6.2 Million Americans Go Online for their Education

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Marketdata Enterprises Questions if the High Price of Online Degrees is Worth it

Online Education Grows Rapidly, Helped by Recession and Easy Loans

Marketdata Enterprises, a 32-year old market research firm that has tracked a wide variety of service sectors since 1979, has released a groundbreaking new 115-page report entitled: Online Education: An Industry & Competitor Analysis. The study traces the “distance learning” business from 2002-2015 forecasts.

Critics of e-learning say that learning alone via a computer does not provide the enriching intellectual exchange that in-person classes offer. Because the industry is so new, naïve consumers may not know the difference between accredited institutions and the estimated 700 fly-by-night operations that imply accreditation and charge steep prices, or sell fake degrees. What’s the quality of online education degrees? Are they readily accepted by employers? Are they worth the high price tags, as much as $50,000+? The jury is still out on all of these issues.

According to Research Director, John LaRosa: “Online education is a fairly new and high growth industry, with its share of growing pains. Growth was fueled by technology and the ability to offer courses via the Internet, to time-pressed working adults seeking to switch careers or augment their skills to make them more marketable in recessions. However, Title IV loans such as Pell Grants were a little too easy to obtain and many students have defaulted on loans that can top $50,000. This has resulted in 2011 being a transition year as competitors adjust their recruitment methods. Beyond this year, growth should resume.”

Report’s major findings:

  • Market Value… Marketdata analysts estimate that the online education market was worth $60.5 billion in 2010—up 24% over 2009. However, the string of 8 consecutive years of double-digit growth will end this year, as enrollments fall sharply and revenues drop by 3.2%. This is due to all the uncertainty over new Federal scrutiny and rules and their effect on schools’ recruitment and other practices. Revenues are forecast to grow 7.7% per year from 2012 to 2015--reaching $78 billion.
  • Major Competitors… Seven of the major online ed schools posted first-half 2011 revenues of $5.6 billion, led by the University of Phoenix. Their combined sales were down by 3.2%. Public companies include: Univ. of Phoenix (Apollo Group), Capella Education, Strayer Univ., American Public Education, Education Management, Career Education, DeVry, ITT Education Services, and Corinthian College. Added to these are many other private non-profits and an estimated 400 “diploma mills” and 300 counterfeit diploma websites selling fake degrees.
  • Online education program enrollments represented about 30% of the post-secondary total, and this share is expected to rise to 37% by 2015.
  • Regarding the high price of online degrees, industry insiders claim that the biggest expense for these programs is personnel, and that it takes more time and personnel to develop an online course, including technical personnel. Many schools have to pay a premium for online teachers, since there may be a smaller pool of them available. Schools usually price the programs according to what the market will bear. However, students may find online courses cheaper than traditional ones because they don’t have to take time off of work or to pay for daycare.
  • 6.2 million students are now enrolled in online ed courses (2010), up from just 1.6 million in 2002. Heavy advertising, marketing and recruiting by the large public companies/schools, coupled with easy Federal loan money, and recession-induced career changes, all contributed to the rapid growth of this field.
  • The industry’s “saturation point” is probably a few years away, and we will know it when the online education market is growing at the same rate as higher education in general—about 1% - 3% per year.
  • The online education business had its beginnings in the mid-1990s, when the Internet became widely available for commercial use. Back then, the number of companies in this field was in the hundreds. Today, it’s in the thousands.

ABOUT THE STUDY
Online Education: An Industry & Competitor Analysis, published in August 2011, is an independently researched “off-the-shelf” study. The study has 115 pages and 38 tables. It costs $1,495 and is also sold by individual chapters. A table of contents is available by mail, email or fax. A 16 pp. Overview summary is available to the public for $79. The study traces the market from 2002-2015, examining these topics: how online education programs work, evolution and rapid growth of the business, why the recession helped the business, bogus diploma mills, new federal rules that examine schools’ recruitment practices and student loan default rates, and detailed competitor profiles.

ABOUT MARKETDATA
Marketdata Enterprises, Inc. is an independent market research firm and analyst of a wide variety of service sectors since 1979. The company publishes market research studies, performs consulting, and operates several unique websites: BestDietForMe.com, MyPersonalGrowth.com, SleepWeb.com, and Pain101.com. Mr. LaRosa is available for interviews.

Contact Information:
John LaRosa,
Marketdata Enterprises, Inc., Tampa, FL
Phone: 813-907-9090
Fax: 813-907-3606

http://www.marketdataenterprises.com

email: john(at)marketdataenterprises(dot)com

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John LaRosa
Marketdata Enterprises
(813) 907-9090
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