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Amidst growing pressures of budgetary constraints and an era of downsizing, the Naval Postgraduate School must seek alternative ways of delivering quality education to its customers. NPS has turned to various forms of distance learning to provide education to officers unable to attend its resident programs. A particular challenge NPS faces in developing distance learning programs is determining their cost. While there have been numerous studies attempting to provide some insight into the costs of delivering distance education programs (i.e., Technology, Open Learning and Distance Education by Dr. Tony Bates of the Open Learning Agency in British Columbia, etc.), there are still many unanswered questions. This thesis analyzed available educational literature on costing distance education programs to assist NPS policy makers in making better decisions. This thesis identified numerous variables that should be considered when developing a cost model for delivering distance education programs that use a combination of web-based instruction, video teleconferencing and traveling instructors. At a minimum, these variables should include: faculty, administrative, technical support, equipment, course development/delivery consumable, infrastructure and maintenance costs. Of course, technology and definitions will vary among researchers. We quickly learned from our research that costing distance education programs is an extremely difficult task, specifically when considering web-based instruction. In an increasingly commercial environment, cost information is a very sensitive matter. Many institutions are not willing to release cost information for proprietary concerns and competition., "The original document contains color images"