The demand1 for online higher education has steadily increased over the past decade.2 Many colleges vying for a competitive edge have turned to contracting3 with online program managers (OPMs)—private, often for-profit tech companies that provide some or all of the elements required for online education in exchange for a fee or a cut of tuition. The initial allure of contracting out is understandable: a college or department can launch new degree programs that will generate desperately needed enrollments and revenue more quickly than by reallocating or acquiring additional capacity to go it alone.

The ongoing coronavirus pandemic will only add to the seeming allure of OPMs. In only a matter of weeks, the public health emergency has upended the nation’s higher education system, forcing colleges and universities of all sizes and stripes to cancel classes or shut down altogether. To continue their teaching, many instructors have turned to less-than-ideal, stop-gap measures4 such as virtual office hours and classes taught over Zoom to facilitate remote learning. As many have pointed out, these temporary responses are not traditional “online education” programs like the ones discussed in this report. Online-only courses are—or at least should be—distinct, designed to take advantage of the medium and address the downsides of the lack of direct human interaction. They rely on sophisticated, often customized, platforms and technologies and have unique curricula. As such, online higher education shouldn’t be confused with the steps that many brick-and-mortar schools are taking in response to the coronavirus crisis in the short run.

The current moment is presenting a true stress test for higher education, forcing many leaders and institutions to rethink previously held assumptions about the relative values of distance learning and face-to-face instruction.

Yet, at the same time, the current health emergency is likely to increase the demand for online higher education in the medium- to long run. The current moment is presenting a true stress test for higher education, forcing many leaders and institutions to rethink previously held assumptions about the relative values of distance learning and face-to-face instruction. Put differently, an unprecedented, highly contagious infectious disease—and the potential that the disease, or others like it, could remain with us for many months, if not years—strengthens the case for online education.

For-profit OPM companies are sure to recognize this reality. It’s only a matter of time before these companies start chomping at the bit to cash in on schools’ uncertainty and growing financial instability. OPMs will pitch themselves as fail-safe, cost-efficient streams of revenue during uncertain times—an immediate solution for schools to quickly convert programs or create new ones online.

To make matters worse, the looming economic recession will likely precipitate an uptick in college enrollment, similar to the one following the 2009 financial crash.5 This wave of recession-induced enrollment increases will translate to more customers and greater demand for online education, as adult students are more likely6 to seek out flexible learning options, many of which are run by predatory for-profit schools. Plus, online education programs will have the added benefit of relaxed regulations, both as a result of Secretary DeVos’s rollbacks7 in recent years, as well as more recently,8 in response to the current crisis.

Taken together, the pressures that institutions will face to contract out online education will be real and significant. The current pandemic is disrupting the higher education system in ways that a technology company could have only dreamt of.

Yet, colleges must resist the urge and impulse to contract out. Schools shouldn’t allow the instability and uncertainty of the current crisis dictate their long-term strategies. As The Century Foundation has documented extensively,9 the costs associated with contracting out the creation and management of online programs are simply too staggering—for students, as well as for the institutions they’ve entrusted with their education.

Instead, schools interested in expanding their online footprint should do it themselves, develop the programs in-house, and retain control over their operations and management. Experience shows that this “DIY” approach to online education works: institutions—including the two profiled in this report, Columbia University’s School of Social Work and Indiana University—have developed and launched successful online programs using their own resources. Doing so protects schools from falling beholden to profit-motivated incentives10 and allows them to remain self-sustaining and autonomous.

Other schools would do well to follow their lead, and do what we know works best in online education.

The Pitfalls of Contracting Out

One piece of rhetoric commonly used in favor of OPMs—or of contracting out generally—is that it is more efficient to pay someone else to deliver a specialized service than it is to develop the capability and capacity to do it yourself. By the early 2000s, many colleges had already begun to contract out11 a host of services and functions, such as parking, dining, and even campus bookstore services, hoping to cut costs or generate revenue; and the prevalence of these contracts today suggests that relying on them has become an accepted part of the business model for running a college. While this logic may be upheld for providing support services, it should not be applied in the same way to a college’s primary function of education. In providing a quality education, the college’s “bottom line” should be the education of the student; a school can run into problems12 maintaining this mission if its core educational services are run by an entity whose bottom line is profit.

