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The Hidden Costs of Distance Learning

In spite of strong investments in technology infrastructure and distance education, competition among higher education providers continues to rise with the growing costs, flexibility, and innovations of corporate and for-profit educational institutions. In the face of competition, college leaders know first hand the growing pressures for online development to broaden distance learning options and generate more opportunities that meet the technological expectations of a new generation of students.

It is widely recognized that strong course design, coupled with online faculty and facilitator training, helps attract students and promote student retention and program success. However, college leaders who do not evaluate the costs of technology, training, and course design against the new opportunities of leasing and contracting for online courses and programs might encounter the runaway expenses of technology investments and the costs of declining enrollments as students vote with their feet.

Cost Models for Distance Education

When it comes to factoring or extrapolating distance education budgets, colleges and universities typically do not track and total all costs associated with development, delivery, instruction, support, and services. Many of higher education’s costing methods were developed in the 1960s and 1970s, when the majority of instruction and curriculum content was written and created by faculty alone for traditional classroom delivery. As this traditional classroom delivery model was basically homogenous, it was easy to calculate the cost per FTE, and this traditional cost model helps us understand why engineering instruction, which often hosts more mathematical exercises and lab simulations, often costs more than text-based English curriculum developments.

However, the model is of little use in determining if classroom instruction costs more or less than distance education delivery models, and it lacks the multiple variables and support costs associated with student success.

During the 1990s, as distance learning doubled in delivery and enrollments matured to new levels of expectation, colleges, universities, associations, and research groups hunted about for best practices and formulas to measure success in distance learning programs and performance in technology investments. In 1998, the Fund for the Improvement of Post Secondary Education (FIPSE) supported a joint endeavor between the Western Cooperative for Educational Telecommunications (WCET) and the National Center for Higher Education Management Systems (NCHEMS). The Technology-Costing Methodology (TCM) Project aimed to develop an objective basis for understanding the scale effects of different modes of delivery and create a generally agreed-upon costing methodology for distance education.

The TCM Tabulator was created as a cost-analysis tool, to include standard definitions of cost categories, for institutions and agencies to first analyze their costs for technology-based instructional approaches and then legitimately compare cost data for different instructional delivery methods. The TCM tabulator outlines the costs of distance learning courses by adding the costs of “design, development, and evaluation,” and then dividing this number by “average enrollment figures,” offering a general cost per student for distance learning courses. This can then be compared to the cost per student for more traditional classroom instruction. The TCM Tabulator is available online as a free service for general use.

Another model for distance learning cost analysis was developed by Brian M. Morgan of Marshall University (2000), and, like the TCM, offers online data input and estimated tabulations as a free service. Morgan attempted to draw in broader categories of costs and variables associated with distance learning to include technology infrastructure, learning support, and support services.

The Morgan-Marshall Model (M3) recognizes variances that make it difficult to apply a simple formula or single input function related to time, in the absence of a set formula or standard that determines the true amount of time necessary to develop an online course. Some of the most influential factors in causes for varying development times include

  • resources available to the developer;
  • technical abilities;
  • pedagogical knowledge;
  • availability of content;
  • form of content, electronic or not;
  • availability of developers and faculty;
  • complexity of courses, objectives, and desired outcomes of courses;
  • type of instructional strategies necessary; and
  • programming needed.

For these reasons, the M3 claims the pricing of course development based on a static number of faculty, staff, or single variable of development time should not be the defining consideration.

The M3 Model uses a questionnaire as input data to evaluate three hidden cost structures in the development of online content. These costs include (1) Development Costs, (2) Teaching and Instructional Costs, and (3) Technology and Infrastructure Costs. Noting these cost factors, the M3 Model also recognizes the variances of potential revenues – to include demand, need, and market – for new courses and programs.

The variables outlined in the analysis of Development Costs on the questionnaire focus on

  • Faculty Training – Course Design;
  • Instructional Technology Support;
  • Research or Library Support; and
  • Supplies Consumed – CDs, printing services, ink cartridges.

In addition to the development costs, the questionnaire poses ideas beyond standard stipend or reimbursement for Teaching and Instructional Costs, to include

  • Student Enrollment Forecasts versus Teaching Load,
  • Office Space,
  • Administrative Overhead, and
  • Help Desk Support for faculty and students.

