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MIT Free Courses

MIT launched a platform called MITx which is a free online class and more importantly platform for studying at MIT. One of the biggest benefits of MITx is that you receive a certification from MIT if you successfully complete the course.

MITx is in addition to its free online library and course materials called OpenCourseWare.

The one large catch here is that the certificate you get form MIT is not technically from MIT but a new non-profit that MIT is setting up. So you still get a quality education but you don’t get the prestige associated with having a degree from MIT.

How does all of this affect the for-profit education industry?

There are several potential issues.

1) People may opt to attend a free online class from MIT even though it does not provide them with a degree.

2) Employers are challenged yet again in terms of proving what the knowledge level of a student truly is. There is now a difference between education level and knowledge level. How do employers effectively test for this? The difference being you knew most people with a bachelor degree had a certain amount of structure and met the standards needed to pass an exam of the material. In this case, you are not sure what the person learned at all.

3) For-profit schools may have to offer a free version of their classes to attract paying students.

4) Student’s demands of for-profit schools will increase and the lead gen aspect will be more difficult.

However, there is always the flip side of this argument. The fact that there is more online material out there, people will become more used to it and look for accredited degree granting programs. This could help lead gen.

Either way this goes, the biggest issue really comes down to employers and how they perceive this type of education. Does paying money for a degree create value in the term education? Does free remove all value from an education?



Rep. Speier and Sen. Carper attack GI BIll Benefits

On February 15, 2012, Rep. Speier (D-California), and Sen. Carper (D-Delaware) introduced a bill that would rework how GI BIll benefits would be counted under the 90/10 rules within the for-profit sector.

The 90/10 rule was meant to limit for-profit schools from getting all of their income from the Federal government in the form of Title IV loans. The unfortunate outcome was that some schools signed on a lot of students who didn’t do well academically and dropped out. Since they took federal student loans they were not able to default on the loan and became saddled with debt and no degree.

The 90/10 rule was aimed at making sure the for-profit sector would raise academic standards and become less reliant on federal student loans. One of the ways to help that 90/10 ratio was to bring on more military students with GI Bill benefits.

With this new bill by Rep. Speier and Sen. Carper, the GI Bill Benefits would be lumped in with the Federal student loan amounts. This has some unfortunate side effects for the education industry and for the the schools themselves.

  1. The for-profit growth rates will be further cut due to a loss of a very strong audience. This will negatively affect the stock prices for the publicly traded schools long term.
  2. The veterans themselves may not be accepted to certain schools depending on their financial situation. This limits the veteran’s educational choices. Online education is a great path for military members since their curriculum can be delivered anywhere. The curriculum is also flexible for members who are on active duty or have to go for deployment. Veterans need these options.
  3. GI Bill benefits are earned through military service. They do not have to be paid back and are not considered to be “loans.” Lumping them into the loan category is misleading. Are they federal funds? Yes, but we gained valuable protection for our country from these individuals. We owe it to them to give them as many educational choices as possible.

If you oppose this bill, please write to your local representative or senator. If you want to contact Rep. Speier directly, you can call her at (202) 225-3531. You can contact Sen. Carper at 202-224-2441.

Apple’s billions – Buy Everyone an Education!

As everyone knows, Apple made $46.63 billion dollars in 14 weeks.

They also mentioned they had close to $97.6 billion dollars in cash on hand.

These figures by themselves are quite staggering. A recent article on the estimated what you could do with $46 billion in cash.

One of the things that caught my eye was that you could buy every 18 year old in America a 2 year degree.

Take a moment to think about that.

What if everyone 18 year old in the US was educated. Yes, this would be a socialist idea, but imagine the amount of wealth that would be created by that many more educated people in the US.

There are major pluses and minuses with this idea.

If everyone was educated, there would be too many people refusing to do blue-collar labor. There are simply not enough white collar jobs at the moment to support that many new graduates within 2 years.

The military would suffer since many recruits wouldn’t need the GI Bill benefits.

The value of a degree would essentially go down since everyone would have one. Only a bachelor degree or master degree would create distinction.

However, on the positive side:

1) Student loans would be massively reduced, pumping billions in to the economy from expendable income.

2) Shortages in key industries like teaching and nursing would be solved.

3) It would force a whole new way of learning. – Let me explain.

From an operational point of view, there is no way to absorb that many new students in to the educational system. Schools, and technology companies would have to team up to create one of the greatest revolutions known to man. The ability to deliver high quality learning and testing to a mass audience at an extremely low cost.

I think models like the MOOC would rise rapidly and new online learning platforms would arise. I also think things like iBooks2 will explode. Systems like would also become mainstream.

Older traditional schools would grasp at straws for “elite” students but will soon realize their curriculum needs to evolve also.

