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Edu Lead Gen Long Term

Often I write about how EDU lead gen is being battered by the current administration and the stock market. Today, I wanted to take a slightly different perspective which is more of a long term view.

For the past 10 years for-profit EDU companies have had to fight against some major issues to validate what they were doing was real. They had to fight against people not having broadband at home, no computers at home, and not understanding what studying online was. Why was I supposed to pay $30k for an education where I never got to meet the professor or my other classmates?

Broadband is almost in every home in the US, computers are everywhere and more importantly people are connected via mobile devices.

But people are still unsure about the quality of an education online and if the for-profit schools are “real.”

One of the greatest things to happen this year was a major initiative by the Obama Administration to actually spur more innovation in the Education sector. This has lead to a series of education start ups and new learning models which are introducing online education to gigantic numbers of people much quicker than any online school.

Sites like Udemy, Udacity, Coursera, KhanAcademy, and Skillshare are all introducing online learning to people who were not in the core demographic of for-profit schools.

What is this important?

First, mass acceptance is vital to legitimize any industry.

Second, these sites are attacking the spectrum of online learners from two ends, the young folks and the older folks who went to traditional schools in the past.

The fact that kids are getting more involved in online learning is great. The folks who are over 28-30 years old who are now trying online learning just happen to be the same people who are hiring these days.

The biggest outcome of the boom in online learning is that employers are now starting to see more of this in the workplace, see the quality of education and experience it for themselves.

This is a major boost for the for-profit sector. If more employers are willing to hire graduates of the online schools this will help them reduce their loan default rates and hopefully increase their graduation rates.

What happens now?

In the coming months you will see many of these free and pay for courses platforms continue to explode. This will lead to a short term erosion in the for-profit sector’s target pool of candidates. Long term there are many potential outcomes.

1) The for-profit schools use these platforms as lead gen tools. The people on these sites self identify that they are life long learners. Perfect candidates for long term degrees.

2) The for-profit schools offer lower cost single course offerings and make their degree a-la-carte oriented. This may face some accreditation issues but this maybe more in line with what the students/customers want.

3) The continued increase in technology penetration into the home will invariably increase the target market for the for-profit schools.

Personally I think 2012 will be a flat year for the online schools but going into the next 24 months, I think you are going to see massive growth, acceptance and product offering changes from the for-profit sector.

I think this view point is further bolstered by the comments made by Mr. Andreesen of Andreesen Horowitz which can be found here and here.

 

 

Obama Slams the For-Profit sector over misleading Military members

Friday, April 27, 2012

President Obama will sign an executive order today that will greatly limit the For-Profit EDU sector from marketing towards military members.

The order is a result of Senator Tom Harkin’s efforts to curb the for-profit sector from getting too much money from the federal government in the form of federal student loans.

What are the main changes in this Executive Order?

  • The VA is going to be trademarking the term “GI Bill” – this will greatly limit what you can say on military specific landing pages and potentially opens up some lead generators to trademark infringement.
  • All schools must provide each prospective student information from the Consumer Financial Protection Board about the “know before your owe financial aid form.” This essentially helps students fully understand the financial implications of what they are getting into.
  • Removing recruiters from military installations.
  • Regulating online recruiting websites from potentially misleading veterans and current military members.  It is not 100% clear who will be regulating the sites though. I suspect a branch of the Department of Education will be tasked with this responsibility.  The sheer number of sites related to this topic is quite massive though.
  • Collecting data from each school about how much revenue they get from GI Bill benefits.
  • Creating a centralized complaint system for military members. If you have tried the CFPB complaint system, it is very effective and efficient.

How does this impact EDU as a sector?

  • From a sector perspective several schools are military dependent since it offsets the current 90/10 regulations. I suspect this may lead to more strategies to find students who are able to pay a larger portion of the tuition themselves.
  • Some of the for-profit stocks are already being hit today with COCO down 3%. I suspect APOL will also take a short term dip on this news.
  • The reality is that no publicly traded school has been penalized publicly for an infringement on the incentive comp rules so far. Until this happens, a lot of this news is more about suppressing the industry versus destroying it.  I also think that a lot of this news is being timed specifically around the upcoming election.

As a media buyer what do I need to know?

  • As a media buyer you may want to call your vendors who are advertising with military sites or keywords. The trademark around the GI Bill is not in effect yet, but you will need to get an inventory around what you are potentially exposed to.
  • The schools and or agencies will need to come up with an universal set of regulations around how to market to the military. This should augment the education marketing council guidelines.
  • I strongly urge you to check out the “Know before you Owe” form on the CFPB site. This gives you a much stronger idea of what the govt is requiring.