Richard Garrett, member of Linked In’s Higher Education Management Group, heads Eduventures Online Higher Education Learning Collaborative. Eduventures in a research and consulting firm, specializing in higher education and based in Boston, MA. The Online Higher Education Learning Collaborative (OHE-LC) is a membership program for colleges and universities active or interested in online higher education.
KCH: The likelihood that students will enroll in online courses/programs from institutions outside of their geographic region has tremendous implications for the way in which the online market evolves. What does your research tell us about the preferences of students to “shop locally?”
RG: Our consumer studies consistently tell us that a majority of prospective online students want to combine online convenience and local study. Approximately two-thirds of prospective students would prefer at least a branch campus/center in their home state, while about a third would select the “best” program regardless of location. It is interesting that 72% of prospective students who express a preference for online study at a school with a physical presence in their home state are content with a branch campus or center, with only 28% demanding a full campus. Whether it’s the option of face-to-face support, interest in blended delivery, in-state tuition, or reassurance about school legitimacy, the local/online combination is persuasive for a significant number of consumers.
As population size grows, preference for 100% online delivery falls and preference for online study at a “local” institution increases. Comparing percentages, respondents living in areas with less than 50,000 population are 59% more likely to express a preference for 100% online study than respondents in areas with more than one million in population (26% v. 16%). Respondents in areas with more than one million in population are 44% more likely to express preference for a “local” (defined as at least a branch campus or center in the respondent’s home state) online provider (73% v. 51%). These figures make sense. Less populated areas tend to have fewer postsecondary institutions, with online delivery offering increased choice. By contrast, large urban areas typically feature multiple postsecondary institutions, making the additional choice available through online study less compelling.
However, it would be a mistake to rush to any simplistic conclusion that less populated geographies represent the best market for OHE members. Population scale must be taken into account. Although residents of low population areas are more than 50% more interested in 100% online study than their major urban area peers, the implied 100% online market size of areas with more than one million in population is more than 500% larger than the implied market in small urban and rural areas. Marketing campaigns aimed at lower population areas may see higher conversion ratios, but this will be offset by reduced market size.
Depending on school type, situation, and ambition, schools may wish to address or challenge consumer needs and anxieties related to an online + local mind-set. The big question is whether over time online higher education will increasingly embody the geographical patterns of higher education generally in the U.S.- large number of smallish schools scattered by geography, with patterns of largely local attendance- or whether online will ultimately encourage students to select the “best” program regardless of geography, and may stimulate forms of school consolidation.
KCH: Online proprietary schools have done well, in part, because of their success serving the adult student market? Are they making inroads into the traditional (18-24) market?
Not really. All the evidence we have suggests that traditional age students still represent only 5-10% of online students at program level, whether at for-profit or non-profit schools. Even initiatives like Apollo Group’s Axia College, offering online associate degrees, recruits a student body with an average age of 30. At present, the draw of the traditional campus experience, whether residential or commuter, remains powerful for younger students. Until online higher education can really show strong outcomes and a “rich” student experience, few traditional age students will go the online route, in my view. What we may see is larger numbers of traditional age but otherwise non-traditional students going online. This population is less interested in or less able to take part in the traditional campus, and may behave more like the adult student in terms of prioritizing online convenience.
Equally, if online higher education fails to penetrate the traditional student market long-term (which currently represents c.60% of the total higher education market in the U.S.), online will start to bump up against growth limitations, at least domestically.
KCH: A recent Sloan-C report suggested that the number of new providers in the online higher education market is slowing. Should we expect greater concentration in this market in the coming years?
An important distinction is between online courses and programs. Sloan focuses on the former. It is true that a majority of schools already offer online courses. While some will continue to get involved in the coming years, others may see a virtue in remaining outside this activity (whether ideologically, or in terms of brand). However, fewer schools offer wholly online programs, and there I expect we will continue to see strong growth, as more schools opt to consolidate their online course offerings into whole programs.
KCH: Are the larger online providers benefiting from economies of scale? Where are the savings been found? Content development? Marketing?
Somewhat hard to tell. There are few 100% online schools, fewer that publicly report this kind of data. For most schools, reported data rarely distinguishes online numbers of this kind. It is certainly true for the likes of Capella University and American Public University System, both 100% online institutions that are publicly traded, margin expansion is a big theme, and something that Wall Street looks for. But I think the sample is too small to judge in terms of online delivery mode as such versus what individual schools are doing operationally.
Our survey data tells us that most online active schools say their online operations are profitable, but it is often hard to know where any subsidy fits in. Among the larger online schools, use of adjunct faculty is clearly key to keeping costs low, but that applies for many face-to-face operations, too. To my knowledge, specific cost-saving pedagogical efforts online are much less visible, particularly at program level. At course level, Carol Twigg’s work on redesign offers lots of evidence of how technology can significantly reduce costs while maintaining or raising quality.
Our focus is online degrees and other programs, and less online courses as part of an otherwise face-to-face student experience. OHE-LC offers members major research studies on key aspects of online higher education, such as demand, supply and competition, as well as operational issues. In addition, custom research allows each member to commission studies that speak to its particular needs and ambitions; and we also connect members via regular Roundtables and an annual meeting.
Online higher education is a young but dynamic market. At Eduventures, our job is to analyze emerging trends and patterns, and to help schools better see themselves, and their opportunities.