Fee Structure

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Tutorial.png Unit 11 

Introduction | Legal Basis and Policy Issues | Determining Fee Levels | Deciding on a Fee Structure | Can Students Afford It? | Influence of Price on Demand | Providing for the Neediest Students

Deciding on a Fee Structure

Once the basis for determining fee levels has been decided, it is necessary to think about how these charges should be structured and administered. There are several options for doing this:

Flat Rate charges

Where a single, uniform charge is levied for all courses/subjects/modules in a particular programme, this is referred to as a flat rate fee. A flat rate fee structure is the easiest to administer, since arithmetical calculations are kept to a minimum and there are fewer opportunities for clerical mistakes. Part-time staff only require a minimum of training to enable them to enrol learners and collect the correct fees. The main drawback of a single fee for all subjects or courses within a particular programme is that it does not achieve a uniform level of cost recovery, regardless of whether this is measured in terms of a percentage of actual expenditure or specific cost elements. Under the flat rate system, the fee would be set on the basis of the average for all of the subject offerings, and this means that some courses will end up cross-subsidising others that are more expensive to provide.

Itemised charges

Many educational institutions break down their fees into separate charges for the different components provided, such as application, registration, tuition, development fund, examinations, etc. The principal advantage of such itemised charges is that learners can see exactly what they are paying for. They also enable the institution to set different rules for different components, for example, by deciding that the registration fee is not refundable, while other components may be. A certain portion of fees may also be set aside for a specific purpose, such as the use of textbooks, which encourages learners to take responsibility for looking after what they have paid for.

The main drawback of this approach is that itemised charges give the impression that some components of the course are optional (e.g. attendance at workshops or tutorials) when, in fact, these are compulsory or form part of the overall package. For this reason, the presentation of itemised charges in any information or publicity must be handled with care in order to avoid misunderstandings. As with any system of charges other than flat rate fees, the chances of clerical errors arising from miscalculating what the learner must pay are increased.

Different fees for different Levels

It is a widely-accepted principle in conventional institutions that the level of fees should increase in a step-like fashion as a student progresses through the various levels of the education system. Fees at senior secondary schools are almost invariably higher than those for junior secondary, while those who advance to tertiary education expect to pay more than they did in high school. In part, this reflects the higher costs associated with higher level studies. Although different fees for different levels may be more complex to administer, the possibility of clerical errors is reduced if registration for the different levels takes place at different times or on different days.

Different fees for different Subjects

A fourth option is for ODL institutions to impose higher fees for subjects that are more expensive to deliver. This is an accepted practice at tertiary level, where faculties in some institutions are allowed to charge different amounts which reflect variations in the unit costs of providing different courses or the earnings potential of graduates. Where a cost recovery model has been adopted, applying this option involves calculating the unit costs of developing and delivering each subject/course. As discussed above, low-entry courses, as well as language and science subjects, may have considerably higher unit costs. Fees are then set at different levels to recover the same percentage of actual costs or cost elements for all subjects. Where fee levels are determined on the basis of what the market will bear, higher fees are generally charged for subjects where demand is high (for example, courses in business management or computer programming).

There are a number of serious drawbacks to this approach. Higher fees may well discourage learners from taking socially- and economically-important subjects such as mathematics or the sciences, and this might have a detrimental effect for the country as a whole. Different fees for different subjects might also lead students to select subjects by price rather than on the basis of their interests or academic abilities. In addition, such an approach tends to discriminate against low-entry subjects, such as “. . .minority languages where student numbers are naturally low, and economies of scale less realisable” (Rumble 2006, page 109). Inevitably, some limits will have to be imposed to ensure at least a minimum level of uniformity in the charges for similar subjects and to avoid the need to change fees every year as a result of fluctuations in the number of learners enrolling from year to year. From an institutional perspective, a system of different fees for different subjects is the most complex to administer and it is likely to result in the highest number of clerical errors.

Higher fees for Repeat Candidates

As noted in previous units, the rate of drop-out and failure among ODL students tends to be higher than among their counterparts in conventional education. In many cases, responsibility for this should not be placed entirely upon the shoulders of the learner, as deficiencies in the education system and other socio-economic factors also come into play. Nevertheless, it is valid to ask whether the public purse should continue to subsidise learners who do not complete the courses they enrolled in or who fail their examination on their first attempt. The principle that those seeking a second chance at education should bear a larger part of the cost is widely accepted in popular discourse. The final option for structuring fees would be to impose higher fees in situations where a learner has failed a particular subject and enrols or re-enrols with an ODL institution in order to repeat the course and re-sit the examination.

The major pitfall associated with this approach to structuring fees relates to the potential for falsification. Where learners fail examinations after studying in a secondary school, there is an incentive for them to hide this fact. If they decide to enrol with an ODL institution claiming to be first-time candidates, it can be difficult to check the veracity of their claims. Like any of the options outlined above, where different fees apply only in certain circumstances, then the potential for clerical errors increases.

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Exercise 11.3 Existing Fee Structure
The purpose of this activity is to review the existing fee structure for a specific ODL course. As with Exercise 11.1, it is designed to be carried out as a group activity by the following:

  • senior managerial and professional staff of ODL institutions, and/or
  • members of governing bodies or advisory committees for ODL institutions.

Questions for discussion:
The group should choose an existing course or programme and discuss the following:

  1. In terms of the options discussed above, how are fees for this course currently structured?
  2. What problem(s) does the institution have in administering these fees?
  3. What are the advantages of structuring fees in this way?