Could Apple reasonably go 14 weeks with no revenue? In theory yes, but in reality no. Could a series of billionaires team up to donate this much money and revolutionize the world? Yes.

Who would reasonably push back against this? First the unions, then the traditional schools and even the govt saying it is socialist.

How can the masses make this work? Push the idea through critical mass. If we cut out just 6.7% of the US military budget to fund a project like this we might put our youth on track to find a cure for cancer, and solve global warming. Education is key. Help support it by imagining new ways to deliver everyone in our country an education.



Note – I do not advocate cutting the US military budget. It is just an example of scale.


Apples iBooks2 impact on online education

Apple announced on January 18th that the are introducing iBooks2 for the iPad.

This announcement albeit small in nature has massive impacts for several reasons.

1) It attacks a traditional industry – book publishing head on. People have been reading books on e-readers for a while now but the content has just been migrated from paper. Very few books have taken advantage of the processor features which can play video, sound, and be interactive. The only books which have really taken advantage of this are children’s books and they have been massively successful as learning tools.

The impact on the publishing industry is going to be swift. You may see publishers go out of business within 2-5 years and some will try to refocus on other types of content. For the authors, I fear that their profits may suffer short term, but long term if books are cheaper, people should buy more of them, unless piracy comes into play.

2) The lines between “app” and web are starting to be blurred through the use of HTML5. I am excited to see how the use of iBooks will actually boost the usage of HTML5 on the web and make content faster, more interactive and easier to build. Once this starts bleeding over into the TV realm, you are going to see some amazingly interactive TV shows with a much higher level of stickiness. Overall, this should increase ad rates long term.

3) A new audience for learning will be opened up. iPads and tablets have a certain magic about them with older adults and young kids. They are easy to approach and use. As tablet sales go up, you will see more and more seniors online and more baby boomers come online.  This new audience will open up a whole new realm of teachers and learners for both the traditional schools and for profit universities.  In reality everyone loves to learn things they are passionate about. I can see millions of life long learners coming online and sharing their learnings with other learners via the iPad or any tablet for that matter.  Think of it like a socially interactive Wikipedia or the laymens version of a MOOC.

From a marketing perspective, this new platform will be a massive lead generation environment. Imagine a user reading a book about psychology and all of a sudden, you have the ability to show them that there are 2 schools teaching this exact book within 25 miles and 1 school teaching this book online. If I were the reader, I would be pretty interested in finding out if I should make my interest a real degree.

However, as much as I would like to see this as a marketing platform, there is reason to believe that people will have voracious appetites for free content but stay away from environments that require testing or loans. Time will tell…

4) Keep an eye out for the mad rush to create books – even if they are 5 pages long, as teasers.

5) Now this iBooks platform may have a negative impact on online schools in the short term. Even though most of the schools offer a curriculum that is designed to be taken on a computer, few have optimized their learning for iPads and the on-the-go lifestyle of many folks. I would love to see schools start to create tablet based learning environments and use that as a marketing tool. EG – Learn Psychology on your iPad and get a degree from X school. That would have an awesome Click Through Rate.

If I had to make a recommendation to folks reading this, I would say do the following:

a) Try a children’s iBook to understand the potential of this platform.  Give it to a kid and see how effortlessly they adapt and interact with it. Then give the same kid a newspaper and see what happens. Key thing to measure is how much time they interact with each and the amount they retain from each.

b) Learn more about HTML5! It is tremendously important! Just knowing what it is capable of helps you understand how vast this platform can be.

c) Take a look at your own content – what can be made into an iBook? Remember, books are not books anymore. They are full on 3 sense experiences. Seeing, hearing, touching.

Consumer Finance Protection Bureau

On January 6th, President Obama nominated Richard Cordray as the director of the Consumer Finance Protection Bureau. The CFPB was created after 2008 under the Dodd – Frank act which is supposed to help consumers avoid another large financial crisis like in 2008.

The CFPB had largely been ineffective since that time since it didn’t have a director. With this nomination, it gives this organization much more structure and a definitive set of industries to target.

Richard Cordray has mentioned he intends to go after the mortgage industry and payday loan industry. One their website – you can also see that they are targeting student loans.

What does all of this mean for the online marketing industry?

The first potential outcome is that this agency starts to go after advertisers who use email, display, search, etc. You may see a few companies go out of business for false advertising. EG – Saying you can get a mortgage at X percentage. This statement might be true, but without the proper disclosures of saying “available to those with tier 1 credit,” a company is implying that anyone is eligible for the mortgage.

This clearly applies to Education also. Companies who stating that you can get a high paying career if you get a degree might be under the attack from this bureau.

