Understanding the Economics of Online Learning

The Costs of Online Learning, the latest in Fordham’s digital learning policy series, tackles the tricky question of per-pupil spending. And while the paper cannot offer definitive answers for policymakers and school leaders, it does provide a helpful primer on the overall economics of online and blended learning.

The top-line findings, that blended learning models cost an estimated $8,900 per pupil (+/- 15%) and fully online schools cost $6,400 (+/- 20%) — compared to traditional expenditures averaging $10,000 — will surely be repeated in statehouse policy battles throughout the country. But, those who actually read the short brief will quickly realize that the authors have bent over backwards to caveat their findings in multiple ways. The most important of these caveats? The author’s cost figures reflect estimates of what online and blended schools are currently spending, rather than what they should be spending. In other words, since we have little understanding of how spending relates to student outcomes, the authors cannot say much about either the effectiveness or productivity of this spending. Is it the right amount? We just don’t know.

Still, readers of the paper will better understand the various components of costs in blended and fully online programs – and how they differ from one another and with traditional instruction. These insights should inform those looking to evaluate digital programs by helping them ask better questions about the choices these programs have made and how they align with an overall instructional philosophy. For example, online programs could spend relatively little on content, relying primarily on their teachers to adapt free and open educational resources. In that case, the program would instead need to invest in its educators, ensuring that they have both the support and expertise needed to assemble and modify curriculum. Likewise, programs investing in sophisticated adaptive content will likely pursue a different instructional model.

Finally, one part of the paper will hopefully improve the overall dialogue around potential “cost savings” from digital innovations. The authors correctly note the wide variations in types of blended and online programs, along with the many different reasons that educators and policymakers pursue these programs. Often, advocates confuse attempts to reduce overall costs with efforts to re-allocate the same costs into a different instructional model (i.e., Rocketship). The first results in lower total expenditures. While the latter may mean lower expenditures in certain areas, such as facilities, those savings are put back into different areas in an attempt to be more productive or focus resources on a particularly vexing instructional problem.

As debates around digital learning become increasingly prominent across the country, it would behoove advocates on all sides to better understand the economics behind these programs. This paper is a helpful start, not only for its content, but also for highlighting the ongoing need to better understand the student outcomes that result from these public expenditures.

-Bill Tucker

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