Last week, Higher Ed Dive reporter Natalie Schwartz published an article about a new online bachelor’s degree offered by Southern Utah University for $9,000.
Southern Utah piloted the program last fall with 111 students. The students were among 14,000 former Southern Utah students who had not completed a bachelor’s degree.
Southern Utah was able to bring the bachelor’s degree price down to $9,000 by incorporating several tactics:
- First, the program is a general studies degree.
- Second, it offers a limited number of courses, each lasting seven weeks.
- Third, faculty members who teach the classes are paid the course overload rate. By utilizing faculty members whose salaries are covered by the traditional university, the cost of teaching each course is approximately $3,000 per course, making the courses less expensive.
- Fourth, by sending an email to former students, the school minimized its marketing costs.
Southern Utah’s president, Scott Wyatt, admitted that utilizing the course overload method to obtain and pay faculty to teach these courses limits the number of students the program can handle. He said the university’s goal is to enroll several thousand students in this bachelor’s program.
Richard Garrett, chief research officer at Eduventures, expressed doubt that this new way of offering a low-cost bachelor’s degree would catch on. Volume is generally necessary to create the economies of scale needed to offer a low price. He also said that colleges have avoided low-priced undergraduate degrees because of the level of student services needed to meet the needs of a less mature and experienced student.
Other experts mentioned by Ms. Schwartz raised concerns about the degree being in general studies rather than a more focused subject. When employers are emphasizing skills, general education degrees are often the antithesis of that.
I admire South Utah’s attempt to offer a low-cost online bachelor’s degree. During my 18-year tenure at American Public University System (APUS), I continued to look at ways in which we could offer our degree programs for a lower cost to our students.
One of the ways in which we were able to hold undergraduate tuition at $250/credit hour since 2001 for our students serving in the military was through taking advantage of the scale created by growing our student enrollment. Other undergraduate students benefited from our efforts to control costs and have only experienced two tuition increases over the past 20 years. These students currently pay $285/credit hour.
According to Ms. Schwartz, Southern New Hampshire University, the largest online university in terms of overall student enrollment, charges $320/credit hour for its undergraduate tuition. It’s my belief that Southern New Hampshire has been able to increase its enrollments due to its substantial investment in marketing expenditures.
If Southern Utah has aspirations for increasing its student enrollment to 20,000 or 30,000 students, it will have to increase its tuition to accommodate the cost of recruiting that many students. And as its president admits, its incremental cost strategy of keeping instructional costs low by incorporating a course overload strategy using full-time faculty is not able to scale, either.
But the real crux of the issue is how to recruit thousands of students without spending a lot of money in advertising, lead generation, and admissions staffing. Utilizing their lists of former students and alumni will provide a limited number of students with little to no marketing expense. Being one of the first to offer a $9,000 bachelor’s degree may be a source of a few more students, but after the publicity dies down, so will the buzz.
I like South Utah’s innovative program, but I do not believe it is scalable using its current business model. While only a few educational institutions may pursue the illusive $10,000 bachelor’s degree, the issues will always lead to the costs of instruction and marketing.