The third input variable, Technology and Infrastructure Costs, led to the review and support of back-office service functions that add to bottom-line investments. These include

  • Server – Hosting Costs;
  • Server Administration;
  • Back-up Costs – Security;
  • Data Communication Changes;
  • Software Costs – Bb and WebCT platforms; and
  • Business Management Costs – Planning time, Meeting time, Development time.

The output of the inquiry is an eLearning Spreadsheet that outlines annual cost units for the three Hidden Cost areas, factors in revenue estimates, and adds new dimensions to the more standard course or stipend model.

Benefits of Contracting and Project SAIL Partnership
Applying these application cost models to course development, on average, the break-even point or return on investment of distance learning expenses is seven years. For more traditional courses such as English, algebra, or chemistry, these are sound investments for expanding program offerings and new opportunities for student enrollment. However, for workforce development and industry job markets, two or three turns of labor demands can cycle through a local economy in seven years. For community colleges and workforce development centers charged with training and retraining developing labor markets, the seven-year cycles may bring too little too late.

In addition to the cycles of labor demand, today’s community college students and a growing number of nontraditional students have greater expectations of service. Many are much more impatient with the semester-based structure of classroom delivery; they are smarter consumers, recognizing the multiple options and competition among online programs and course providers. They have a stronger grasp of technological skill and are more comfortable with distance education and eLearning exchanges, and they recognize 24/7 connections while expecting this type of immediate service. In spite of these advances, today’s community college students and nontraditional students share commonalities for successful program completion with their predecessors. The overwhelming majority of students enrolled in higher education still require financial aid, a great number require tutoring, library services, computer access, testing options, technical assistance with online resources, placement services, and ongoing academic counseling.

To meet these growing expectations of services and the ever-changing workforce development demands, many institutions are looking at alternative e-learning options beyond the significant budget investments of program and content development. Many are weighing the cost to develop, maintain, and distribute courses and programs against the cost to license, lease, or exchange courses and programs with other institutions. The hidden costs of distance learning, faculty development, and technological infrastructure point to Project SAIL, Specialty Asynchronous Industry Learning, as a new consortium of partners focused on the exchange of specialized industry-driven programs.

The growth and maturity of eLearning programs and courses makes it possible to extend access to specialty courses, degrees, and training beyond traditional college service-area boundaries. Project SAIL offers colleges the opportunities to expand their distance learning program options and fulfill immediate local area workforce needs in even the most remote communities without significant time and dollar investments in content or technological developments. Project SAIL, as a national repository for the exchange of asynchronous specialty industry curricula and training options, is distinguished by three strategic objectives:

Targeting Specialty Asynchronous Industry Learning content – Project SAIL focuses on specially designed online courses and programs that provide immediate skill training for the fundamentals of a specific trade or profession rather than widely available postsecondary general education offerings.

Providing access to existing programs and degrees – Project SAIL connects participants to successful online content and curriculum developed within community colleges or industry training centers, as well as to existing degree, certificate, and transfer agreements and college support systems.

Developing a model curriculum and content-exchange system – Through Project SAIL, successful specialty courses that have been developed by one institution — often at significant cost and investment — can be licensed or brokered for use by another college to build a program that meets new workforce development needs without duplication of development dollars.

The curriculum and content exchange system — an array of customized purchase, license, and lease options – is the “win-win-win” foundation of Project SAIL. This exchange system serves the institution providing the specialty content that recaptures some of its investment funding; the recipient institution that enriches its program options, maintains FTE counts, and serves local industry needs; and the students who access successful, high-quality online or hybrid learning options while remaining at their home institution with sustained services such as advising, financial aid, tutoring, computer lab access, library access, career guidance services, and local industry placement services.

The specific benefits and cost savings of Project SAIL participation offer solutions to the hidden costs of distance learning development, training, and design. Factoring these costs, with the time constraints for immediate local industry and workforce development needs, underscore the long-term investment costs to develop, maintain, and distribute specialty distance learning programs. Project SAIL offers a viable solution to enrich community college’s long-standing leadership in workforce training, and offer opportunities to reinvest in their local communities with innovative responses and solutions, rather than reinvent specialty content with heavy investments of time and money.

Click here to preview Project SAIL programs and courses and learn how to participate.

For more information on
the Hidden Costs of Distance Learning
, contact:

Carl Cooper
Executive Director, Telelearning
LeCroy Center
Dallas County Community College District



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