A study compared costs and effectiveness of online learning (OL) with traditional face-to-face teaching methods. Six case studies (from New South Wales, Victoria, and South Australia) provided data on these of two types of OL: (1) mixed-mode delivery using the computer and Internet in a classroom and (2) use of OL in distance education. The Webb (1999) information technology cost model was used. OL effectiveness was assessed by student questionnaires and interviews. Satisfaction ratings for different types of online learning were compared with the ratings of all technical and further education graduates. Among the findings were: (1) regarding classroom-based, mixed-mode delivery with low interactivity and heavy reliance on content, courses were high in cost compared with traditional classroom instruction and low on effectiveness in terms of student satisfaction; (2) with high levels of interactivity using the Internet and use of pre-existing Web-based resources, costs were often lower and students rated effectiveness more highly than traditional classroom instruction; regarding distance delivery, contrast was between the traditional correspondence model with its low interactivity and heavy reliance on content and online delivery with potential for high levels of interactivity; (3) using online communication for distance learning to provide high levels of interactivity could cost about twice that of a low-interaction, print-based correspondence course, but learning effectiveness ratings were better and on a par with satisfaction levels for classroom-based courses. These three strategies were suggested to improve OL cost-effectiveness: reduce costs, improve learning effectiveness, and increase volume. (Contains 46 references.) (YLB)