Costs of Competency-Based Programs Come Into Focus

October 18, 2016

Competency-based education programs may be inexpensive to run, but they can also take longer than expected to turn a profit, according to a study released on Tuesday and supported by the Lumina Foundation.

Competency-based programs allow students to progress according to their demonstrated mastery of subject matter instead of the time they spend in a course. Advocates for the approach believe that it can improve on the traditional model of education by making college more accessible to students, particularly adults, providing clearer measures of learning, and reducing costs. At last count, about 600 higher-education institutions were looking seriously at starting such programs.

The authors of the study hope their findings will help such institutions make more clear-eyed choices. Among the four institutions studied — Brandman University, the Kentucky Community and Technical College system, the University of Wisconsin-Extension, and Walden University — most expect to break even in five years. "We’re not seeing it as a quick moneymaker," Richard L. Staisloff, one of the study’s authors, said in an interview.

In many cases, he said, competency-based programs were priced too low initially, before the business model was developed and start-up costs adequately considered. Those costs could be significant, ranging from $78,000 to $700,000 to start a single program. Three-quarters of the costs were for infrastructure, such as technology, billing, human resources, and legal expenses, and the other quarter was for curricular development. Institutions spent, on average, $4.1 million in the first year they offered their programs.

"If you’re not going to be in it for the long term," said Mr. Staisloff, who is the founder of the rpk Group, a consulting firm, "you’re sort of fooling yourself."

“If you're not going to be in it for the long term, you're sort of fooling yourself.”
Over time, that initial investment may well pay off; the institutions in the study predicted that, in the sixth year, their competency-based programs would operate at half the cost of their traditional programs. Most of the savings would result from dividing the traditional faculty job into different roles, like instructional designer, assessment expert, counselor, and subject-matter expert, a step that would allow student-to-faculty ratios to increase.

But other risks remain unresolved. The U.S. Department of Education’s inspector general, for example, has raised questions about whether students enrolled in those programs have enough contact with their professors.

The costs and risks may be reasons for caution, said Mr. Staisloff. "Maybe you don’t jump in right now," he said. But he also acknowledged that colleges that hesitate may be in danger of losing out on market share as competency-based learning continues to gain popularity. There’s a risk in waiting, too.

Dan Berrett writes about teaching, learning, the curriculum, and educational quality. Follow him on Twitter @danberrett, or write to him at