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Is It Too Late for Online?

Is It Too Late for Online?

The Chronicle of Higher Education The number of students pursuing a higher education degree completely online climbed from 1.6 million in 2010 to more than 2.7 million in 2015, according to the National Center for Education Statistics (NCES) and Eduventures. This 69 percent growth in online enrollments occurred at the same time that on-campus enrollment in U.S. higher education was declining, by 3.4 percent. In fact, one-third of all higher education students in America now take at least one class online, according to a survey conducted by the Babson Survey Research Group. Despite the dramatic increases in online degree seekers in recent years, “a plateau for online enrollments may be approaching," write the survey report authors. Today the demand for online programs is being met by more than a thousand degree-granting institutions, creating a crowded field that competes in a limited marketplace.  Says Randy Best, Chairman of Academic Partnerships, “Going online is now more a defensive strategy rather than an opportunity to grab a larger market share, like it once was.” The swelling stream of students and revenue that rewarded first-wave institutions flowed from a pent-up demand for higher education among working adults – older, often married and unable to give up jobs or leave families behind in exchange for re-entering traditional campus life.  The appeal of pursuing a degree online, at home, fitting into their already busy schedules, offered an enticing alternative for large numbers of mid-career adults.  Yet, in the early years, these non-traditional students desirous of a flexible path to a degree had only a small number of providers to choose from, mostly expensive for-profit proprietary schools. The for-profit enrollments skyrocketed at unprecedented rates as these institutions catered to the rapidly expanding base of underserved or unserved non-traditional students – who today account for 74 percent of all U.S. postsecondary students. As late as 2008, public universities had left this huge market to the for-profits. Public universities slowly began to recognize the immense opportunity before them in the online world.  But most encountered strong institutional resistance. According to the Babson survey, for the past nine years no more than one third of chief academic officers reported that their faculty accepted the value and legitimacy of online education. Says Best, “Defenders of the status quo did not appreciate the impact that making their high-demand programs available online could have on their institution’s future.” The few public universities that did venture into the water found their online students, contrary to expectations, to be well qualified, well equipped and serious about their studies. Encouraged by how the early entries to the online arena prospered, more universities were able to persuade reluctant faculty and administrators to begin putting programs online. Their success led to a tidal wave of universities launching online degrees. It is now hard to imagine a university with high growth without online degrees. While an increasing number of universities came to appreciate the benefits of online learning for non-traditional students within their geographical service area, very few in those early days anticipated the fierce battle for students that going online ultimately engendered. Says Best, “Institutions soon learned that, regardless of where a new online provider was located, that competitor was, overnight, in every home in their area aggressively competing for students”. Universities also found that having a highly ranked brand did not necessarily translate into online success, nor did it protect them from the impact online competitors would have on their enrollment pattern. In fact, many more regional brands that caught the early online wave have grown their overall enrollment by 30 percent to 50 percent, becoming national leaders in particular programs, and their growth continues accelerating.  In an environment influenced by search engines and fast-changing aggressive marketing, early movers continue to get bigger, regardless of their original size, thus creating a further disadvantage for late entries to the online universe of choices. Says Best, “The two principal reasons it’s now difficult for a university to just go online and catch up is the current cost of recruiting an online student has significantly increased from eight years ago. And, the competition that now exists is difficult to exaggerate.”  The 10 or 12 large proprietary schools charging high tuition are no longer the main competitors for an institution still contemplating stepping into the online arena. The competition is public universities that have gone online in droves with virtually the same programs at low subsidized tuition rates. Many of these institutions started with a few high-demand programs online; now, many have 30 to more than 100 programs online. Prospects have more choices than ever before, and it’s estimated that the average student who enrolls online looks at six to 10 online institutions before enrolling, dismissing with a click schools they find not competitive on price or convenience. Scalability is also a contributor to the continued growth of established online programs, with every school armed with the possibility of serving virtually an unlimited number of students. There are currently enough online schools to accommodate nearly every would-be college student in the country.  Going forward, the winners online are going to be the schools with the most marketing dollars and the greatest marketing expertise. “Schools who saw online as a threat were right, but clearly not for the reasons they thought,” says Best.  “The threat has come from what they decided not to do.” Institutions located in the mid-Atlantic and up through New England, on the West Coast and in some areas of the mid-West, still have a great opportunity, because in these regional markets there has been the greatest reluctance to go online. According to the NCES, students in New England, for example, are highly likely to enroll only in traditional programs – 84.5 percent of them did so.  That share falls as low as 63.4 percent in the Southwest. Universities in crowded markets who wish to launch successful online programs need to carefully follow a script proven by predecessors.  Only high-demand programs should be launched.  Online is not an effective tool for saving a low-enrollment program; it is about increasing capacity and expanding the reach of great professors and programs for which there is market demand. Also, says Best, “The launch must be aggressive with a first-year marketing budget of $2 million to $4 million. It takes this size of investment to be noticed today.”  Further, the university must be prepared for scale, particularly in the admissions and IT departments. Says Best, “The launch requires doing some things differently, and the processes can be a bit complex the first year. But the jump in enrollment and revenue can still be most rewarding in parts of the country not inundated by online providers.”

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