- Good education does not come cheap.
- Can education be provided in a competitive market?
Good quality education, whether online or face-to-face will cost money. Which form of education, or rather which combination, is appropriate depends on the context. For 18 – 24 years old, the campus university seems optimal, although the more independent attitude of young people is reflected in a more critical approach to education. They seem to choose for a combination of work and (distance) education, adding to the more adult learners. Also, for big audiences or a large geographical spread of learners, online distance education could be more effective, but not necessary less expensive.
The transformation of costs of education into the fees of the learners is a political choice. By setting the size of the overall budget and the part spend on education, it determines the access and price of education. Of course, governments will ask organizations to organize education in an efficient and effective way. However, the usage of for-profit organizations to realize the educational goals would require that they provide the same or higher quality of education at 60% of the costs of not-for profit organizations, which seem quite a challenge.
The challenge for government agencies is to make sure that the for-profit organizations align their (profit) goal with the goals of the students and the governmental goals, preventing misuse and fraud as described by Carey.
2. Good education does not come cheap.
When someone writes:“The price of college is breaking America”, the problem seems sever. Yet, Kevin Carey also has the answer: It also doesn’t explain why colleges have failed to take advantage of the best opportunity to radically drop the price of a good …………The answer is online learning.[..]. This is how universities could break the tuition cost curve—by making the price of online degrees proportional to what colleges actually spend to operate the courses.”
In a reaction to this Paul Prinsloo wrote at twitter: “[..] working in a mega public distance/blended institution with more than 350,000 students calls forth grappling with the three vectors of the “iron triangle” – access, quality, cost. I classify under ‘quality’ the issue of student:instructor ratio […] So balancing cost, quality & access (an unholy trinity) per se means compromise. You cannot touch one of three vectors without impacting the other two. Appointing ‘cheap’ adjuncts, increasing class sizes & redefining good quality to “good enough” is the name of the game”.
In my experience, working for 30 years in distance education, there are some rules of the thumb:
- The total costs of developing good distance learning courses (DLC) are about the same as classroom courses (F2F). However, costs in DLC mostly fall in the design and production phase, whereas F2F-courses require more efforts (and costs) in the exploitation phase.
Two comments on this rule are (a) that many costs of F2F-courses are hidden for the administration; preparations for the September-courses often takes place in the summer or are disguised as research; (b) quality in DLC is not defined as the student:instructor ratio, but rather as the absence of instructors. Perfect (non-existing) course materials do not require any explanations. And yes, although much of the knowledge of the original designer is made explicit in the materials, it will be imperfect and adjuncts are used to help students.
- Different courses require a different approach. We try (tried) to embed basic knowledge in courses that can be studied independent of tutors, other students and place and time. Other courses, for example advanced courses or competences courses require academic reflection and discussion, so students are grouped together and mentored when needed. In the last case, there are didactical reasons for
- There seems to be a relationship between the number of students, their geographical location and the most costs-effective teaching style. Small groups in each other neighborhood will be best served with F2F-courses. For groups divided over large areas or large amount of students DLC may be cost effective. Two simple examples: we had a set of independent DLC-s which were taught to 300-400 students using 7 lectors. Because we added research competences into the course, it is now taught in groups of 20 students, requiring 15 tutors. When the amount of students rose towards 500 students, the amount of tutors increased to 25 (but in reality, we also increased the amount of students/group). The group of students who are writing a master thesis, meet in Utrecht, which involves train trips up to 200 km., on average students and teachers travel 50 km to attend these colleges.
Therefore, in different situations, DLC-s can be more cost-effective. However, good education does not come cheap. Just filming your classes and putting them on the internet can provide others with good educational resources, but does not creates good education. The same applies for an unrestricted increase of the number of face-to-face meetings, sometimes students have to read and work as individuals. Yet, in my opinion, there is no iron triangle; the relationship between quality (in a broad sense), access and costs is mainly a financial decision. As we experience in DLC, the decision to cut costs in the design phase has its consequences in the later phases of the course, including failing students or increasing tutoring costs. Only when the government agencies or the management of the educational organization set a fixed budget, the triangle becomes fixed. And as teachers cannot influence access or costs, it will be the quality which will be adjusting.
The idea that online learning will decrease prices of education as students only pay for the teaching (activities) and not for football, buildings and buffets, is an old one. Christensen et al. (2010) predicted the disruption of education because of distance and online learning. As we saw above, there is no necessity that good quality DLC will be cheaper than F2F education; only that it will be more cost-effective per student.
One exception is as an organization uses existing materials and competences to develop online education. For example commercial educators hire university professors to develop courses, which can be sold cheap. However, the professors are trained by and do research at institutions financed by public funds, so part of the costs are carried by the public sector. Following Carey, American universities are organizing this competition themselves with the help of socalled ‘online program managers’ (OPMs): for-profit firms taking the educational programs of these institutions and putting them online, in exchange of 50-60% of the tuition fees.
Carey then makes two important points with respect to the costs of education:
- By comparing the fee of an online course, set at a breakeven point by Georgia Institute of Technology ($ 6,000) with the fee of similar courses, which are offered for fees up to $65,000.
- Based on the financial rapports of 2U, an OPM, he gives a breakdown of costs, resulting in a 43% profits (divided 50:50 over 2U and the universities), 43% program costs (developing the program, subscription & administration and marketing & sales, 19%) and 14% instructional costs.
The ratio between program costs and instructional costs is a problem when quality is measured in student:instructor ratios. If the developed online materials are of good quality, our rule of the thumb says that investing in good materials can reduce the required amount of tutoring. There is not much to be said about it without any data on students’ progress, degrees awarded and student intentions.
3. Can education be provided in a competitive market?
More disturbing are the figures with respect to profits and fees as mentioned above. If profit is the only reason to offer an educational program, there seems to be an inclination to raise the fee for students up to 11 times the costs and spent more on marketing and sales than on instruction.
Whereas much of the comments on Carey focus on the costs aspect of online education (see Lederman, 2019). However, from my (European) point of view, I find the examples given of for-profit-firms who use the tax and educational policies to generate business without any regard to quality much more disturbing. Lederman (2019) interviews Terry Bates, who stated, “Certainly in the U.S.A., OPMs are sucking money out of the system, as are for-profits. However, neither of these conditions apply in Canada. Tuition fees are lower because provincial governments in Canada better support higher education institutions financially than do the state governments in the U.S.A”.
He point out two choices that influence an educational system. Firstly, the political choice to support education or not. On a budget level, educational outlays compete with other spending, whereas the overall budget depends on the amount of tax revenues. Therefore, the costs of education for students and learners are not only a design choice of teachers and educational institutions but also of national and state governments. Secondly, if for-profit organizations provide services or goods, part of the price (fee, charge) will be profit. If the quality of service a not-for profit organization is as good as the for-profit organization, society will be better off when the not-for profit organization is chosen. The reason to choose for a for-profit organization to organize online education should be in the fact that this organization can offer courses or a program at a total of costs and profit below the costs of the production by the not-for profit organization. In terms of the figures of 2U, the costs of the combined 2U/university offering should be 43% lower than the costs of the online program by the university. When we add to that, that a public financed university should not advertise as often as a for-profit organization, the total costs of the combination have to be 63% below the costs of the university.
And, perhaps Trace Urdan (Tyton Partners, cited in Lederman, 2019) is right that Carey “blames capitalism” [..] and “doesn’t like profit making in higher education” [..]. Nevertheless, as illustrated above, the positive effect of capitalism rests on the assumption that for-profit firms are about 60% cheaper than not-for profit organizations given the same level of quality.
Furthermore, a free market does only make sense if one the demand side consumers have consumers-freedom, meaning that they are free to choose. However, in (formal) education students only get to choose the once and are then locked in. Schoeni (2018, 457) shows for military expenditures that innovation through private-public partnerships are bad for innovation as: [..] “competition is once and done. It occurs early in the process, then vendor lock ensures that incumbents have a ready buyer for decades. P3s would only exacerbate that problem. By definition they lock in a single supplier for the long term”.
Urdan argues that: “But higher education pricing at the master’s level is not cost based. Among the elite schools that Carey holds up, it is value based. [some are higher priced], but because these are the prices that buyers believe these programs are worth”. Which shows that regular market-laws do not apply to education.
More disturbing are the examples Casey mentions where for-profit educational firms ignore all levels of quality and see students only as a mean to derive income from. Or as Casey describes: “There was the recruiter who described hunting for students outside welfare offices in poor, mostly black neighborhoods. A prospect was considered qualified if he could “breathe, scribble his name, had a driver’s license, and was over 18 years of age,” the recruiter explained”. Subsidy hunting is of all times and places, but it cannot be an argument for the use of for-profit organizations in education.
Carey, Kevin. (2019). The creeping capitalist takeover of higher education, Huffpost, April 1, 2019, https://www.huffpost.com/highline/article/capitalist-takeover-college/
Christensen, C. M., Johnson, C. W., & Horn, M. B. (2010). Disrupting class. McGraw-Hill.
Lederman, Doug. (2019). What Kevin Carey Got Right (and Wrong), Inside Higher Ed, April 10, 2019. http://www.insidehighered.com/digital-learning/article/2019/04/10/expert-roundup-what-kevin-carey-got-right-and-wrong-about-opms
Reed, Matt. (2019).The Assumption that Online Teaching is Cheaper, Online education, costs and the OPM debate, April 11, Inside Higher Ed, http://www.insidehighered.com/blogs/confessions-community-college-dean/assumption-online-teaching-cheaper
Schoeni, L.C.D.E. (2018). Whither Innovation?: Why Open Systems Architecture May Deliver on the False Promise of Public-Private Partnerships. Administrative Law Review, 70(2), 409-458.