To:  Board of Regents

From:  Lynn Hamilton, Chair Tuition Committee

Date:  July 1, 2003

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

The Tuition Committee met by telephone on July 1, 2003 to discuss the overall issue of tuition rates for on-line courses. There was consensus to recommend the following in lieu of the 125% rate proposed:

The minimum non-resident tuition rate for on-line courses will be 150% of the resident rate. Institutions will have the flexibility to charge beyond the minimum to whatever level is feasible in the marketplace. Institutions are authorized to charge additional fees directly related to the delivery of such courses. Mandatory campus fees will not apply to online courses.

As reported by the campuses, on-line courses are generally under-subscribed and enroll mostly resident students. If the institutions were more price competitive they could enroll nonresident students and increase income necessary to maintain such courses and develop new courses for resident Montana students. Because the start-up costs of existing courses have already been expended it can be possible to generate income at the 150% rate.

Many states have eliminated any distinction between in-state and out-state tuition for electronically delivered courses and some have eliminated any connection to on-campus tuition rates. At this time the charge for on-line courses seems to be all over the board. Several states have projects underway to determine actual cost for delivery of the courses and intend to set the rate at the identified cost.

Members of the committee expressed the need to continue to review the issues surrounding the cost of electronically delivered courses and in the future, bring forward a more detailed recommendation to the Board.