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COMMENT | Online higher education - the race to the bottom

COMMENT | As we enter the second year of the Covid-19 pandemic many universities and, more particularly, the owners of private institutions, have finally decided to change their teaching and learning model or, more accurately, their business model.

Crushed by a year of falling student income and fixed costs and forced into online teaching, millions of dollars and faculty hours are being spent to convert traditional course material, assessments and notes into online formats as quickly as possible.

The economics of this model are simple. Once the core course content has been created and uploaded, it can be used for many years with minimal maintenance. It is almost always of a minimum standard and there is rarely any appetite to improve it. Faculty are often exhausted from the whole exercise and are mostly not paid extra for creating or subsequently improving the material, so it will remain in its minimally converted format for many years to come.

Some universities aim to sell these programmes through overseas franchises as online distance learning (ODL) certificates using only local-language teachers because the students often have very poor English.

There is almost zero marginal cost to this model because online access costs literally nothing. The course fees come from two sources, entry costs for registration and exit costs for examinations. Registration fees will become minimal and the certificates will be priced at the cost of paying someone to grade the assignments. In Malaysia, this is as little as RM20 (US$5) per paper.

Add in administration, overheads and profit margins and the costs are inflated but market pressure is now actively forcing the final price down. For example, standard MBAs in Malaysia retail at around RM26,000 (US$6,500). Competition has forced ticket prices to as little as RM12,000 (US$3,000). Even international MBAs retail for only $2,940 or US$3,000 (RM12,000) including the US$60 (RM240) registration fees.

In order to run programmes at these prices, universities cut their largest overhead which is the cost of their full-time staff. Institutions register and examine students with little or no tuition. Exams will be graded by people with ... 

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