July 10-11, 2003

ITEM 120-2005-R0703  Authorization to Offer Online Courses to Non-resident Students at no less than 125% of Resident Tuition; Montana State University

THAT: The Board of Regents of Higher Education authorizes the campuses of Montana State University to price their online offerings so as to be responsive to local, regional and national markets and to offer access to Non-resident Students at no less than 125% of Resident Tuition rates.

EXPLANATION: The campuses of Montana State University have excess capacity in a number of their online course and program offerings. In order to utilize these courses at or closer to capacity, MSU would like to price these courses to non-resident students at rates that can attract students from outside Montana. With few exceptions, the cost of non-resident tuition and fees prohibits the campuses from being in a competitive market place for non-resident online students. If permitted to charge a market competitive rate, but not less than 125% of resident tuition, MSU could increase its revenue from online courses and make the further development of online courses and programs cost-effective. This could be done while maintaining access for Montana students.

MSU-Billings, for instance, offered 75 on-line courses in the Fall Semester of 2002. These courses had an average capacity of 31.4 and an average enrollment of 21.3, nearly all of whom were resident students. The 10 remaining seats in the average class could have been filled with non-resident students, but for a pricing structure that is cost prohibitive, given the market place for these particular courses.

At the MSU-Great Falls College of Technology on-line enrollments have grown steadily and now represent about 20% of the FTE production. During the Fall Semester of 2002, 47 on-line courses were offered. These courses had an average capacity of 23.7 and an average student enrollment of 19.1, clearly closer to the average capacity, but with up to nine vacant "seats" in some classes. The current proposal would allow them to consider whether the market for some courses would suggest that they raise the price in order to allow a lower price on others or to bring a greater cost/revenue balance to their overall set of offerings.

Online offerings also present the best opportunity for the Billings, Great Falls and Havre campuses to reverse their historic inability to attract non-resident students and enjoy the benefits that non-resident tuition revenues can bring to a campus. National interest in offerings on each of the campuses has been significant in the past, but non-resident tuition has been a deterrent. 

Additionally, the return on these campuses' investment in online and distance offerings is a key component in strategies for long-term sustainability. In Great Falls, for instance, online courses and programs provide the best alternative for meeting local students' needs in the COT's space-constrained environment; adding non-resident students ensures that these courses have enrollments sufficient to offer them.

Pricing online delivery of coursework is still at the stage of art rather than science. The MSU campuses feel disadvantaged by a "one size fits all" pricing structure that, in an increasingly competitive market place, has had the effect of limiting the market to Montana. This proposal will allow some interaction between the campuses and the market to arrive at a price for each offering that will maximize revenue while maintaining quality.