Eduventures Richard Garrett's Online Higher Education Market Update 2008 National & New York Data

Online Higher Education Market Update 2008National and New York Data

Online Higher Education Learning CollaborativeEduventures, LLC

February 2009

2Copyright © 2006 Eduventures, LLC.

Overview

Overview of the Online Higher Education market• National Market: sizing, segments and forecasts• National Market: positioning and differentiation• New York: selected data and observations

Copyright © 2009 Eduventures Inc


About EduventuresEduventures founded in 1993Research and consultingLearning Collaborative for Higher Education• Increasingly competitive/complex higher education environment:

need for data-driven decision making focused on common functionalareas

• Member-driven, shared-cost modelOHE-LC (Online Higher Education Learning Collaborative)• Focused on online market expansion and characteristics, program

development, and institutional strategy and operations- Increase/rationalize enrollment growth- Increase operational efficiency

Schools benefit by leveraging the knowledge and experience of theprogram membership and OHE-LC staff.

© 2009 Eduventures, Inc.


OHE-LC Membership, February 2009

92 members

• Public- e.g. Empire State College, University of Illinois, University of

Wisconsin Extension, University of Indiana, Rio Salado College• Private

- e.g. Drexel University Online, Norwich University, Park University,Liberty University, Nova Southeastern, Western Governor’sUniversity

• For-Profit- e.g Laureate Education, Kaplan University, Capella University,

EDMC, DeVry, APUS, Northcentral, Ashford, Corinthian



Value for SUNY Learning Network…Unique, groundbreaking studies on online markettrendsPeer networking- monthly roundtables featuring Capella,Drexel, Nova, APUS, Kelley, Franklin, UMassOnline etc;plus Annual Member MeetingUnlimited quick turnaround custom research (phone,memo or data)- data points, perspective, synthesis,market overviewsLarger-scale custom research- primary research,broader scopeCampus visit



The National Online HigherEducation Market:

Sizing, Segments & Forecasts



425,575

623,563

843,931

1,101,346

1,400,672

1,707,945

1,923,599

2,194,932

2,535,674

2,878,213

3,214,990

3,465,991

47%

35%

31%

22%

13%14%

16%14%

12%

8%

27%

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2002 2003 2004 2005 2006 2007 2008F 2009F 2010F 2011F 2012F 2013F

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Online Headcount

Growth

Online Market Size and Forecast

c.10.6% ofall students

c.18% of allstudents

At 2010 base,14% growth

would be biggestnet addition in

history

Forecast impact of(perceived) severe

recession

Source: OHE-LC data, NCES and OHE-LC staff analysis. Fall entry 5



Notes…Degree-granting, Title IV schools only; Fall entryOnline= 80%+ of formal instruction online (not onlinecourses part of an otherwise campus-based experience)Historical base estimates revised down somewhat- in lightof better evidenceAssumption of major recession from Q4 2008 through atleast 2009- where cyclicality (weakness in some non-military tuition assistance, corporate training, consumerconfidence) may somewhat offset conventional counter-cyclicalityComparison with Sloan-C online course-levelnumbers/trends from 2007 report (9% growth from 2005to 2006). Eduventures sees stronger growth at programlevel, including in terms of increased institutionalparticipationEstimates based on extensive but incomplete, oftenambiguous data



Adult Student Trends, Fall 1995-2007

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Y1995 Y1997 Y1999 Y2001 Y2003 Y2005 Y2007

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Undergraduate # Aged 25+

Graduate # aged 30+

Undergraduate % Aged 25+

Graduate % Aged 30+

Adult Undergraduates- 12% increase1995-2007 (despite 1.5% drop in 25-44

population 2000-2007)

Graduates 30+-25% increase

1995-2007(despite negativedemographics)

Traditional age studentsgrew by a third at both

undergraduate andgraduate level between

1995-2005

Source: NCES and OHE-LC staff analysis

So some evidence that for-profit/onlinemay have grown the overall adult market;BUT falling adult market share (36% in

1995 to 31% in 2007) compared totraditional students

6



Dynamics of online growth to 2013…Steady normalization of online delivery in terms of institutional/facultyparticipation and consumer familiarity. Recession-inducedentrepreneurship v. conservatism. More competitive/differentiationUnmatched convenience; indirect cost savings (gas prices); growingsophistication/disciplinary rangeEvidence that online may have significantly grown adult participationbetween 1999 and 2007, and likely continue to do soOnline focus and funding stability of military market; plus new GI BillNo let up in skills obsolescence, need for higher order skills, careerchange. Online as cost-efficient solution for consumers/firmsRecession-induced tuition hikes, physical capacity/funding constraintsof public schools, less traditional student body and onlinenormalization will persuade a growing number of adults and (stillforecast to be a modest proportion) of traditional age students to optfor online studyEstimated dollar size of the online market- $6.2B (2005), $11.7B(2008); forecast of $26B (2013)Outcomes data still very limited



