Actual costs of a diploma program

Ross Woods, based on a Linked1n discussion between Paul Rasmussen, Douglas Stirling, and Ross Woods

This discussion came up in the context of colleges profiteering when getting funds through government student loans.

So how much does it actually cost to run a Diploma program? Here's a scenario for variable operational expenses in classroom-based training. You're planning at one day per subject of face-to-face class time with self-study and work experience to make up the difference. This is far under the suggested hours, but more than many colleges give. The budget is:

This comes to a cost of $19,200 for a twelve-unit diploma with ten students, or $1920 per student. Allowing another $80 for printing materials and other variables, it come to $2,000 per student.

Adding the fixed costs of the college tells how many enrollments a college needs to break even. That is, the break even point for a group of ten students is this amount plus the fixed costs of the RTO; it tells how many enrollments a college needs to break even on a particular course.

However, many supposedly "fixed" costs are semi-variable. They also scale; an admin person has only so much capacity, and costs also depend on how efficient and automated the processes and systems are. Realistically, a college should aim for a 60% gross margin as reasonable, which gives about $5,000-$6,000 per student. To be comfortable, a gross margin of 70% results in a fee of about $7,000 per student. If a college charges much more than that and giving only stock-standard materials and coursework, it's probably a little profiteering.

If more is done on the job as productive work and less is done in class, the actual cost per student can go down. But it’s not that simple. First, one-to-one workplace coaching can be very expensive if the college has to pay the coach to visit the practicum location. Second, it is easy to be unethical. If students are not paid, the practicum must primarily be a learning experience; it is exploitative to require students to work for free without learning.

Some Diplomas have higher costs, particularly those that require specialized equipment or services. For example, a diploma of outdoor recreation or sport has the extra costs of specialized trainers, camps, excursions, elite facilities, equipment, and time to scope out and risk-assess outdoor environments such as bush, snow, water etc. These can chew into any budget quickly.

A college can charge more for a premium if it offers something better than average, such as specifically contextualized materials, exposure to industry leaders, or detailed simulated environments. Just make sure it's actually a premium product, and not just purchased materials that are hardly contextualized and irrelevant to the work students will perform after graduating. Even with high quality products, it is still difficult to justify more than $10,000 per student for most courses.