Understanding the National Online Higher Education Market
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1 Understanding the National Online Higher Education Market 2008 USDLA Conference Mindy Hershberger Research Manager Online Higher Education Learning Collaborative Eduventures, LLC April 23, 2008 Copyright 2008 Eduventures LLC
2 Market Estimation Eduventures estimates that at the close of 2006, there were 1.5 million students in 100% online higher education degree-seeking programs. 8.5% of all students at U.S. degree-granting, Title IV eligible schools 20% of all adult students Copyright 2006 Eduventures, LLC. Copyright 2008 Eduventures LLC 2
3 The National Online Market 2,500,000 2,000,000 55% 45% Online Students Growth 8.6% of headcount at degree-granting schools 1,822,500 2,132,325 60% 50% 1,500,000 34% 1,518,750 1,219,000 30% 40% Estimated 20% of age 25+ headcount 30% 1,000, , ,727 24% 20% 17% 20% 500, ,113 10% F 2007F 2008F 0% Copyright Copyright Eduventures Eduventures, LLC LLC. 3
4 Market Landscape: The Online Market Is Becoming Increasingly Competitive # of Institutions with Online Education Programs Price Accreditation Quality Selectivity Gold Rush The Age of Competition Pedagogical model Delivery model Student outcomes Brand The Age of Brands Are we facing the online revolution s counter-revolution? Colonizing the Frontier Institutions need to move towards 1) greater differentiation and 2) stronger brand development Copyright Eduventures, LLCLLC. 4
5 Understanding the National Online Higher Education Market Eduventures Online Higher Education Learning Collaborative (OHE-LC) of 70 postsecondary institutions nation-wide commissioned the OHE-LC research team to conduct a study of the national market. 2-Part Study Conducted in 2007: Part I: Survey of 2,153 prospective higher education students nationally Part II: National, regional, and state-wide online higher education market sizing & analysis Copyright 2006 Eduventures, LLC. Copyright 2008 Eduventures LLC 5
6 Students First Choice in Delivery Mode Copyright 2006 Eduventures, LLC. 6
7 First Preference in Delivery Mode, By Age of Respondent Copyright 2006 Eduventures, LLC. 7
8 First Preference in Delivery Mode, By Degree of Interest Copyright 2006 Eduventures, LLC. 8
9 Differences in Motivation Among Students Choosing Different Delivery Modes? Copyright 2006 Eduventures, LLC. 9
10 Experience Learning Online Copyright 2006 Eduventures, LLC. 10
11 Perception of Quality of Online Learning Copyright 2006 Eduventures, LLC. 11
12 Perception of Quality of Online Learning Copyright 2006 Eduventures, LLC. 12
13 Why did respondents believe online education was inferior? On-campus programs/courses will always be known for better interaction between faculty and students 84% Socializing and networking with other students is much more difficult online 77% Most employers regard an online education as second-rate 57% Online education is more open to cheating and fraud 50% My family and friends would be much less impressed by an online degree compared to a degree taken on-campus 46% An online library is no substitute for a traditional library 39% In my profession (or intended profession), online education is not respected 36% Most online programs are too career-oriented, and less intellectually demanding than many campus-based programs 33% The subjects I want to study are not available in online programs/courses 31% It s very hard to tell the difference between online programs from different universities/colleges 30% It is difficult to find online programs that are accredited 30% Copyright 2006 Eduventures, LLC. 13
14 If you were going to study online, what type of experience would be important? I d want to know there was always an instructor I could talk to 72% If my computer went wrong, I d want to know I could get help quickly 53% I d want to study mostly on my own, and not have too many group discussions or other group activities online with other students 51% I d want lots of group discussions and other group activities online with other students I d like another online student to be designated as my buddy, so we could help each other learn online 23% 23% I d like to be able to regularly see and hear the other online students live (e.g.using webcams) 21% I d want to make friends with the other online students 17% Copyright 2006 Eduventures, LLC. 14
15 What can schools do to increase your interest in online study? Copyright Copyright Eduventures Eduventures, LLC LLC. 15
16 Conclusions, Part I Online learning is most popular among adults aged years working professionals most likely looking to complete a degree begun in past years, increase their pay/performance in their current job, or change careers Interest in online learning is not negligible among other age groups Highest online interest is for Associate s and Bachelor s degrees Majority of respondents have never taken an online course from a college/university. Experience does increase perception of quality Faculty-student interaction is a key concern among learners when considering online education Copyright 2006 Eduventures, LLC. Copyright 2008 Eduventures LLC 16
17 Understanding the National Online Higher Education Market Eduventures Online Higher Education Learning Collaborative (OHE-LC) of 70 postsecondary institutions nation-wide commissioned the OHE-LC research team to conduct a study of the national market. 2-Part Study Conducted in 2007: Part I: Survey of 2,153 prospective higher education students nationally Part II: National, regional, and state-wide online higher education market sizing & analysis Copyright 2006 Eduventures, LLC. Copyright 2008 Eduventures LLC 17