Key variables/unknownsNature of Downturn. Perception, severity, impact. Net cyclical or counter-cyclical?Adults. Post-2013, double-digit growth may be inhibited by upper limits(40%?) of online share of adult market (unless online more clearly grows theadult market overall), and interests of campus-based institutions to maintainonline/campus balanceTraditional Students. Possibility that traditional age student participationonline at program level will be post-2013 growth vehicle, given low base (est.5% in 2013, up from c.1.5% today) and strengthening drivers. Possibility ofgrowth reaccelerationInternational. Possibility that online may become a significant vehicle forcross-border higher education- driven by cost and security issues, as well ascapacity constraints of conventional higher education in the face of growingunmet demand. Source of growth post-maturity of online domestic market?Fall v. 12 month headcount. IPEDS shows 12 month unduplicatedheadcount to be 29% higher than Fall headcount (21.9m 2003/04 v. 16.9mFall 2003). 100% online schools, where multiple entry points are common,report average c.75% higher 12 month headcount. Norm of Fall reporting inU.S. higher education may significantly undercount online market size. Valueof Fall reporting is significantly enhanced ability to benchmark onlineheadcount against sector as a whole



By Control (Estimate- Fall 2008)

32%

14%

53%

7%

19%

74%

1,028,000

275,000

620,000

0%

10%

20%

30%

40%

50%

60%

70%

80%

For-Profit Private Non-Profit Public

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Online Market Share

Higher Education Market Share

Online Headcount

Source: OHE-LC data, NCES and OHE-LC staff analysis. 9



Commentary and Forecast by ControlFor-profit schools retain vastlydisproportionate share of onlinemarket (c.32%), compared toshare of higher educationstudents generally (c.7%)For-profit strengths remain-speed to market, execution,marketing spend/technique,customer service, online fit withmissionPressure on for-profit share-steady normalization of onlineat publics with local/nationalbrands, and often much lowerprices points

3,465,991(+c.1,500,000)100%TOTAL

2,010,000(+c.1,000,000)58% (+5%)Public

416,000(+c.140,000)12% (-2%)

Private Non-Profit

1,040,000(+c.400,000)30% (-2%)For-Profit

OnlineHeadcount(+/- 2008)

OnlineMarketShare

(+/-2008)Forecast,Fall 2013



22.2%

46.5%

28.3%

3.0%

28.4%

59.1%

11.4%

1.0%

0%

10%

20%

30%

40%

50%

60%

70%

Associate Bachelor's Master's Doctoral

% of Online Market

% of Offline Market

Est. Online Students by Credential (Fall, 2008)Relative weakness at undergraduate

level- relatively few online programs atcommunity colleges; less academicallyexperienced demographic; stimulus of

Axia College at associate level;emphasis on completion programs at

bachelor’s level

Relative strength at graduate level-short master’s programs; more

academically experienceddemographic; older consumer placeshigher value on convenience; greater

institutional comfort forexperimentation

Est. Online Headcount &Market Share, Fall 2008

Associate= 339,000 (c.7.9%)

Bachelor’s= 708,000 (c.7.9%)

Master’s= 431,000 (c.21.3%)

Doctoral= 46,000 (c.24.1%)

Undergraduate= c.7.9% online

Graduate= c.21.5% online

Source: OHE-LC data, NCES and OHE-LC staff analysis. Excludes certificates, first professional and non-credit



Est. Online Headcount by Field (BA, Fall 2008)

14%

18%

25%

6%

11%

16%

13%

5%

8%9%

0

50000

100000

150000

200000

250000

300000

Busines

s

Hea

lthca

re CIT

Crim

inal Jus

tice

Educa

tion

Com

mun

ication

Libe

ral a

rts

Psych

olog

y

Public

adm

inistra

tion

Con

sumer

/hum

an scien

ces

0%

5%

10%

15%

20%

25%

30%

Est. Online Bachelor's Headcount

Est. Online Market Share

Ripe fordevelopment?

c.800,000 studentmarket

Online as mainstreamIn General but NOT online Top 10: Visual &

Performing Arts, Engineering, Biological/BiomedicalSciences (1m+ students)

Source: OHE-LC data, NCES and OHE-LC staff analysis12Copyright © 2009 Eduventures Inc


Est. Online Headcount by Field (MA- Fall, 2008)

26%

15%

21%

31%

15%

40%

9%

19%14% 15%

0

20000

40000

60000

80000

100000

120000

140000

Bus

ines

s

Edu

catio

n

Hea

lthca

re CIT

Engine

ering

Pub

lic adm

inistra

tion

Psy

cholog

y

Crim

inal ju

stice

Theo

logy

/relig

ious

voc

ations

Com

mun

ication

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Est. Online Master's Headcount

Est. Online Market Share

In general, online is relativelymore significant at master’s

compared to bachelor’s level-smaller, more conducive market

In General but NOT online Top 10: Legal Studies,Biological/Biomedical Studies (c.200,000+ students)

Source: OHE-LC data, NCES and OHE-LC staff analysis13Copyright © 2009 Eduventures Inc


