What is needed to make distance education cost-effective?

There is much evidence that distance education can be more cost-effective than traditional education. But to enjoy the economies of scale that lead to cost-efficiency, those planning a distance education system must ensure that there are enough students to result in an average cost per student lower than that in conventional systems. That means that the dropout rate must be kept low, and that the number of courses cannot grow so large as to raise the average cost per student above that in conventional systems. Other significant factors in cost-effectiveness are the choice of media, market research to ensure that courses attract sufficient students, and investment of adequate resources in student services and central infrastructure.

Studies of cost-effectiveness have been undertaken at Athabasca University in Canada, the Universidad Estatal a Distancia in Costa Rica, and the Universidad Nacional Abierta in Venezuela. A study of the Open University (UK) showed that the threshold at which it became more efficient than the average campus-based university was 21,691 students.

In evaluating the cost-effectiveness of distance education, cost avoidance needs to be taken into account. The U.S. Navy, by conducting training courses and conferences on its Video Teletraining (VTT) network, saved $7,154,000 in travel costs and per diem in fiscal 1989-94. The U.S. Air Force satellite training system yielded $5,000,000 in cost avoidance in 1992-93 by using a distance learning mode to deliver an acquisition planning and analysis course. In addition, cost avoidance in travel time amounted to 30 man-years, and student throughput increased from 300 to 3,000.