18 Online Delivery & Geography- the theory Online delivery implies geography is irrelevant- the death of distance study at the best schools in the country/world 100% online schools imply a certain rootlessness and non-geographically specific reach For-profit pioneers used national reach to scale Co-location of student, faculty and institution was no longer a fundamental pedagogic value Copyright 2006 Eduventures, LLC. Copyright 2008 Eduventures LLC 18
19 Online delivery & geography- the reality When considering an online program, c.60% of consumers care about geography Suggests majority of online market is local/regional, and minority national Consumers with a preference for online delivery were also geographically-minded, but had a broader definition of local National market Best regardless of location 32% I would never select an online program 14% Main campus in state 4% Local markets Branch campus within 10 miles 30% Branch campus in state 9% Source: June 2006 Eduventures survey of 2,033 U.S. consumers interested in postsecondary education in the next three years Main campus within 10 miles 11% Copyright 2006 Eduventures, LLC. Copyright 2008 Eduventures LLC 19
20 Online delivery & geography- the reality Copyright 2006 Eduventures, LLC. 20
21 Geography matters in online higher education 40% 35% 30% 25% 20% 15% 10% 5% 0% 36% Local (within 50 miles) Online student headcount distribution 53% of online students live in the same state as the providing institution (closer to 60% if non-domestic excluded) 17% 11% 27% 4% 4% State Region National U.S. abroad International Other 1% Source: Fall 2006 Eduventures survey of 138 U.S. schools with online program-level students (reporting for end of 2005) Copyright Copyright Eduventures Eduventures, LLC LLC. 21
22 Why else does geography matter in online higher education? State regulation- assumes a geographicallybound system; why is Capella University licensed in 14 states? Tuition- should student location determine tuition? Faculty- some state boards require online faculty to be licensed in that state Pedagogy- how does geographical distribution of online students affect pedagogy? Services- how might local v. national online student focus affect student services? Copyright 2006 Eduventures, LLC. Copyright 2008 Eduventures LLC 22
23 Eduventures Study on Regional/State/Local Online Markets Eduventures conducted a study to size the market for online degrees on a regional, state-wide, and local scale, using data from the following sources: National Department of Education IPEDS system Looking at the Top 10 largest adult-serving schools online activity in a particular geographic area Existing Eduventures data regarding market size and online headcount Existing Sloan-C data Used a combination of synthesis and modeling to go beyond the existing national market sizing data sets Copyright Eduventures, LLCLLC. 23
24 Online headcount concentration- by state All Learners Copyright Eduventures, LLCLLC. 24
25 Key factors Presence of one or more larger online active schools Influence of a substantive online state consortium Population growth or rural setting (consumer survey) Institutional type Copyright Eduventures, LLCLLC. 25
26 Online headcount concentration by state- Adult Learners Copyright Eduventures, LLCLLC. 26
27 Online active schools licensed out-of-state Copyright Eduventures, LLCLLC. 27
28 Online active schools licensed out-of-state Key drivers include population growth, military installations and neighboring states, as well as regulatory requirements licensed for what? is rarely clear (programs, recruitment, faculty, address, marketing) Copyright Eduventures, LLCLLC. 28
29 Online-specific licensing Only Arizona, Nevada, Tennessee and Wisconsin appear to assert jurisdiction over out-of-state online delivery to state residents as such- but there is clearly a gap between assertion and enforcement 18 states; 9 schools Copyright Eduventures, LLCLLC. 29
30 Why do students care about geography? Copyright Eduventures, LLCLLC. 30
31 Key institutional questions about the geography variable How important and stable is consumer demand for local online programs? How can different providers play to or counter such demand? In a more crowded market, and in terms of more generic programs, will more schools begin to use online to serve traditional, often local constituents? Will National players respond with marketing technique/spend, and a refreshed distance online value proposition? Copyright Eduventures, LLCLLC. 31
32 Conclusions, Part II Geography matters in online higher education, and will grow more important in the future Mainstreaming of online delivery will shift local/national online market dynamics- closer to more localized higher education market More locally oriented schools have an opportunity to address consumer demand for local online study In order to remain competitive, more nationally oriented schools must counter this trend State oversight may mean local regulation of a national market Copyright Eduventures, LLCLLC. 32
33 Final Thoughts Online enrollments will likely continue to grow in the coming years, though we are beginning to see stabilization Online education will likely continue to be most popular among working professionals, though it will become increasingly incorporated into traditional on-campus programming We will continue to see a market emergence of local online providers, which will drive competition in new ways, in particular for national providers We will need to continue to monitor the development and interplay of postsecondary education licensing and online education Copyright Eduventures, LLCLLC. 33
34 Thank You Any questions? Mindy Hershberger Custom Research Manager Online Higher Education Learning Collaborative Eduventures, Inc. Prudential Tower, 9 th Floor 800 Boylston Street Boston, MA (Direct) mhershberger@eduventures.com If you would like a copy of this powerpoint presentation, please leave your business card at the front. Copyright Eduventures, LLCLLC. 34
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