Online courses, instructional quality, and economics: a conceptual  (Page 3/8)

Benchmark data also ignore the fact that the student market is segmented rather than homogenous (Zemsky, Shaman,&Shapiro, 2001). This segmentation reflects a variety of institutional types and missions. Students who will be attracted to, and well served by, one type of institution will not be attracted to, or well served by, another institution. Recruiting outside the normal market segment of an institution is costly because of increased recruitment costs and lower retention rates. Furthermore, the intrusion of large institutions into markets normally the province of small institutions may have a negative impact on higher education in general (Newman et al., 2004). Without the capital to compete with larger institutions, smaller institutions may ultimately cease to exist. With them will go the unique missions they serve and the diversity which is the great strength of higher education in the United States. Thus, an important consideration in the decision to go online is whether students appropriately served under the institutional mission will benefit from the courses and programs provided.

Return on investment analysis: an alternative to benchmarking

Benchmarking alone, in our opinion, should not be the reason for offering online courses. Instead, benchmark data should trigger a serious return on investment analysis (ROI). That is, data showing that other institutions of higher education are implementing online learning are only sufficient to indicate that institutional leaders need to determine whether or not such instruction can serve their institutional mission in a cost effective fashion. Other data must be considered before this decision is made. The additional data, however, may be difficult to obtain because institutions of higher education are not accustomed to calculating costs accurately. For example, institutions typically underestimate the cost of recruiting students (Raisman, 2007). Nevertheless, such calculations need to be made because simply increasing enrollment can actually result in a loss of revenue when the costs of recruitment and instruction exceed the revenue obtain through tuition, fees, and so forth.

Calculating required cost

How much should putting a course online cost? Prior to offering online courses, the costs of putting quality courses on line needs to be calculated. The cost estimates for the ROI in the current analysis are taken from the business world. We used business calculations because higher education is under increasing pressure to provide accountability with regard to student learning (Newman et al., 2004). In the past, if we provided insufficient instruction and students failed to learn, we either failed them or adjusted grades in some way (e.g., curving, extra credit). Thus, the cost of instruction has simply been whatever we have been willing to pay. In the business world, however, if insufficient instruction is provided and students do not learn, the trainer gets fired. A world in which teachers can be fired when their students do not learn not only tends to generate better practice, but also reflects a level of accountability typically not present in higher education. That is, in higher education, poor teaching can often be covered up by failing the students, grading on a curve, giving extra credit, or similar practices that either blame the student or inflate grades. Thus, we contend that the business world is the best place to estimate what online courses should cost. In this world, instruction costs whatever it takes to do the job well, not simply what the institution is willing to pay.