Going to college at the University of Phoenix and its ilk costs three to four times as much as at a typical state university. Shouldn’t it be significantly cheaper?
Think about it: The faculty are all part-time, hence cheaper. The start-up costs of their software were paid years ago. There’s no campus to upkeep. There’s no football team to subsidize. Nevertheless, students at these places pay more for a substantially inferior education. Shouldn’t it be the other way around?
[Come to think of it, why don't actual campuses with online arms discount tuition for online courses? If they want students to go into these courses that require less overhead, wouldn't that be the logical way to get them to take them?]
I suspect my answer to the original question depends upon who the target audience is. People who have an option to attend a bricks and mortar campus generally do so. The people who go to these online places do so as a last resort. That’s why the drop-out rates are so high. This makes online education an inferior good in the economic sense. Here’s Wikipedia (which I needed to refresh my mind of the definition of that term):
In consumer theory, an inferior good is a good that decreases in demand when consumer income rises, unlike normal goods, for which the opposite is observed.
That doesn’t mean there aren’t some online courses somewhere that are taught well (perhaps even better than their face-to-face equivalents), but give all but the laziest students a choice between online and face-to-face I’m guessing they’ll take the one with real contact, otherwise they wouldn’t enroll in a real college to begin with.
So why hasn’t the online education industry tried to do to higher education what Walmart did to Mom and Pop or what the Internet has done to daily newspapers?: Discount the product and steal our customers? Is it because the industry is run by greedheads? Maybe.
But perhaps it’s because they know they can’t. To discount their product would be an admission that their education isn’t worth as much as a traditional higher education, which would then send the whole house of cards tumbling down.