Looking Ahead to a New Year for Online Education

Looking Ahead to a New Year for Online Education

2012 has arrived and it is time to consider what the upcoming months may have in store for the field of online education and more specifically, the for-profit education industry because those schools are one of the driving forces behind online learning growth and innovation. Whether you are pursuing an online degree or have an interest in enrolling in an online program, this information will help you make informed decisions about your degree program and choice of online school.

Wrapping Up 2011 

Throughout the past year there were articles and reports published about the quality of online schools, along with the investigation of some for-profit institutions. There are a few key studies that have formed a point of reference for the industry and will serve to influence developments and changes in 2012.

Sloan Consortium Report: Going the Distance: Online Education in the United States, 2011. This study was conducted from 2010 to 2011 and published in the fall of 2011. Surveys were sent to 4,523 institutions and 2,512 institutions responded. What the results of the survey found is that after eight years of growth in the for-profit industry, the growth was finally slowing down. There was still a 10% increase in enrollment reported from the prior year; however, that was a smaller percentage increase than previous years. A decrease in enrollment is not surprising given the negative attention focused on some of the larger for-profit schools this year.

The published report states that over 6.1 million students were taking at least one online course during the fall 2010 term; an increase of 560,000 students over the number reported the previous year. What these results indicate overall is that the number of students taking online courses continues to increase. While the number of enrollments includes for-profit, private, and public schools, what these numbers do substantiate is the continued acceptance of online courses as an effective means of delivering education.

In December 2011 the U.S. Government Accountability Office (GAO) issued a Report to Congressional Requesters titled: Postsecondary Education – Student Outcomes Vary at For-Profit, Nonprofit, and Public Schools. This was an audit that was conducted from November of 2010 to December 2011. Recently, there has been increased concern about accountability for online schools because of the amount of federal student aid provided by the government each year ($132 billion in grants and loans from 2009-2010).

The GAO had already been investigating the for-profit industry and a prior report in 2011 addressed recruiting and admissions practices. The new report addressed the following issues: graduation rates, employment outcomes, student loan debts, and default rates for students at for-profit schools compared to those at nonprofit and public schools. The outcome of this audit found that for-profit students had a higher unemployment rate and student loan default rate. It has been pointed out that the GAO report may not have been entirely accurate because a literature review was conducted for the basis of the report instead of an actual survey.

Also in December 2011 a Huffington Post article by Chris Kirkham addressed budget cuts with community colleges and took the position that the increase in money available for student loans (along with Pell grants) could have been utilized better to support public schools. Adding to that concern is the way that for-profit schools utilize the funding received. Kirkham cited Bridgepoint Education Inc., as an example and stated that it devotes 37 percent of its operating costs to education, according to its most recent annual securities filings. The rest goes toward marketing, executive compensation and other overhead. As someone who works in this industry it is not too surprising that other costs are involved, especially for a school that relies upon the use of advanced technology and the employment of experienced faculty members.

Another development occurred in December 2011 when Congress' final results of proposed regulatory changes for federal student aid were announced. Originally the government planned to develop formulas that measured such factors as the students’ debt levels and income after graduation when making a determination of the availability of federal aid. If schools were not found to meet the proposed guidelines by 2012 then penalties would be applied. The final outcome resulted in the targeted date being moved to 2015, allowing schools to provide more information about students’ loans, default rates, etc. It was estimated that for-profit schools spent $16 million to defend the industry during the 18 month period that the regulations were being reviewed and developed.

The Beginning of 2012

Now in 2012 a new article has emerged by the Huffington Post and it presents more bad news about the for-profit industry. The title of the article sums it up: For-Profit College Students Face Higher Debt, More Unemployment, Report Finds. The article presents information from the National Bureau of Economic Research indicating that students enrolling at for-profit colleges in 2004 were making, on average, between $1,800 to $2,000 less annually than students attending other types of institutions. This was information gained from a study conducted by Harvard researchers who concluded that for-profit students experienced higher debt and more unemployment.

It’s interesting to examine how this research report was conducted. The researchers assessed outcomes of a recent cohort of first-time undergraduates who attended for-profits relative to comparable students who attended community colleges or other public or private non-profit institutions. The student population of a for-profit school is often different than a traditional school because it is designed for non-traditional, working adults and those adults who may not typically have access to higher education. I have worked with many students in my classes who were obtaining a degree for career advancement and their employers were not asking how the degree was obtained, rather there was an interest in the type of degree completed.

Andrew S. Rosen, Chairman and Chief Executive Officer of Kaplan University, has responded by publishing a book titled “Change.edu: Rebooting for the New Talent Economy.” He defends the need for online schools and in his defense he points to the use of funding by traditional schools – for dorms, prestigious buildings, and athletic facilities. The reviews of this book have been positive because Rosen backs up his statements with data and research, and he presents justification for this industry.

Overall, the regulatory issues, along with the governmental audits and investigations, will prompt greater accountability for online schools. There appears to be no sign of the for-profit schools going away and it is likely that this year will see further changes as the issues of career preparedness and student loan debt are addressed.

There should also be further accountability placed on potential students – because you should not start a new online degree program until you are knowledgeable about career options that are available and you understand the costs involved in obtaining your degree. In a challenging economy you have to make informed decisions.

Predictions for 2012
One development that has not received a lot of attention is the potential that online schools have for international growth. At present it is estimated that online education overseas operations currently account for a relatively small percent of the overall revenue: 6.8 percent at Apollo Group, and 26 percent at Kaplan. Last year Capella University and Kaplan University both made international acquisitions and this demonstrates the flexibility these educational institutions have to reach a much broader audience than their campus-based counterparts.

2012 has already begun with a strong focus on the for-profit industry. As a prior online student and a current online instructor I find the continuing discussions and the debates are beneficial because many students pursue education in order to provide relevant knowledge and skills that meet the needs finding jobs in a difficult environment. Responsibility and accountability should always be important elements of this student-centered approach, on the part of the school and the students. Regulations will make the industry stronger and technology will make it more adaptable.    

Share your feedback about online education in 2012 via Twitter @DrBruceJ

By Dr. Bruce Johnson

Photo © Steve Drake/Corbis

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