In providing a quality education, the college’s “bottom line” should be the education of the student.

As found through previous research,13 contracting out online services poses less risk when the contracts are limited to specific services for a fixed price. Even so, schools overwhelmingly opt to contract out all operating services,14 including program development and design, student recruitment, and instructor training, in exchange for a share of the program’s tuition. This is a far more problematic model, as it subjects academic quality—the pillars of an educational institution—to profit-based incentives.

Furthermore, the appeal of “bundled services” arrangements is largely that schools do not have to build their own expertise and capacity; the result is that OPM-run programs become essentially a black box. At best, schools in this arrangement are confined to “renting” programs from an outside company, obligated to continually renew their contracts, or face losing everything; similar to a tenant making payments on a property, schools in this situation hold no real claim to the property’s value. At worst, schools don’t even know what services they are contracting for, and are being overcharged for program aspects they don’t need, or are left so far out of the decision-making and operations process that the OPM runs the program into the ground15—which not only severely damages their “brand,” but also means they may need to start over again.

Going It Alone: Two Case Studies

Some schools have recognized the pitfalls of contracting out online programs, and instead have taken steps to go it alone. Below are case studies of two schools of differing sizes—Columbia’s School of Social Work and Indiana University—that launched their own online programs.

Columbia’s School of Social Work

Columbia’s School of Social Work (CSSW) launched an online master’s in social work (MSW) in 2015. In an effort to retain autonomy over their budget, CSSW Online opted to bolster their own capacity rather than work with an OPM.

The online MSW courses were piloted in partnership with Columbia’s School of Professional Studies, which already had existing online programs16 and its own course development team, which included a media team, education technologists, course developers, and instructional designers. In the first semester that online MSW courses were offered, the School of Professional Studies managed all of CSSW Online’s tech support. Once this partnership ended, CSSW expanded to hire their own tech support, additional instructors, and a course development manager, who works with instructors and associates to design their courses for an online format. The instructors and associates are expected to work with the course development manager17 for each new course or course update in their curriculum.

The online CSSW program is unique in that everyone—from the live support specialists to the course development manager—are MSW-holders and are trained through CSSW’s self-developed, online training institutes.18 Some are even alumni from Columbia’s MSW program. According to CSSW Online’s director of administration, Matthea Marquart, the rationale behind training social workers to be IT experts rather than hiring staff with an IT background was that quality student support requires full presence and familiarity with the subject matter, especially with the sensitive subjects particular to social work.19 According to social work scholars, best practices for online education20 in their field include establishing community, having a social presence, and establishing an authentic connection with students. Marquart suggested it would be difficult to achieve this level of engagement in a course on alcoholism, for example, or on racial identity, if the members of the instructional team were unfamiliar with the field of social work.

Quality student support requires full presence and familiarity with the subject matter.

The online MSW program now enrolls about 20 percent of the School of Social Work’s students, currently about 200 students. The program relies on CSSW’s instructional team of 65 professors, who head the design and teaching of courses, 90 teaching assistants, and 40 technical support specialists who are CSSW alumni and took online courses as students. This instructional team is present each time class meets, providing three-tiered support for online students.

In addition to developing the online MSW at Columbia, Marquart also created and maintains the school’s Institute on Pedagogy and Technology for Online Courses21 to provide training to any social work professional who wishes to effectively teach online. The pedagogy institute is a five-week course focused on a breadth of online instructional skills and on how to integrate social work values into student engagement, and it evolved out of the training and feedback of CSSW Online’s existing residential instructors. As this institute is online, one of its priorities is to expose the instructional team to the experience of being an online student, so that the student’s perspective always remains at the core of their work. The institute also promotes academic freedom by teaching the skills necessary for taking ownership over the creation of online assignments, interactive lessons, and live class sessions, so that each instructional team can create unique course sections that reflect their expertise. Furthermore, all instructors and associates seeking to work at CSSW Online need to pass the institute’s training course as a prerequisite to apply to work at CSSW Online. In this way, the institute serves as a mechanism to recruit, screen, and hire instructors and teaching assistants.

