Academic journal article Planning for Higher Education

Principles for Promoting the Financial Sustainability of Online Programs

Academic journal article Planning for Higher Education

Principles for Promoting the Financial Sustainability of Online Programs

Article excerpt

From interviews with managers of FIPSE-funded online learning projects, these authors derived and analyzed ten basic principles for planning a sustainable online program.


Online education has exploded over the past decade, growing approximately 20 percent per year (Allen and Seaman 2004, 2006). Online programs or courses are offered in a full range of disciplines, from accounting to zoology ( However, funding for higher education throughout the United States is likely to be constrained or even decline as a result of economic problems. In fact, by 2013, all 50 states are expected to face budget deficits (Boyd 2002).

In this environment of increased demand for online programs and decreased state funding for institutions, it is fair to ask whether there are rules or principles that improve the likelihood that online programs will be financially sustainable. If such principles exist, planners would have a tool to ensure their institutions identify and offer online courses or programs that contribute to the financial bottom line. This article reviews the literature on planning for distance or online education, describes the methodology for developing principles of financial sustainability, and discusses those principles in light of what planners should know.

The Literature on Planning Online Programs

While there are many good guides to planning in higher education (Bryson 2004; Do Ie ? ce, Rowley, and Lujan 1997; Rowley, Lujan, and Dolence 1998; Rowley and Sherman 2001), they contain no detailed discussion of how to best plan for online learning (although online learning is often mentioned as part of higher education's potential future). Perhaps the best book devoted to planning for and managing online learning is by Bates (1999), since his advice was based on his years of experience in developing and offering many online programs. Bates' work included examples of budget scenarios for covering the necessary costs of online education, as well as details regarding marketing, pricing, and the trade-off among various costs.

Yet the number of books on planning and managing online learning is growing. Melton (2002) followed the "how to" genre of guidebooks by focusing on practical advice. Santosh (2003) brought together the expertise of experienced leaders and practitioners and included chapters on policy and planning, management, and quality assurance. Both Melton (2002) and Santosh (2003) addressed how to make online learning cost-effective by controlling costs and ensuring a quality learning experience for the student. More recently, Johnstone and WCET Associates (2007) focused primarily on the planning required to achieve various efficiencies through the use of online services and courses. Each of these sources make the work of developing, designing, and offering online courses and programs less opaque and more accessible for individuals or institutions new to online learning.

Planning to expand online courses remains hit- or- miss.

Colleges and universities continue to increase their online offerings in an effort to tap into new student markets, increase student enrollments, and generate revenue. Planning to expand online courses or programs remains a hit-or-miss effort, depending on the preferences of the institution and the skills of those involved. Yet, solid thinking and planning for online learning is needed now more than ever. What is specifically needed is a guide based on the expertise of experienced managers of online education designed to help institutions plan for online courses and programs that will be financially and educationally successful. The study presented in this article is an attempt to develop that guide in the form of principles that will contribute to the financial sustainability of online efforts.


In the summer of 2006, a Fund for the Improvement of Postseconda ry Education (FIPSE) program director expressed interest in identifying the rules or principles for achieving the financial sustainability of online programs. …

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