Online education enterprises at U.S. colleges and universities are experiencing significant growth in both budgets and revenue generation, even as they face mounting pressure to offset institutional funding shortfalls, according to a new national survey released by UPCEA, the online and professional education association.
"This report and its findings arrive at a critical time for postsecondary leaders," said Julie Uranis, senior vice president for online and strategic initiatives at UPCEA. "Given the instability in higher education, the insights and benchmarking opportunities in BOnES will help leaders make strategic decisions and understand the expected yield of investments in the online enterprise."
The survey findings come as online education has become increasingly central to institutional sustainability strategies. More than half of online units surveyed reported being tasked with reducing costs and generating additional revenue to support broader institutional shortfalls or address reduced funding.
The integration of artificial intelligence emerged as a significant trend, with nearly half of online enterprises reporting collaborative approaches to AI decision-making with institutional leadership. The most common AI applications include enhancing teaching practices (61%) and improving administrative efficiency (58%).
However, AI adoption patterns reveal uneven maturity across institutions. While some organizations demonstrate highly autonomous AI implementation, others lack formal processes altogether—a concerning gap given the rapid evolution and potential risks of generative AI technology.
"The data provided in this report help to provide clarity for those variables and other essential benchmarks for online leaders," said Bruce Etter, senior director of research and consulting at UPCEA, referring to the complex relationship between institutional investment and revenue generation in online education.
The survey reveals that most institutions continue to operate academically decentralized models, with 84% of respondents agreeing this describes their structure. However, administrative approaches are split almost evenly between decentralized (44%) and centralized (46%) operations.
Graduate programs remain the backbone of online portfolios, with 89% of institutions offering graduate degrees and 81% providing graduate credit-bearing certificates. Notably, undergraduate degree offerings increased by 10 percentage points year-over-year, reaching 78% of institutions.
The financial architecture supporting online enterprises proves highly varied. While 28% use revenue share models and 22% employ revenue-dependent entrepreneurial approaches, nearly half selected "Other" when describing their financial models—highlighting the complexity and hybrid nature of funding structures.
This diversity extends to faculty compensation, where 92% of institutions now include online teaching in regular faculty course loads, up from 79% in 2024. The trend suggests deeper integration of online education into mainstream academic operations.
New key performance indicators introduced in the survey reveal significant variability in operational efficiency. On average, institutions generate nearly five dollars in gross revenue for every budget dollar invested, though this metric varies widely across different institutional contexts.
The average online enterprise budget reached $8.1 million, while staffing levels increased to an average of 44 full-time equivalent employees—reflecting strategic investments in capacity building.
The survey data, disaggregated by institutional size and Carnegie classification, reveals distinct operational patterns. Large institutions (serving more than 15,000 students) lead in total enrollment and revenue generation but show lower per-student efficiency compared to smaller institutions.
Research-intensive (R1) institutions demonstrate the highest average budgets at $10 million and are most likely to contract external services, while R2 institutions show higher revenue efficiency per full-time employee despite smaller overall budgets.
The report's authors offer five key recommendations for online education leaders: interrogate financial models for sustainability, benchmark efficiency rather than just scale, develop clear AI strategies, align staffing with strategic priorities, and invest in organizational clarity.
