What you should know before implementing a competency-based education program

The break-even point—when annual per-student revenues exceed expenditures—occurs in the fifth year of operation

Competency-based education (CBE) can generate cost savings, but a new study supported by the Lumina Foundation finds that those savings can be slow to materialize.

CBE is an educational approach that focuses on how well a student understands the subject and commands the skills required in the course. Students don't pass the course simply by sitting for hours in a lecture hall, but rather by proving that they have mastered the content. 

Three myths about competency-based education

The study, conducted by the consulting firm rpkGROUP, looked at four institutions and systems that have implemented competency-based programs: Brandman University, the Kentucky Community and Technical College System, University of Wisconsin-Extension, and Walden University. Each of the programs examined are at different phases of implementation.

During the first year, the institutions spent an average of $4.2 million on their CBE programs. Infrastructure, technology, billing, human resources, and legal expenses all contributed to the initial cost, which continued to grow during the first three years.

Even though the initial investment is taxing, the study shows CBE programs do pay off in the long run. By the fifth year, three of the four institutions projected their programs will break even, and by year six the institutions expect CBE programs will operate at 50% of the cost of a traditional learning program.

"The break-even point—when annual per-student revenues exceed expenditures—occurs in the fifth year of operation, when enrollment averages just under 6,000 students," the study states.

For many institutions, the delayed savings are due to high start-up costs and relatively low tuition prices. The study notes that the tuition range for most CBE programs "was established before a full business model was developed and before the revenue streams and expenditure structures behind each competency-based education program were fully understood."

Richard Staisloff, founder and principle of rpkGroup and one of the study's authors, advises those considering a competency-based system to be wary of the costs and risks, but not to write off the idea completely—as doing so could result in losing out on market share (Barrett, Chronicle of Higher Education, 10/18; Fain, Inside Higher Ed, 10/18).

Designing a competency-based program? Throw out the rulebook.

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