Garrett, R. (2009) Online Higher Education Market Update Boston MA: Eduventures Inc.

This post is an expansion of an earlier post ‘For-profits increase market share of online learning‘, now I’ve had a chance to read the original report in full. I am grateful to Eduventures for sharing a copy with me, as the report is not publicly available over the Internet. There is however an excellent short video by the author available from

The focus of this report is on the impact of the recession on the online market, but the report also provides some interesting data about competition between for-profit and public institutions for the higher education online market. For instance the for-profit sector has a much higher proportion of the total online market (around 32%) compared with its share of the overall higher education market (about 7%), and seven of the top ten institutions in terms of the number of online enrolments are for-profits. The report goes into the reasons why (mainly better marketing and more ability to respond to demand in the for-profit sector), and the video gives some useful pointers to the public institutions with regard to how they can compete better with the for-profits.

Enrolments in fully online courses are around the 11% mark of all enrolments, and this is expected to increase to 20% by 2014 (about 4 million enrolments). Still more than half (55%) of all US degree-granting institutions offer no fully online courses (down from 69% in 2005). However, Eduventures estimates that of the adult market (25+), 24% are currently in online programs and this is expected to increase to 35-40% by 2014.

Master’s programs are the big growth area in online teaching. The report stated that:

master’s programs offer the best combination of student maturity, short length, career focus and institutional comfort with experimentation-hence often very high online penetration.

The two most popular online master’s subjects in terms of enrolments were business and education, although there was a ‘long tail’ of subjects at this level.

The main message appears to be that for-profit institutions offering 100% online programs such as University pf Phoenix Online and Kaplan are much better placed to expand over the future than public and private universities, who, partly because of faculty resistance and partly because of a wish to exploit the benefits of a physical campus, have neither the desire nor the capacity to expand rapidly into fully online learning. However the demand for online learning is there and is likely to grow, while at the same time campus-based enrolments from high schools are likely to decline over the next few years, due to demographics. Lastly, online enrolments have benefited from the recession in the USA and therefore could act as a stabilizing factor for student enrolment in both for-profit and public universities.


  1. Online learning has not even approached its ultimate scope and size but will as the need for learning as a more or less permanent feature of careers renders face-to-face education less accommodating of the needs of working professionals. In addition, the acceptance of online learning by regulatory and governing bodies continues to increase, fueling further growth.

  2. I guess it is time online courses stopped competing with offline ones. Students and counselor alike compare the two and most often than now online education is not able to compete on some of the parameters that put physical or hybrid courses on a pedestal. But maybe this economy and the changing look of the Market may put a differreny light onthe online ones. I am still waitig to see how online courses will carve a niche and show that they are of good value and hold water in the job Market

  3. You’re absolutely right that the demand for online learning will continue to grow. Attitudes are changing as well, even in professional schools. For instance, how many people laughed when they first heard Concord Law School offered an Online Law Degree? Well today, ABA accredited law schools make classes available online (for credit). The students are limited as to how many credits they can complete online, but that alone should send a signal that ‘this is only the beginning’.

    I realize this posting is over a year old, so I’m not sure where you stand today… but I don’t agree with you where you say that “…for-profit institutions offering 100% online programs such as University of Phoenix Online and Kaplan are much better placed to expand over the future than public and private universities…” Here’s why:

    1.) The technology for online learning platforms is relatively inexpensive (if a public school doesn’t have it, funds could certainly be appropriated)
    2.) Public (and most non-profit) schools, for whatever reason…, do not have to “prove themselves” to the typical prospective online student. While I don’t necessarily agree, the perception is “automatic credibility”.
    3.) Public & non-profit institutions don’t need to compete nationally; all they have to do is focus on dominating their own city & surrounding communities.
    4.) Price. Referring back to #1 above, the overhead to operate and staff an online learning platform is incredibly low compared to on-campus, for-profits charge anywhere from $275 to $700 per credit hour (some… maybe more). A state school can maintain (or even discount) current tuition rates and still walk away with more revenue than they would had they taught the same courses on campus. In-state tuition runs from $85 to $170 a credit hour (undergrad in Florida). My point here is the for-profits can’t compete (even if they wanted to) on price.

    Now here’s the critical point (and you touched on this): Non-profits & state schools must begin to take their business seriously. You mentioned professors being resistant to change, I don’t disagree… but the reason non-profits are consistently dominated in the online education marketplace is because they refuse to treat admissions as enrollment management. This is a business, regardless of whether or not they’re for-profit or non-profit: The light bill has to get paid, the pretty buildings need to be cleaned, the lawn must be mowed – Revenue is a necessity.

    I understand how entities such as this can be so averse to change, but quite frankly, it’s a relatively easy-fix. They wouldn’t even need to completely eliminate all bureaucracy. All they would need to do is to reform one department, Admissions. If they would invest in a professional sales force (like it or not, Admissions is sales), it would pay for itself several times over in a very short period of time. In addition, over that same short period of time, public & non-profit universities would begin to vacuum in a major portion of the online education market share within their local markets.

    Online education can deliver the same quality as being in the classroom (many students actually claim a higher quality). I predict the inevitable decline in for-profit online schools. I’m not saying “elimination”, but there will be significant shifts in market share from the University of Phoenixes & Kaplans to the local non-profit, state, and even for-profit bricks & mortar universities’ Online Degree programs.

    Jason Bradley

    • Hi, Jason

      Many thanks for your thoughtful comment on my post about the online higher education market in the USA.

      My position hasn’t changed much on this. I work mainly (but not exclusively) with the public sector. Senior management is often pushing for online learning and there is more acceptance by instructors, but few institutions have a business or strategic plan for online learning, which results in slower take-up and poorer quality, and little if any savings on cost. So it’s not so much an attitude problem now (although that varies by institution) as a technical management problem.

      Best regards


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