Positioning and differentiation trendsCurrent explanation of online growth will remain very important-convenience, flexibility, adult learner, geography, programming,marketing, operationsMore sophisticated consumers means prospective student decision-making should become more demanding and rationalMany schools will embrace differentiation strategies that suggestopportunities to go beyond “natural” assets (e.g. parentcharacteristics, local visibility), without the option of outspending thecompetitionIn a maturing online market, “online” will continue to diversify, schoolswill become more self-aware of the nature/value of currentapproaches/assets, and will do more to position this to the marketOn this scenario, more nuanced aspects of online offerings (e.g.platform, pedagogy, support services, partnerships, student body,scheduling, outcomes etc) will become much more developed andvisible, and necessitate a more complex explanation of online valueand for online growth



Positioning and differentiation across 18areas and 100 schools

4. Uncommon PositioningDifferentiated

OutcomesProgrammatic AccreditationValues

3. Common PositioningDifferentiated

ProgrammingStudent Support

2. Uncommon PositioningUndifferentiated

AlumniAwards and RankingsCredit TransferNews Section/BlogsPartnershipsPlatformsStudent Body/Diversity

1. Common PositioningUndifferentiated

FacultyFinancial AidPedagogy/Student ExperiencePricingScheduling/AccelerationStatus/Experience/Size

21

Source: Competing in Online Higher Education 2008, Parts 1-3(OHE-LC, 2008)



Conclusions…Online headcount forecast to reach almost 3.5 million by 2013(c.18% of all students)Current economic downturn may initially slow growth in short-term; online will then become strongly counter-cyclicalPost-2013, more significant traditional student or internationalparticipation may be key to further expansionEvidence regarding current prospective online studentdecision-making helps explain the relatively undifferentiatedonline value proposition characteristic of the current marketA maturing market, in every sense, is forecast to drive a morenuanced and diversified approach to positioning anddifferentiationThis scenario may be more supportive of growing the onlinemarket into additional disciplines and demographicsMultiple opportunities for online active schools to differentiate;building on threshold standards



Online Higher Education inNew York State:

selected data & observations



Adult Student Undergraduate Enrollment atNY Schools, 1995-2007

271,725

255,096

234,317224,996

258,833251,377 247,583

-

50,000

100,000

150,000

200,000

250,000

300,000

Y1995 Y1997 Y1999 Y2001 Y2003 Y2005 Y2007

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Undergraduate # Aged 25+ at

NY Schools

% of all undergraduates at NY

schools

Growth 1995-2007: -8.9%

SUNY Schools: -18%(c.35,000 in 1995 downto some 29,000 in 2007)



Enrollment & Population- U.S. v. NY

40.0%

9.0%11.8%

-1.4%

42.9%

12.3%

-8.9% -7.8%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

Under 25

Undergraduate 1995-

2007

18-24 population

(2000-2007)

Over 25

Undergraduate 1995-

2007

25-44 population

(2000-2007)

U.S.

NY

Trends: Both NY and U.S. saw traditional ageundergraduate growth far in excess of populationgrowth. By contrast, while the U.S. saw abovepopulation growth among adult undergraduates,NY saw below population decline. WHY?



Top 20 Adult Serving NY Schools- Online Presence

Courses only 4,945Nassau Community College

Courses only 5,028CUNY LaGuardia Community College

Significant 5,253Mercy College-Main Campus

Courses only 5,362CUNY Lehman College

Little or none 5,504Fordham University

Courses only 5,520CUNY City College

Significant 5,765Monroe Community College

Little or none 6,075CUNY Bernard M Baruch College

Courses only 6,261Suffolk County Community College

Little or none 6,410CUNY Brooklyn College

Courses only 6,537CUNY Borough of Manhattan Community College

Courses only 6,948CUNY Queens College

Significant 7,485Stony Brook University

Emerging 7,721SUNY at Buffalo

Courses only 8,482CUNY Hunter College

Major 10,664SUNY Empire State College

Major 10,679Touro College

Emerging 12,433Columbia University in the City of New York

Emerging 17,260New York University

Major 33,117Excelsior College

Online CategoryAdult Students 25+ Fall 2007School



Observations…NY degree-granting schools experienced a net loss of adultundergraduates between 1995-2007 (-8.9% compared to 11.8%nationally); SUNY schools experienced even steeper decline (-18%)Partly explained by NY’s steeper than average 25-44 populationdecline between 1995-2007?Also, NY experienced very strong increase in traditional ageparticipation- up 42% over the period (SUNY schools up 24%)Compared to many other states, NY exhibits relatively few majoronline players, with much activity at course rather than program levelWithin SUNY LN- little online bachelor’s activity outside Empire StateCollege; predominance of online associate programs (but typically notfrom SUNY schools that enroll most adult students)Eduventures consumer data shows average, or perhaps aboveaverage interest in online study among NY residents. Also, aboveaverage educational attainment- impact on online activity?Hypothesis: weaker adult population/enrollment, and robusttraditional student enrollment, have dampened online programdevelopment in NY to date? Or, has relative lack of online programsdampened adult student enrollment? Might post-2009 fall intraditional student numbers, and booming adult figures, spur moreonline activity?



Richard Garrett Program Director & Senior Analyst, OHEEduventures, LLCPrudential Tower10th Floor800 Boylston StreetBoston, MA 02199617-532-6081 (Direct)[email protected]


Thank youPlease direct any feedback or questions to: