Understanding the economics of online learning
January 10, 2012
In this post, guest blogger Bill Tucker, managing director of Education Sector, responds to "The Costs of Online Learning," a paper released today as part of Fordham's Creating Sound Policy for Digital Learning series.
The latest in Fordham’s digital learning policy series
tackles the tricky question of cost. And while the paper cannot offer
definitive answers for policymakers and school leaders, it does provide a
helpful primer on the overall economics of online and blended learning.
The top-line findings, that blended learning models cost an
estimated $8,900 per pupil (+/- 15%) and fully online schools cost $6,400 (+/-
20%), will surely be repeated in statehouse policy battles throughout the
country. But, those who actually read the short brief will quickly realize that
the authors have bent over backwards to caveat their findings in multiple ways.
The most important of these caveats? The author’s cost figures reflect
estimates of what online and blended schools are currently spending, rather
than what they should be spending. In other words, since we have little
understanding of how spending relates to student outcomes, the authors cannot
say much about either the effectiveness or productivity of this spending. Is it
the right amount? We just don’t know.
Still, readers of the paper will better understand the
various components of costs in blended and fully online programs – and how they
differ from one another and with traditional instruction. These insights should
inform those looking to evaluate digital programs by helping them ask better
questions about the choices these programs have made and how they align with an
overall instructional philosophy. For example, online programs could spend
relatively little on content, relying primarily on their teachers to adapt free
and open educational resources. In that case, the program would instead need to
invest in its educators, ensuring that they have both the support and expertise
needed to assemble and modify curriculum. Likewise, programs investing in
sophisticated adaptive content will likely pursue a different instructional
Finally, one part of the paper will hopefully improve the
overall dialogue around potential “cost savings” from digital innovations. The
authors correctly note the wide variations in types of blended and online
programs, along with the many different reasons that educators and policymakers
pursue these programs. Often, advocates confuse attempts to reduce overall
costs with efforts to re-allocate the same costs into a different instructional
model (i.e., Rocketship). The first results in lower total expenditures.
While the latter may mean lower expenditures in certain areas, such as
facilities, those savings are put back into different areas in an attempt to be
more productive or focus resources on a particularly vexing instructional
As debates around digital learning become increasingly
prominent across the country, it would behoove advocates on all sides to better
understand the economics behind these programs. This paper is a helpful start,
not only for its content, but also for highlighting the ongoing need to better
understand the student outcomes that result from these public expenditures.