Dawn Shedrick, an adjunct instructor for both online and residential CSSW programs, said that CSSW’s training left her with more tools and support than trainings she underwent at other institutions.22 When Shedrick taught at Fordham University’s online MSW, run by the OPM 2U, she was trained entirely by 2U, but ended up needing to supplement that training with self-guided readings, as the 2U training consisted simply of four videos. Furthermore, Shedrick said that 2U was responsible for everything that went into Fordham’s online MSW program, including the instructional design and course content, but their staff had no background in social work. As a result, the 2U instructional designers often leaned on the adjunct instructors for assistance.

Because CSSW has full autonomy over its budget, it can treat tuition from the residential and online programs as a single revenue stream to allow for shared opportunities between the online and residential students. For example, students of the online and residential campus can transfer between campuses for a semester; an arrangement that would be more difficult in OPM-run online programs that have a revenue stream distinct from the university, and would likely impose additional fees for residential students and perhaps additional costs to the school itself.

An additional benefit of a school being self-sufficient is the freedom to invest resources where they are needed, and trusting that those needs are identified through democratic, faculty-led governance. CSSW Online screens and places online students in externships wherever they are located, which is unlike most distance social work programs that require students to find externships on their own—a very daunting task for a student, according to Marquart.23 CSSW Online is also able to maintain a low student-to-faculty ratio. Their online program’s student-to-advisor ratio is 12-to-1, and the campus program’s is 20-to-1, which allows for in-depth advising. According to Marquart, strong advising support is necessary in a social work program, due to the triggering nature of the content, but such an investment in advising would be difficult to achieve and sustain in a program that exists primarily to drive up enrollment and revenue.

CSSW’s largest challenge in expanding online was a limited marketing budget. However, as program scale was not the primary goal, and many of CSSW’s students gravitated toward the school for its reputation, the CSSW MSW program has not needed to expand its marketing capacity so far.

The expansion of CSSW online added a minimal amount to the college’s original budget. The biggest cost to CSSW—and what had the most significant impact on the budget—was the addition of instructional staff. The instructor training institute required a modest budget, as it is staffed by existing faculty, though it was staffed just by Marquart in the institute’s beginning. Admittedly, this put some strain on personnel capacity, as Marquart took on extra hours to manage this along with her other roles.

The CSSW Online program is collaboratively led by faculty who share in decision-making processes about program goals. The hope is that the shared leadership will ensure continuity of the program and its autonomy, even in the event of a leadership or staff turnover. Marquart is also an active member of Columbia’s Online Operations committee, consisting of other department heads of online programs.

CSSW’s online MSW24 is priced at $54,784, much less than the residential program cost of $81,368,25 which Marquart explained is because the MSW is CSSW’s sole online program, so online students do not have the option to take courses that are outside of their program in the same way as brick-and-mortar students could through CSSW’s multiple residential programs. This compares to Fordham’s 2U-operated online MSW26 at $62,634 and residential program cost of $70,332.27

Indiana University

CSSW Online’s experience gives an idea of how a relatively small program can be launched and sustained through internal sources. At the other end of the spectrum, Indiana University Online28 (IU Online) launched in 2012, now supporting 140 online programs with over 32,000 students enrolled. IU Online is not its own unique branch, but rather a centralized operations unit managing the online programs of eight Indiana University campuses. Essentially an internal OPM, IU Online facilitates standardized marketing, recruitment, online course design, instructor training, and compliance operations for all the IU campuses offering online programs.

IU has been offering online programs through different schools and campuses for the past fifteen years. Before IU Online, each campus set its own guidelines for faculty training, recruitment, and branding. IU Online arose out of a faculty-led study29 to assess the university’s structure of online learning delivery that identified the need for a centralized “gatekeeper” between the various IU campus programs to prevent intercampus disparities, as well as a unified IU brand under which to bring together the offerings of the regional campuses.

