Enrollment in online courses within colleges and universities is growing at a rate far exceeding that of enrollment in classroom-delivered, face-to-face courses. Given this growth, it is important that administrators understand the costs required to deliver online courses. A frequently asked question by policy-makers is whether online instruction is more or less expensive to deliver than comparable face-to-face, classroom-delivered instruction.

The objectives of this study were to (1) develop a exploratory model for deriving a cost measure for classroom-delivered instruction and an analogous model for deriving a cost measure for delivering online instruction, (2) perform an inter-institutional comparison of both classroom-delivered and online-delivered courses, (3) identify the opinions and assumptions of various campus administrators regarding online courses, and (4) identify the role of costs in the academic decision-making process regarding offering online courses.

The study employed a mixed-methods research methodology. The quantitative analysis was performed using publicly available data from seven public institutions. The qualitative analysis entailed directed interviews with 12 pre-identified campus decision-makers from those institutions: six chief business officers and six chief academic officers.

The study found that, for the organizations studied, online courses are delivered at a lower unit cost than face-to-face courses. In addition, the study determined that as an academic decision factor, cost is overwhelmed by other factors such as enrollment growth, campus space constraints, and broadening access.