I can potentially see mortgage advertisers and payday loan advertisers have to add significant disclaimers to their ads which inherently ruin the click through rates. If you take a look at the pharma industry, they barely advertise since there are so many regulations around what they can and cannot say.

Personally I think mortgage and payday will continue to buy media aggressively but they may have to pay more to the affiliates and media sources to make their offers work.

Will the affiliates continue to run these offers?

Yes. There will always be affiliates who are willing to take the risk. There are also larger affiliates who are well insured and have implemented safety control procedures to stay in the vertical. If I was an advertiser,  I would be asking more questions to my affiliates/vendors about what sort of controls they have in place and if they understand the Dodd – Frank act to begin with.

Here is a link to a laymen’s version of the Dodd-Frank act. 

Here is the full act in Government speak.

What should I do if I am an affiliate?

If you are an affiliate who is in the mortgage space or payday loan space you should check with your lawyer to see if you have adequate Errors and Ommissions liability coverage.  If you need a suggestion of a person who can get you E&O insurance, please email me directly.

You should also check all your contracts to see how advertising liability may flow back to you and what jurisdiction the contract is written in.

Occupy for Education?

#OccupyWallSt, the movement spawned a few months ago has spread across most of the capitalist world and is already creating sub-categories likes Occupy for Education.

Several articles and tweets talk about what is wrong with student loans and student debt.

The general premise here is that the government should forgive all student debt.  There is even a petition on the site for this.

Others are saying that student loans should be treated in a similar way to regular loans where you can get out of them by declaring bankruptcy.

As you can imagine there are large implications to these suggestions.

1) That is a lot of debt to forgive. Who ends up picking up the tab for all the bad debt and where does it actually go? Somehow people think that debt can just disappear. The economic implications of this are quite vast. If we were to write off all debt, you have a few major effects.

  • The financial system locks up. Lending as a model won’t work anymore because people can just do a quick Twitter uprising and get rid of all their debt. If money stops moving, the economy breaks.
  • Credit scores become irrelevant. There will be no metric to decide if a person is going to pay back a loan. This limits purchasing power and once again undermines the credit system.
  • The economy itself slows to a a pre-historic pace. We would need to pay for everything in cash. People won’t be able to buy homes, cars or durable goods. Factories would shut and the entire global economy would fail. Capitalism itself would cease to exist. Socialism or Communism would potentially rise.
2) The assumption from the Occupy movement folks is that if they didn’t have to pay for their education they could spend more money in the economy or potentially take lower paying jobs. This is a short term view. If no one had debt to pay back, the financial system would collapse and you wouldn’t have an economy to spend in.
Now, I tend to actually agree that some student loans should be forgivable. There are always going to be people who run into extremely dire straits and need to get out of all their debt. But releasing everyone from their debt all at once would be catastrophic.
My advice to #OccupyWallSt is to be careful what you wish for. What the movement is really asking for is a form of socialism or potentially communism where everyone is equal.
By the way, it is time for #OccupyWallSt to have a Sean Parker moment and just shorten their name to “#Occupy.”

Schools not working leads?

Leads360 recently published a white paper entitled “Failing grades: Evaluating admissions processes at for-profit schools.”

The data in the report is shocking. It states most of the schools in the for profit sector are just not working their leads efficiently at all.

Here are some key findings:

  • Most schools did not follow best practices when sending out emails or calling back in a timely fashion
  • Some schools called leads too often, up to 82 times.
  • Some schools took too long to make first contact, allowing for the lead to become cold.
  • Optimizing process can greatly reduce waste.
Being a vendor in the education space for many years I often wondered what really happened to all of the leads that were being sent into the schools. These days all you hear are stories about the leads being over marketed to, when the real story is that most leads are not being marketed to enough.
How does this affect the industry from an economic perspective?
If you look at this from a macro perspective. If leads are universally being worked inefficiently, lead prices will remain low since the overall quality is always low.
Even though EDU has been hit hard with regulation, new competition continues to come into the market, continually pushing media prices higher. This in essence means that the vendor side of the industry is being squeezed on margin because the costs are going up and revenue is staying stable if not declining.
For the schools, several of them have cited lower growth in their quarterly reports due to massive changes in how they handle leads and the enrollment process. They changed compensation plans, and they also changed scripts to make them more compliant with the DOE regulations. What this has lead to is a focus on the process after a student is on the phone and perhaps taken a bit of attention away from actually getting the user on the phone first.
If enrollment rates and growth forecasts are dropping, it seems to make sense to look at the entire process rather than isolate one component.  I think there are lots of things that can be done to optimize the process flow at the for-profit schools. One of them is using better lead management and routing tools like Leads360. Outside of a technology solution, I think it makes sense to also have new funnel metrics for the vendors to help them enhance leads by setting expectations. I for one know a lot of vendors would love to have insight into how their leads are being worked and if they can enhance the process. For the most part the vendors do want to help or better understand the process. A more collaborative environment will make marketing more efficient but also more ethical in the long run.
There are a few considerations one should take into account when reading the Leads360 report too. They mentioned a school like AIU does not send out any emails. This could simply be part of their strategy. I suspect this was highly analytics driven a while ago and needs to be re-evaluated since the market has changed so much in the past 18 months.
The other part of this equation is that, we should ask more about what the consumer wants. Email and phone are somewhat old mediums of communication these days. Perhaps people want to be contacted on Facebook, Twitter or through IM? The Millenial generation is going to start demanding these new paths. It will be up to the advertisers to keep pace with their audience and develop new best practices. EG – what is the optimal number of times you can SMS a person before getting them on a phone call? What is the social etiquette about contacting someone on Facebook or Linkedin and how does that relate to advertising? How does a brand get invited into a user’s inner circle online?

