Although higher education has historically been a reliable economic engine for individuals and the economy, higher education insiders have long failed to communicate the value of the industry to students, parents, employers and policymakers who question the investment, argue Kathleen Ives and Deborah Seymour in her new book, Using ROI for strategic planning of online education. Online learning has the potential to provide access and optimal course pace and content for students with time, geographic or medical limitations. But many are still critical.
At the same time, the shift from emergency distance learning in the early pandemic has morphed into innovation and investment in online teaching and learning. Many have since discovered an interest in understanding the profitability of online learning.
Within the Higher Ed Ives and Seymour recently asked why analyzing return on investment is uncomfortable for many in higher education, the gap between the understanding of return on investment between students and academic leaders, and how ed tech companies are bringing the notion of return on investment into focus for academic leaders. What follows is an edited and condensed version of that email conversation.
Q: Kathleen, you argue that implementing return on investment analysis in online higher education will require significant cultural, policy and procedural changes. Which of these changes need to happen, and how do we recognize progress?
Ives: Historically, colleges have seen themselves as mission-driven, which means measuring return on investment can be culturally uncomfortable. Colleges may fear that a business perspective could undermine their values and turn them into college mills. At the same time, the universities face increasing competition both within and outside of the universities. Reversing this mission-driven mindset will require a cultural shift that treats students as customers. Customer satisfaction is vital to survival, otherwise they will go elsewhere.
As the cost of higher education and student debt rise, policymakers and others question higher education’s role in creating the workforce needed to sustain the economy. At the same time, college enrollments are declining, state governments are offering less support, and employers are skeptical that college graduates have adequate skills. According to the presidents interviewed in our book, policymakers could help colleges protect students, increase access, and improve both institutional and student returns without introducing regulations that limit innovation.
Universities navigate complex technological environments with limited resources. They typically have neither the operational infrastructure nor the embedded capabilities to institutionalize the return on investment. By reviewing and adapting return-on-investment methodologies for informed decision-making, online college leaders can evaluate initiatives and work toward achieving their financial and social goals.
Online colleges will see progress if they adopt a return-on-investment mentality. Such thinking may be new to many, and some may not be used to digesting or even requesting such an analysis. But the contributors to this book argue that they should be taken on the journey. To make return on investment a cornerstone of future initiatives, they need training on best practices and terminology. A return-on-investment mentality increases engagement in the decision-making process and makes it easier for everyone to see its impact.
Q: A chapter in your book by Laurie Hillstock suggests that students and college leaders may have different perspectives on the profitability of online learning. Students consider a number of complex factors—including cost, type of degree, faculty-to-student ratio, connections with classmates, placement, and starting salaries. Many higher education leaders now view the delivery of online courses primarily as a means of increasing access to higher education. What steps can leaders take today to close this gap?
A: First, leaders can recognize that learners are different in many ways. A universal method cannot close the gap. Capture and It will be helpful to respond to students’ direct feedback. To do this, colleges must be keen to build trust and help students feel heard. Formative assessments, such as asking for feedback, can be more effective than online surveys.
Some students may be more comfortable sharing with faculty, staff, peer mentors, or other students than with college leaders. In such cases, be transparent with those the students feel most comfortable with. Then look for ways to work with and through them to capture authentic student feedback.
Remember, don’t just collect student feedback. Be aware when responding to the feedback. Share updates with students too. Building authentic relationships takes time, but is necessary for student success.
Q: Deborah, you’re noticing that innovative investors and entrepreneurial ventures — like ed-tech companies, online program managers, venture capital firms, and pathway programs — are trying to lay claim to the online ecosystem of higher education. How have these institutions and companies brought the notion of return on investment into focus for college leaders and students?
Seymour: More and more employers are hiring candidates based on their technical skills rather than their communication skills. Boot camp training programs at Apple, Microsoft, Google, and others, and Pathway programs focus on the competencies and skills that employers say are necessary to fill existing technical skills gaps. Many students study programming to get a job instead of pursuing a two- or four-year degree.
As a result, many colleges have been forced to look at their strategy and balance sheets differently. What is the return on investment for a person who chooses a degree over technical skills training? This question can no longer be ignored.
Q: The collection of articles in your book makes a strong case for executives to pay more attention to ROI analysis in online education. But one of David Schejbal’s articles argues that “Higher education institutions would be well served if they resisted the urge to put online education in a narrow return-on-investment box to justify its value.” Is there a holistic one? Online return on investment chart for higher education that can be used to measure non-financial benefits such as an educated population, research, individual enrichment and community improvement?
A: To our knowledge, no actual table exists. But David Schejbal explains why university access matters beyond employment rates and the economy. The more people are educated beyond secondary school, the more actively citizens participate in public life, the crime rate falls and life expectancy increases.
When a college wants to offer an online program, return-on-investment planning includes market research to determine tangible, monetary benefits for both the student and the institution. But colleges will also want to align their online programs with their social missions. (This is alluded to in Leah Matthews’ chapter on online education and accreditation.) This means that social factors in a campus-based program, such as nursing, must also be included in online nursing programs.
Q: What did you learn about the profitability of online learning in putting this book together that you didn’t fully understand before you started?
Seymour: When an in-class course is initially developed, many colleges do not consider the cost of converting it to an online course that is compliant with the Americans With Disabilities Act. In some cases, these conversion costs are higher than the original development costs. Additionally, these costs are often not included in the course design, nor are they included in the pricing that online program managers charge when developing courses for colleges. That is, the risk of non-compliance is passed on to the institution. Hidden costs like these on an institution’s balance sheet can create significant opportunity costs.
Online programs face many external challenges, including doubts about their value. University leaders may be more successful if they first address their institution’s internal challenges. To do this, they should consult strategy and planning experts to ensure that oversights do not jeopardize program continuity.
Ives: The profitability of online higher education has moved beyond the single measure of student earning potential. It is not solely, or even necessarily, a KPI for measuring investment efficiency as typically measured by corporations, investors, and entrepreneurs. What works for one college’s mission and vision may not work for another institution.
Many methods are available to assess return on investment, and many institutional leaders are serious about measuring value versus cost, especially in terms of students and institutional mission. Depending on the definition of success, many pursue differentiated return-on-investment analyses.
Many of the presidents told us the pandemic has brought forward some plans to streamline their return-on-investment initiatives. As Keith Miller, President of Greenville Technical College, put it, “The ROI might actually go up because we’ve learned so much.”