an institution, what costs are involved in the establishment of this type of venture, and also examine costs and possible problems that may be encountered with ongoing course offerings.
The need for this research became evident to as early as 1998 when trying to research what online courses were costing our University. Marshall University’s School for Extended Education provided a simple spreadsheet showing how much the University had paid for the development and teaching of online courses, and stated that these were the costs of Marshall University’s online course endeavors. The first thing that entered my mind was the question “what about my time and effort spent? Who accounts for that?” This sparked interest to look back at what the University had done and thought about the finances involved. It was decided that it would be beneficial to see if the investment has been rewarded. In short, was it all worth it?
Nine months ago, there was extreme excitement about the possible outcomes of this project. Nine months later, there is even greater excitement about the results, and a hope that the information provided herein will be beneficial to those considering implementing online courses. Since there have not been many books published on the costs of online education, research focus was through a literature search of magazine articles, an analysis of gathered surveys, and personal experience. Although this paper represents the findings of said research, a continued search for answers in this area with the use of the accompanying web site (http:/webpages.marshall.edu/~morgan16/onlinecosts/) is necessary.
Determining the Costs of Online Courses 8
Since this is such a gray area in higher education, there are hopes that this information will provide other institutions as to what they need to be aware of before deciding to initiate these types of offerings. After compiling research and survey results, it was evident there were many things found that had not been considered beforehand. It was fascinating to find a high percentage of faculty who were interested in teaching online, but only if administration were to make changes in such a manner they would be recognized for their efforts. Students at our Marshall University have been very pleased with their experiences in online courses to date, something we had no evidence to support until this point.
Some of the greatest concerns in the area of online courses have been retention and equality of content being offered. It was gratifying to find that retention rates in online courses at many institutions, including Marshall University, are in the 70% range and accrediting agencies are accepting online courses as an acceptable form of delivery. Another positive experience that resulted from this project was the accompanying web site (http:/webpages.marshall.edu/~morgan16/onlinecosts/) that allows individuals to enter data specific to their institution in order to estimate costs associated with a venture into online courses. This site was developed from research data gathered over the past nine months. By attempting to account for all costs involved, the site should provide an institution with a true overview of the costs in introducing and maintaining online courses.
Online education has rapidly developed into such a hot topic that it has become the center of conversation at many higher education institutions. An institution either has plunged into it headfirst, or is seriously pursuing interest. What more often than not happens is that higher education Institutions begin offering online courses without realizing what they will cost 1) to get started and 2) in the long run. Carlson (1999) insists that to be successful, institutions must properly plan, convert material, and evaluate their distance education offerings. Nonetheless, some institutions will never possess the resources to be able to conduct this endeavor themselves without possibly a partnership. Online education may not even be the approach that some wish to take.
Because there has not been much information available regarding how an institution should get started and what the cost might be, this project is a great opportunity for additional research and
Determining the Costs of Online Courses 9
development of a web site where an individual could answer questions regarding their institution to determine if online courses will be beneficial or too costly for investment. Some institutions forced into online education have closed shop, usually because they were without a well-thought out financial plan. Still others have prospered.
This paper will provide insight as to what one should be aware of before venturing into the realm of online education. The research results should also provide a means to see if the financial investment of online education will be beneficial. It is easy to say that no two institutions are the same and, because of this, the web site at http://webpages.marshall.edu/~morganl6/onlinecosts/ allows the changing of variables that reflect the affects on the outcomes of the costs. Once users of the site have made their own entries and comparisons, updates will be made to reflect changes suggested by those users.
The web site was tested with findings from Marshall University’s cost analysis regarding online courses and found to be very accurate. The numbers were not identical, but the ratio of the institution’s cost to revenue between the site and the paper were within five percent. Additional comparisons at other institutions will greatly solidify the site as an invaluable tool. Continued updates and maintenance of this site will be a personal goal.
The Institute of Higher Education released a report on March 21, 2000 (Quality on the Line) regarding guidelines for online courses. Throughout this paper, at some point 23 of the 24 principles that Fleischauer (2000) named as critical elements to have in place before venturing online were mentioned. The only one missed was that adequate library resources needed to be supplied to online students.