The Rising Cost of Online Education: A Paradox in Higher Learning
Online education has become a significant part of the American higher education landscape, with more students learning entirely online than ever before. However, this shift has brought with it a growing concern among students and educators alike: why do online courses often cost just as much—or even more—than their in-person counterparts?
Emma Bittner, a 25-year-old from Austin, Texas, found herself in this situation when she considered pursuing a master’s degree in public health. She expected that an online program would be more affordable, but instead, she discovered that the cost was comparable to or even higher than traditional in-person programs. “I’m like, what makes this worth it?” she said. “Why does it cost that much if I don’t get meetings face-to-face with the professor or have the experience in person?”
This confusion is widespread. A 2024 survey by New America found that 80% of Americans believe online learning after high school should cost less than in-person programs. After all, technology has driven down costs in many industries, and online courses theoretically offer economies of scale by eliminating the need for physical classrooms.
Yet, according to an annual survey of campus chief online learning officers, 83% of online programs in higher education cost students as much as or more than their in-person equivalents. Some institutions even add an extra “distance learning fee.” This discrepancy raises questions about how universities are pricing their online offerings.
The Financial Strategy Behind Online Tuition
Universities and colleges often use revenue from online programs to subsidize other parts of their operations. For instance, 60% of public and over half of private universities make more money from online education than they spend on it, according to the same survey. Many of these institutions reinvest the funds into general operating budgets.
Kevin Carey, vice president of education and work at New America, argues that online education is seen as a new revenue stream rather than a way to reduce costs. “Public officials are not stopping them,” he said. “They’re not coming and saying, ‘Hey, we’re seeing this new opportunity to save money. These online courses could be cheaper. Make them cheaper.’ This is just a continuation of the status quo.”
In addition to financial considerations, online programs also face higher operational costs. They require expensive technology infrastructure, faculty support, and resources such as online advisors and tutoring centers. According to a survey by Ithaka S+R, 80% of faculty reported that it takes as much time, or more, to develop online courses compared to in-person ones due to the need for technological integration.
Marketing and the Perception of Value
Another factor contributing to the high cost of online education is marketing. Universities invest heavily in advertising to attract students across the country. For example, the University of Arizona Global Campus spent $11,521 on advertising for every online student it enrolled. Similarly, the University of Maryland Global Campus committed $500 million to advertising over six years.
Such spending raises questions about whether the money could be better used to lower tuition. “What if you took that money and translated it into lower tuition?” asked Carey.
Despite the high costs, online students often face poorer outcomes. Research by Duha Altindag and colleagues found that online instruction results in lower grades than in-person education, and students are more likely to withdraw or repeat courses. Lower-income students, in particular, tend to struggle more in online settings due to limited access to resources and balancing work or family responsibilities.
The Future of Online Education
While online education continues to grow, some examples show that lower tuition is possible. Georgia Institute of Technology offers a $7,000 online master’s degree in computer science, significantly cheaper than its in-person version. Other institutions, such as Western Governors University and Southern New Hampshire University, also offer relatively low-cost options.
Competition among online providers is increasing, and some universities are cutting ties with for-profit middlemen known as online program managers. In 2023, nearly 150 such deals were canceled or not renewed.
However, despite these developments, the proportion of universities charging more for online programs than in-person classes has only slightly declined, and the drop is statistically insignificant. As enrollments continue to fluctuate, institutions increasingly rely on online revenue to sustain their operations.
For students like Bittner, the question remains: Why do online programs cost so much? “Even in the program I’m in now, you don’t get the same access to stuff as an in-person student,” she said. “What are you putting into it that costs so much?”