Under this new structure, each IU campus remains responsible for the development, admissions, and instruction of their programs, and while online students are recruited by and apply through the IU Online portal, they still are admitted to a specific IU campus. IU Online provides a standard set of policies and criteria30 for each campus to follow in carrying out these responsibilities. These policies came out of a collaborative process that involved input from university leadership about online education challenges, such as maintaining campus missions, academic standards between programs and campuses, support services needed for high-quality online education, and factors for program pricing.

Compilation of Facebook ads for IU Online. Source: Facebook Ad Library

According to Bradley Wheeler, IU’s vice president for information technology, the largest challenge was building up expertise and capacity to manage all of the online operations, but it was better to remain “uniquely IU” and own capacity rather than rent it for a high price.31 According to Wheeler, it was not very difficult getting faculty on board with the IU Online initiative, because it arose out of leadership conversations and campus feedback. While some marketing expertise needed to be developed (the Kelley School of Business lent some startup marketing support), marketing has not been a large cost for IU, as it decided to focus its efforts on its natural markets32 of regional residents and alumni where the IU brand and regionally distinct courses33 carry weight.

IU Online was launched34 with an initial investment of $8 million from shared contributions between IU’s President’s Office and several campus and department budgets. These funds were primarily used to cover startup costs, such as hiring instructional designers and technical support, and expanding the hardware and software systems necessary to maintain large scale online programs. The rest of operations have been continually funded through enrollment.

Each IU campus has a Center for Teaching and Learning, which trains faculty in online instruction and helps departments transform their existing curricula into online courses. Each IU campus follows IU Online’s quality standards, but ultimately possesses its own expertise and capacity, a practice that leadership hopes lends itself to transparency and sustainability of the IU Online. Each online program is also overseen by its respective campus, so the campuses retain the ability to handle administrative turnover in their own way.

Pricing of online programs remains one of the largest uncertainties in the online education market.

Pricing of online programs remains one of the largest uncertainties35 in the online education market. While some believe that online education should be cheaper because it requires fewer brick and mortar resources, others say online education could be just as costly, if not more, because quality online courses require more student support36 than courses with in-person instruction. According to IU Dean Bobby Schnabel, who headed the research that led to IU’s online expansion plan, online education increases cost per student37 because of the need to increase faculty capacity by decreasing class sizes, or by bringing on additional instructional assistants. As such, IU Online’s undergraduate programs are priced slightly higher than residential programs for in-state students, but lower than residential programs for out-of-state students. Its graduate programs are priced according to market demand. It is unclear whether the costs of delivery factor into the eventual tuition price listed online, but IU gives some freedom to departments and programs to set tuition at rates thought to be competitive. This is evidenced in differential pricing of just two online graduate degrees: the online MBA program38 tuition is listed at $74,520, while the online MA in English is $34,560.39

Conclusion

In a marketplace as competitive as online education, the impulse of institutions to get online quickly is not surprising. Colleges and universities start off on the disadvantaged side of an information imbalance when they first pursue the decision to offer online education; schools that decide to build their online programs themselves could overcome that imbalance, while those that expand via an OPM could remain in the dark.

Public universities such as IU make a lot of their financial details40 available through their websites or public records requests, but costs of running online programs at private nonprofits, for-profits, and OPMs is less accessible. In time, it is hoped that more light may be shed on the investments that schools and OPMs41 alike make toward each program they manage. Until then, schools should do their best to assess what is in their capacity and what is best left to a contractor.

Acknowledgements: The author would like to thank officials at Columbia University and Indiana University for transparently providing input into this report.