CECO – Down 40%

Career Education Corp had a ~40% drop in their stock price today.

The reason for this massive one day drop is that their CEO resigned after announcing quarterly earnings that were well below estimates.

Net Income was $10.6 million which as less than half of the last year earnings in the same quarter. Last year CECO posted a $26.1 million earnings quarter.

The other news is that the company’s lawyers also confirmed “improper placement determination practices.” This sounds like a fancy way of saying that there are still issues on the admissions front.

The interim CEO is Steven Lesnik who has a background in the PR world.

In terms of the sector – the news did move the sector down, but not uniformly. Most schools were down 1-3% only. Oddly enough COCO was up 6% in early trading.

I think an outcome of such a massive drop like this is potential additional scrutiny on the sector and hopefully more improvements for the consumer.

Is for-profit EDU still failing?

As we get closer to the 2012 elections the tone and rhetoric around the EDU sector has been changing quite a bit. You don’t see the aggressiveness in the articles talking about aggressive tactics but you do still see stats like the ones published on October 12th by the Department of Education.

The Department of Education announcement stated that 180 schools failed the financial responsibility test for fiscal year 2010. 30 of those schools were private for profit schools.

Most of the schools that are facing the biggest issues are built around trade programs, culinary, music and art programs. Not sure if this is a trend of just a coincidence. In the chart from you can see some schools actually improved, just not enough. Surprisingly some schools became even worse. To me those schools should be examined more carefully to see what management is doing.  One might assume that these schools are playing chicken with the government and seeing if the government will actually make a move to reprimand them.

The real question comes down to why the education system is not able to get out of this rut? I have a few potential ideas but would like to hear more from our readers.

1) The economy is in bad shape, people need the financial aid and are not able to contribute much from their own pockets.

2) As many people are out of work, they are looking for new fields to retrain in – focusing on their passions like art or cooking and not realizing what they are getting into.

3) The schools themselves are still being too aggressive in their marketing?

4) The most likely scenario is that the schools aren’t able to bring in enough self paying students to balance their more risky student loan basis. It has become a bit of a catch 22. They can’t get the enrollments they need due to marketing regulations and they can’t get rid of their “bad customers.”

5) The schools can’t cut costs fast enough and maintain the quality of education to make the school more affordable.

Lots o theories flying around these days but I think we will start to see dramatically improved balance sheets by the middle of 2012, which is about 2 full fiscal years after this re-organization started to occur. This upcoming set of financial results will give us a much more clear indication of where the industry is trending.


Online Education is booming (Graphic)

Online Education is starting to come of age. Traditional schools are launching their own online programs, and even grade schools are offering online classes.

A recent infographic in the Chronicle of Higher Education described the explosive growth of online education since 2003.

Here are some key findings:

  • 63% of online course attendees are Female
  • 52% of people in online courses are between 18-25 years old
  • Criminal Justice is the number 1 field for online study – controlling 27% of the total enrollments.
  • For Profit schools only make up 42% of the online students.
  • In 2008 1 out of 4 students was enrolled in 1 online class
  • By 2014 3.97 million students are expected to study online
  • The largest online school is University of Phoenix with 400k students
Now, the stats were compiled from a variety of sources so it is probably wise to take things with a grain of salt. The study did not disclose methodologies either.
I think the stats about Criminal Justice being the number one program can be attributed to a few attributes; the popularity of the CSI style TV shows and the massive marketing campaigns around these programs.
The fact that the majority of online students are women is most likely attributed to women being more aspirational and also secure with long term commitment. Yup, I said it.
In the future, I expect to see the average age of a student to actually increase as more and more baby boomers come online. I also expect the age to increase because people are going back to school to retrain for a new career.