Why Does Online College Cost So Much?

Why does an online college degree cost just as much, or even more, than taking classes in person? Among the surprising answers is that colleges and universities are using online higher education to subsidize everything else they do, and some schools are spending significant amounts on marketing and advertising for it. The result is that 83% of online programs in higher education cost students as much as or more than the in-person versions, according to an annual survey of college online-learning officers. The survey was conducted by Eduventures, an arm of the higher education consulting company Encoura, for the nonprofits Quality Matters and Educause. About a quarter of universities and colleges even tack on an additional “distance learning” fee, the survey found.

Universities and colleges “see online higher education as an opportunity to make money and use it for whatever they want to make money for,” said Kevin Carey, vice president of education and work at the left-leaning think tank New America. But eighty percent of Americans think online learning after high school should cost less than in-person programs, according to a 2024 survey of 1,705 adults by New America. After all, technology has reduced prices in many other industries, and online courses don’t require classrooms or other physical facilities and can theoretically be taught to a much larger number of students, creating economies of scale.

But, in addition to using online revenue to help pay for other things, universities say they have had to spend more than they anticipated on advising and support for online students, whose academic performance, on average, lags behind their in-person counterparts. The concerns about cost come as online higher education is projected to pass an impressive if little-noticed milestone this year: For the first time, more American college students will be learning entirely online than will be learning 100% in person. That’s according to an estimate made in January by Richard Garrett, Eduventures’ chief research officer.

Among the reasons is that learning online offers scheduling flexibility for people also juggling jobs and families. It’s being particularly pushed for professional certificates and graduate degrees. And the online sector got a boost from the COVID-19 pandemic, when just about everyone was forced to learn remotely. Meanwhile, more institutions seeing the revenue potential are scrambling to get in on it. Bringing down the price of a degree “was certainly a key part of the appeal” when online higher education began, Garrett said. “Online was going to be disruptive,” he added. “It was supposed to widen access. And it would reduce the price. But it hasn’t played out that way.”

Today, online instruction for in-state students at four-year public universities costs, on average, $341 a credit, the independent Education Data Initiative finds. That’s higher than the average $325 a credit for face-to-face tuition. This adds up to about $41,000 for a degree online, compared with about $39,000 in tuition for a degree obtained in person. Two-thirds of private four-year universities and colleges with online programs charge more for them than for their face-to-face classes, according to the survey of online managers. For private universities and colleges, the average tuition for online learning comes to $516 per credit.

Community colleges collectively enroll the largest number of students who learn entirely online. The Eduventures survey found that all the community colleges surveyed charge those students the same as or more than their in-person counterparts. That’s likely because community college tuition overall is already comparatively low, Garrett explains. There have been some widely cited examples of online programs with dramatically lower tuition, such as a $7,000 online master’s degree in computer science at the Georgia Institute of Technology (compared with the estimated nearly $43,000 for the two-year in-person version). That program has attracted thousands of students and a few copycats.

There are also signs that prices could fall. Competition is intensifying from national nonprofit providers such as Western Governors University, which charges a comparatively low average of $8,300 per year, and Southern New Hampshire University, whose undergraduate price per credit hour is a slightly lower-than-average (for online courses) $330. Also, universities have started cutting their ties with for-profit middlemen, called online program managers, which take big cuts of up to 80% of revenues. Nearly 150 such deals were canceled or ended and not renewed in 2023, the most recent year for which the information is available, the market research firm Validated Insights reported.

Allison Green
Boston Tutoring Services