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Online degree programs have been great at saving students money indirectly, but rarely have schools used online to lower tuition. Connecting technology innovation to instructional cost reduction in higher education often feels like touching the third rail – certain death, so you don’t do it. But the climate may be changing.

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Online degree programs have been great at saving students money indirectly (avoid commuting and childcare costs, easier to combine study with full-time work), but rarely have schools used online to lower tuition. This is partly because at many schools the way online is organized means cost actually go up, and partly reflects institutional hesitation about lower pricing sending unpredictable signals about quality and the relative value of the traditional campus. Connecting technology innovation to instructional cost reduction in higher education often feels like touching the third rail – certain death, so you don’t do it.

But the climate may be changing. Take two recent announcements from Florida and South Carolina. Florida’s decision to create a new wholly online public university, managed by the University of Florida, includes a requirement that tuition is no more than 75% of standard campus pricing. The new university will focus on Bachelor’s degrees. University of South Carolina has launched Palmetto College, a new branch of the university focused on online Bachelor’s completion. For state residents, tuition per semester will be $900 lower than normal. Rarely have mandated cost savings been such an explicit part of new online initiatives.

At the same time, other fashionable online-related developments such as MOOCs, competency and adaptive learning, all explicitly target cost reduction alongside pedagogic gains.

These are logical next-step trajectories for online higher education. If online cannot squarely address the major frictions in U.S. higher education – cost, time, attainment, quality – it risks the marginalization that has accompanied the maturation of all prior forms of distance learning. Online has performed in terms of access and convenience, but only indirectly in terms of cost and price, and not clearly on attainment or quality.

But why is cost reduction rising up the agenda now? The confluence of declining traditional student demographics, weak state appropriations, sluggish endowments and looking back on twenty plus years of tuition outpacing inflation comes to mind. The revolutionary air of MOOCs has got lawmakers attention, and given credibility to the idea that technology can lower costs not only in nearly every other industry but in higher education, too.

According to IPEDS, wages and benefits make up 80%+ of instructional costs in U.S. higher education. Unless you believe that lots of new public funding is forthcoming, and instructional artisanship is the only way, some form of cost reduction, likely involving technology, seems the responsible way forward. The recent pushback from the Philosophy Department at San Jose State University, in the wake of expanded use of third party MOOC courses at the institution, is a perfect example of the assertion that academic quality is inherently bound up with faculty labor, and technology can be no more than a minor aid.

At this point, the debate quickly escalates and complicates, and you find yourself hopelessly tangled amid differing values, ideals and perceptions of reality.

Yet curiously, quality-enhancing cost reduction strategies are well-understood. Most notably, for the past 15 years, the National Center for Academic Transformation, led by Carol Twigg, has steadily demonstrated how to simultaneously improve access, enhance quality and lower costs using technology and other techniques. The N-CAT approach has produced results, albeit at small scale, all over the country in a multitude of disciplines and institutions. Moreover, N-CAT techniques are very faculty-centric, simple and locally-oriented, and not about more “radical” MOOCs and competency. It might be argued that N-CAT is about preserving the traditional academy by means of common sense cost reduction and quality enhancement methods, and not about disruption.

A recent newsletter found Carol complaining that despite endless debate about rising costs, N-CAT still seems to be the “only ones in higher education who want to do it [i.e. cost reduction] and, unfortunately, the only ones who seem to know how to do it.” Course-level pilots too often fail to take root or spread, and funders want scale. It is striking that online programs, and nontraditional schools most prominent in the online program market, have not engaged with, or been engaged by, N-CAT.

N-CAT’s work makes cost reduction practical and safe, yet lacks the glamour of unproven MOOCs. You can touch the third rail and not expire (although it is foolish to imagine that significant cost reduction is consistent with zero reduction in labor). Carol and colleagues have decided to cease demonstration projects and move to broader change strategies. It will be interesting to see the progress Carol makes with N-CAT’s new focus. With enough pain in the system, and pretenders circling, the timing may be quite good.

At Eduventures, we’re seeking insights into online program cost structures, among other things, in our latest Benchmarking Online Operations survey, which invited Online Higher Education Knowledge Community members are currently completing. If your institution is interested in taking part, please get in touch.

Via susangautsch