Notes

  1. Julia E. Seaman, I. Elaine Allen, and Jeff Seaman, “Grade Increase: Tracking Distance Education in the United States,” Bay View Analytics (2018), http://onlinelearningsurvey.com/reports/gradeincrease.pdf.
  2. National Center for Education Statistics, “Number and percentage of undergraduate students enrolled in distance education or online classes and degree programs, by selected characteristics: Selected years, 2003–04 through 2015–16,” Digest of Education Statistics, https://nces.ed.gov/programs/digest/d18/tables/dt18_311.22.asp.
  3. Stephanie Hall and Taela Dudley, “Dear Colleges: Take Control of Your Online Courses,” The Century Foundation, September 12, 2019, https://tcf.org/content/report/dear-colleges-take-control-online-courses/?session=1.
  4. Chris Quintana, “College closings: More than 100 colleges cancel in-person classes and move online,” USA Today, March 11, 2020, https://www.usatoday.com/story/news/education/2020/03/11/coronavirus-college-closings-list-online-classes/5022256002/.
  5. “Digest of Education Statistics: Table 303.20. Total fall enrollment in all postsecondary institutions participating in Title IV programs and annual percentage change in enrollment, by degree-granting status and control of institution: 1995 through 2016,” National Center for Education Statistics, https://nces.ed.gov/programs/digest/d17/tables/dt17_303.20.asp.
  6. Ellie Ashford, “Adults Seek Flexible Options for College.” Community College Daily, May 24, 2019, http://www.ccdaily.com/2019/05/adults-seek-flexible-options-colleges/.
  7. Paul Pain, “New Rules on Accreditation and State Authorization,” Inside Higher Ed, November 1, 2019, https://www.insidehighered.com/news/2019/11/01/education-department-issues-new-regulations-accreditation-and-state-authorization; and: “Tracking Deregulation in the Trump Era.” Brookings Institute, March 10, 2020, https://www.brookings.edu/interactives/tracking-deregulation-in-the-trump-era/.
  8. See U.S. Department of Education Office of Federal Student Aid, Information for Federal Aid Professionals, Guidance for Interruptions of Study Related to Coronavirus (COVID-19), March 5, 2020, https://ifap.ed.gov/electronic-announcements/030520Guidance4interruptionsrelated2CoronavirusCOVID19.
  9. Stephanie Hall and Taela Dudley, “Dear Colleges: Take Control of Your Online Courses,” The Century Foundation, September 12, 2019, https://tcf.org/content/report/dear-colleges-take-control-online-courses/?session=1.
  10. “The Cycle of Scandal at For-Profit Colleges,” The Century Foundation, https://tcf.org/topics/education/the-cycle-of-scandal-at-for-profit-colleges/?session=1.
  11. Ben Gose, “The Companies that Colleges Keep,” The Chronicle of Higher Education , January 28, 2005, https://www.chronicle.com/article/The-Companies-That-Colleges/12899.
  12. “The Cycle of Scandal at For-Profit Colleges,” The Century Foundation, https://tcf.org/topics/education/the-cycle-of-scandal-at-for-profit-colleges/?session=1.
  13. Stephanie Hall and Taela Dudley, “Dear Colleges: Take Control of Your Online Courses,” The Century Foundation, September 12, 2019, https://tcf.org/content/report/dear-colleges-take-control-online-courses/?session=1
  14. Ibid.
  15. Harriet Ryan and Matt Hamilton, “Must Reads: Online degrees made USC the world’s biggest social work school. Then things went terribly wrong,” Los Angeles Times, June 6, 2019, https://www.latimes.com/local/lanow/la-me-usc-social-work-20190606-story.html.
  16. See the Columbia University School of Professional Studies, https://professional.sps.columbia.edu/?utm_source=Google&utm_medium=cpc&utm_campaign=Columbia-Branded&gclid=EAIaIQobChMIpJf52v_b5wIVyrzACh2BtgZ6EAAYASAAEgKQ1fD_BwE.
  17. “Course Development Support CSSW Online Campus,” Columbia School of Social Work, https://documentcloud.adobe.com/link/track?uri=urn:aaid:scds:US:13598beb-eb2c-445d-9f83-ffe4f1c6e978.
  18. Johanna Creswell Báez, Matthea Marquart, Rebecca Yae-Eun Chung, Delia
