Why MOOCs Aren't So Cheap ... for Colleges

In all the cost discussions about Massive Open Online Courses, there's been an elephant in the room: the cost burdens on the creators. 

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By Rachelle DeJong,
Minding the Campus
September 18, 2013

The "Massive" in MOOC refers to class size, but one might think it stands for cost savings as well. MOOCs are free for students who register and cheap for those who seek credit. Few colleges and universities plan to grant credit for MOOCs, but of those who do, the cost to the student is typically a few hundred dollars per course; sometimes, it's only the price of paying for a proctored exam.

But MOOCs are not terribly cheap for the colleges and partner platforms producing them. Building a MOOC is tricky work.

It involves writing lecture scripts, rethinking course structure, creating a slew of multiple choice quizzes, adapting grading software, filming lectures and (sometimes) discussion groups, editing footage, and building a course page. Once the course goes live online, someone has to pay for chat feed monitors, glitch repair, and a squad of tutors and administrators. All this for a product that's supposed to resemble a frozen dinner: pre-packaged, simple to prepare, and consumed in front of a screen.

So what do MOOCs actually cost the producers? Some are cheap, like self-produced off-the-cuff lectures delivered in front of a webcam and uploaded via an open source platform like Google's Course Builder. However, MOOCs that professionally shot and edited and then spliced with interactive features can cost on the order of a quarter-million dollars. 


For most MOOCs, three different entities help pay for production: the school volunteering the content, the platform that hosts it, and external third parties.

Udacity budgets $200,000 for each course it makes. For many technologies, production costs decrease after their initial development, but Udacity's costs are likely to keep rising as it launches MOOC 2.0, a modified version that includes more personal interaction with professors, tutors, and mentors. In its partnership with Georgia Institute of Technology's new MOOC-ified master's degree in computer science, Udacity expects to double its costs to $400,000 per course.

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EdX gives its partners the option of producing a MOOC on their own and then submitting the finished product to EdX, or else paying for EdX's design and consulting services at a rate of $250,000 per course plus another $50,000 each time the course is re-run. EdX is run jointly by MIT and Harvard, who have each fronted $30 million to create the program, though EdX president Anant Agarwal emphasizes the need for EdX to generate sustainable sources of money to avoid becoming a drain on its university parents.

Georgetown, when it announced a partnership with EdX, planned to invest $2 million in the Harvard-MIT brainchild, while Amherst College expected to spend a total of $2.2 million, though the faculty voted down the proposal. Meanwhile the University of Texas shelled out $5 million to join EdX.

Coursera's costs are less public, though its partner schools have spent tens of thousands of dollars on their own course development. The University of Pennsylvania spent about $50,000 per course, while the University of Edinburgh dropped approximately $45,000 on each of its six courses. U Penn and the California Institute of Technology, when they joined Coursera, invested $3.7 million, justifying the expenditure as an investment in branding and a jumpstart for future online possibilities. 

In addition to schools and platforms, a hodgepodge of third parties help to pick up the tab, sometimes obscuring the true cost of MOOCs. Private donors, including alumni eager to see their alma maters splashing the covers of technology journals, fork over substantial donations. The Bill & Melinda Gates Foundation has spent millions of dollars promoting MOOC use, especially advocating for MOOCs in remedial education. (Udacity founder Sebastian Thrun credits Gates with making remedial ed MOOCs a reality.)


Gates has also provided EdX a grant of $1 million. Then there are the venture capitalists, who have backed Udacity with $22 million and Coursera with $65 million. Sometimes governments help to foot the bill, too: the state of California awarded $16.9 million to California community colleges, asking them to further develop online initiatives, including MOOCs.

Many of these investors, of course, hope to make money on MOOCs, most likely not by selling the courses directly to students, but by renting them to small schools that then pair the outsourced lectures with proctored tests and, in some cases, group discussions and extra assignments.

Udacity and Coursera have also experimented with doubling as paid headhunters; they sift course participation and assignment grades to identify promising students, offering to match them with a potential employer who pays a fee for each introduction. They've also experimented with selling their own certificates of completion. But most college presidents don't actually expect MOOCs to reduce student costs. And even if courses do generate revenue, large portions of that revenue will return to the platform, not to the school that supplied the MOOC.

Georgia Tech, in its much discussed plan to create with Udacity a MOOC version of its prestigious master's degree in computer science, hopes to turn a profit of $4.7 million by its third year of operation, but it's banking on a $2.1 million start-up grant from AT&T to do it. It's also raised as many doubts as it has hopes about financial viability, such as those from critics who note that the first year's course development will cost over $15,000 per student. Georgia Tech also counts on quickly attracting 8,700 full-time students, more than the total number of computer science master's degrees awarded in 2009-2010. 


Spending money on experiments isn't categorically bad. If not for fearless financial backers, we wouldn't have the personal computer, or the printing press, both of which have been great boons to the academic world. MOOCs are still developing, and since we don't know yet whether they'll succeed in facilitating learning, careful investment is healthy. 

What is worrisome, though, is the reckless abandon with which schools are investing in experiments that provide minimal value to their own students and do not yet offer much to outside participants. If anything, our ignorance of the effects of MOOCs on learning outcomes should gives schools and donors pause. 

This article originally appeared in Minding the Campus
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