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Mature Market for Online Education

September 19, 2012

The market for online higher education aimed at adults may be reaching maturity, according to a new report from Eduventures. And without a better-defined product, the report's author said online learning faces a risk of petering out and being little more than a back-up alternative to on-campus education for students.

“We feel this is the watershed moment,” said Richard Garrett, vice president and principal analyst for Eduventures and the report’s author. “After years of endless growth, we’re definitely coming to more of a plateau situation.”

Eduventures is a research and consulting firm that works with colleges and higher education-related businesses. The study (more about it, and where to buy a copy) was based in part on the newly-released results of a survey of 1,500 U.S. adults on their attitudes about online education. Released today, the company has conducted a version of the survey (of 18- to 70-year-olds) sporadically since 2004.

Citing survey findings and market data, the report found that 38 percent of prospective adult students prefer to study fully or mostly online. That portion remains virtually unchanged since 2006, when 37 percent said they preferred online learning. Similarly, there was only a small bump over the last six years in the percentage of adult students who said online college is equal in quality to campus learning.

The number of adult students has grown rapidly over the last two decades, according to the report, with for-profit and online colleges accounting for the bulk of that growth. And adults have become a much larger part of the online market, reaching 28 percent of the fully or majority online headcount in 2011, according to the study. But with the unchanged level of preference for online education among adult students, it might be harder to continue the boom's gains.

The survey also found that while 77 percent of adults are interested in attending college in some form, or anticipate doing so, fewer than 5 percent of adults actually enroll in any one year. That means that large numbers of interested adult students are dissuaded by tuition prices or time constraints, according to the study.

“Many prospective students find it expensive and too time-consuming,” said Garrett.

Those perceptions extend to both on-campus and online learning, according to the study.

“There is a connection between sustained adult concern over cost and time barriers in higher education, and the lack of momentum over time in adult preference for online delivery and perceptions of online quality,” the report said. “To date, online higher education has addressed fundamental cost and time barriers only partially.”

The study pushes back on conventional wisdom about the exploding growth potential of online education. The for-profit sector, for example, has seen its online enrollments tumble of late. And signs of stagnation in the market, combined with student worries about cost and time, mean that online providers will need to do more to make their product stand out, Garrett said.

Convenience was the big draw in the past, and might have been enough to attract students. That is probably no longer the case, according to the report.

Colleges will have to compete on the quality of their online academic experience, said Garrett. And learning outcomes -- more tangible evidence of learning and return on investment -- will also become more important in the jostling of a tighter online market.

The competition could be a good thing, Garrett said, and there is plenty of room for colleges to demonstrate their strengths online because, currently, “it’s very hard to tell one school from the other.”

The Completion Agenda, MOOCs

The report takes an unusually hopeful look at how the United States stacks up on degree production. As has been well-documented, younger Americans (25- to 34-year-olds) have fallen behind in degree attainment compared to their peers in other countries. However, that may be due in part to what the report describes as a particularly well-developed U.S. higher education system for older adults.

To wit, the study cites U.S. Census data showing that 55- to 64-year-olds are substantially more likely to hold a bachelor’s degree than they were when they were in that younger age group. And with the recent growth of online higher education and the addition of more nonprofit players -- what Garrett calls the “mainstreaming” of online learning -- young Americans might outpace previous generations in degrees earned during their thirties, forties and beyond.

“The fact that older U.S. adults have been able to go or return to higher education later in life is an immense strategic advantage for the United States,” the report said, “diversifying programming and giving adults considerable flexibility on when and how to study.”

That flexibility, however, has not so far extended to alternative credentialing, as the degree remains firmly at the center of American higher education.

The degree-centric status quo will not allow the adult student market to grow to its full potential, according to the report, because of the current system’s high costs and “ambiguous” value proposition. And non-degree certificate programs will need to play a significant role for the national college “completion agenda” to have a chance of working, the report found.

The study describes alternative approaches for the future, including a relatively radical scenario with an expanded focus on individual courses and skills, as opposed to degrees, as well as a bigger role for competency-based education. Massive open online courses (MOOCS) could be a player, too, according to the report.

For now, however, Garrett said the prognosis for the degree remains good. And MOOCs, while intriguing, are not currently part of a radical challenge to higher education. He said that could only happen if, on a wide scale, the courses became valuable to employers as they try to evaluate job candidates.

“The challenge for MOOCs and similar innovations,” according to the study, “if the goal is to supplant conventional schools and credentials, is consumer conservatism.”

But all the recent hype around MOOCs and online learning is at least helping to drive the conversation about potential game-changers for adult education, even if they have yet to really make their mark.

“We are being shown the possibilities much more than we were years ago,” Garrett said.

 

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