    Ryan, and Kristin Garay, “Developing and Supporting Faculty Training for Online Social Work Education: The Columbia University School of Social Work Online Pedagogy Institute,” Journal of Teaching in Social Work 39, nos. 4–5 (2019): 505–18, https://doi.org/10.1080/08841233.2019.1653419.
  19. Matthea Marquart, interview with the author, New York, November 13, 2019.
  20. M. Secret, K. J. Bentley, and J. C. Kadolph, “Student voices speak quality assurance:
    Continual improvement in online social work education,” Journal of Social Work Education 52, no. 1 (2016), 30–42, https://doi.org/10.1080/10437797.2016.1112630.
  21. Rebecca Chung, Matthea S. Marquart, Delia E. Ryan, and Johanna C. Baez, “Preparing Faculty to Teach Online via an Award-Winning Intensive Online Pedagogy Institute,” February 2020, https://academiccommons.columbia.edu/doi/10.7916/d8-ab3x-6t08.
  22. Dawn E. Shedrick, interview with the author, New York, December 13, 2019.
  23. Matthea Marquart, interview with the author, New York, November 13, 2019.
  24. Columbia School of Social Work, Cost of Attendance: Online Campus, https://socialwork.columbia.edu/admissions/tuition-financial-aid/cost-of-attendance-online-campus/.
  25. Columbia School of Social Work, Cost of Attendance: New York City, Campus,https://socialwork.columbia.edu/admissions/tuition-financial-aid/cost-attendance-new-york-city-campus/.
  26. Fordham University Graduate School of Social Service, OnlineMSW@Fordham, Tuition and Financial Aid, https://onlinemsw.fordham.edu/admissions/tuition-financial-aid/.
  27. Fordham University Graduate School of Social Work, Cost of Attendance Academic Year 2019–2020, https://www.fordham.edu/download/downloads/id/10112/2_year_plan_of_study.pdf.
  28. Indiana University Office of Online Education, https://ooe.iu.edu/.
  29. Dean Bobby Schnabel, “Indiana University Strategic Plan for Online Education,” March 2011, https://ooe.iu.edu/doc/ooe_strategic_plan.pdf.
  30. Barbara A. Bichelmeyer, “IU Online Moving Forward,” June 2012, https://ooe.iu.edu/doc/Moving%20Forward%202012.pdf.
  31. Bradley C. Wheeler, interview with the author, New York, December 10, 2019.
  32. Barbara A. Bichelmeyer, “Moving Forward 2.0: IU Online Implementation Plan,” April 2015, https://teachingonline.iu.edu/about/staff/moving_forward_2.0.html.
  33. M.S. in Cybersecurity Risk Management, https://cybersecurity.iu.edu/
  34. Indiana University, “Indiana University announces IU Online, a major new online education initiative,“ IU News Room, September 5, 2012, https://newsinfo.iu.edu/news/page/normal/23061.html.
  35. Ryan Craig, “Prelude to a Pricing Paradigm Shift,” Inside Higher Ed, October 4, 2019, https://www.insidehighered.com/digital-learning/views/2019/10/04/why-hasn%E2%80%99t-tuition-online-education-tumbled-and-what-will-it-take.
  36. Eric Bettinger and Susanna Loeb, “Promises and pitfalls of online education,” The Brookings Institution, June 9, 2017, https://www.brookings.edu/research/promises-and-pitfalls-of-online-education/.
  37. Dean Bobby Schnabel, “Indiana University Strategic Plan for Online Education,” March 2011, https://ooe.iu.edu/doc/ooe_strategic_plan.pdf.
  38. Master of Business Administration, https://online.iu.edu/program/indiana-business-administration-mba-graduate-1515523342686.
  39. M.A. in English, https://online.iu.edu/program/indiana-business-administration-mba-graduate-1515523342686.
  40. Barbara A. Bichelmeyer, “Moving Forward 2.0: IU Online Implementation Plan,” April 2015, https://teachingonline.iu.edu/about/staff/moving_forward_2.0.html.
  41. Lindsey McKenzie, “Key Senators Turn Up Heat on OPMs,” Inside Higher Ed, February 5, 2020, https://www.insidehighered.com/news/2020/02/05/online-program-management-companies-face-washington-microscope?utm_source=Inside+Higher+Ed&utm_campaign=f84d74af7a-DNU_2019_COPY_02&utm_medium=email&utm_term=0_1fcbc04421-f84d74af7a-233825017&mc_cid=f84d74af7a&mc_eid=7ac5807ca8.

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