Education Intelligence is a newsletter curated by Chris Fellingham. You can signup for it here.
This week is about binging, the rise of for-credit MOOCs on-campus, and the size of 2U’s moat (in the Warren Buffett sense).
State of MOOCS
Is 2U overvalued?: Not a stock tip, but the rise of MOOC platforms into the degree space presents a clear strategic threat to the company.
Udacity release new numbers, they look good: Class Central has the scoop. Udacity revealed they have 53,000 enrollments at present and have had 18,000 students graduate through their Nanodegrees. Revenues have doubled. In the old formula that would be 53K*$200 p/m; however, recent Nanodegrees have started moving to upfront payment. Udacity have been exceptional in keeping the hype going, and they’ve done this by capturing the Silicon Valley zeitgeist in educational form. Where else can you take the Self-Driving Car Nanodegree (10,000 students) and soon the Flying Car Nanodegree? An advantage of Thrun as CEO (here).
- Udacity launch their own career service: Udacity already have the careers fairs, career support (interview and CV training), job back guarantee, and Udacity Blitz (internships), so this was a logical corollary to that. Udacity’s higher cost ($150–200 p/m) is pricey compared with the likes of Treehouse. They justify that based on (perceived) employability of their graduates ( here).
- Udacity also announced 60,000 lead generation scholarships funded by Google and 15,000 funded by Bertelsmann ( here).
Binging for the bottom line rather than the waistline: Eric Bradlow, a Wharton professor, argues there are two types of “bingers”: those who learn the same subject consecutively (e.g. lots of marketing courses), those who consume any subject for x period of time, and a third type who only appear on Friday nights (joking). According to Bradlow, “bingers” are more likely to complete courses because as they get closer to completing a course, their learning gradient increases and the motivation of completion stops them switching to something else. Furthermore, “bingers” tended to stay on a platform longer, take more courses, and have a higher customer lifetime value. Bradlow noted Coursera used to release content week by week. His findings suggest MOOC platforms would do better to release content all at once to let bingers be bingers ( here).
Graduation day for MOOCs: MIT, Georgia Tech, and Texas A&M are all running MOOCs as for-credit courses for undergraduate students. MIT students found taking the MOOC “significantly less stressful” than the offline course, while completion rates were unchanged. Texas A&M has gone a step further and made a key course — “Principles of Economics” — only available by MOOC. They argue that while MOOCs are not superior to small classes, they are superior to the huge lecture rooms the university often deals with, and this means they don’t have to cap the number of students per course. Adoption of MOOCs in universities should pick up, especially where demand outstrips supply (here and here).
edX announces eleven new Professional Certificates: These range from the New York Institute of Finance’s “Mortgage Backed Securities” (no harm could come of that, right?) to “Public Library Management.” EdX clearly wish to draw a distinction between their for-credit “MicroMasters” courses and non-credit “Professional Certificates” courses. Yet the distinction (absent of a formal qualification) is in some respects arbitrary, since MOOC platforms all believe there is professional demand for tertiary courses (here).
The Business of EdTech
Credly raise $4.6 million in funding: The digital credentialing service has now raised $7 million, with Lumina Foundation and City & Guilds Group participating in the latest round. Investors argue that the rise of skill-based hiring (as distinct from hiring based on a candidate’s degree) and professional development are creating a market for digital and verifiable credentialing services. Credly are working with Digitalme, which is backed by City & Guilds; Digitalme provides employees with a training path, and Credly stores the accreditation ( here).
Cybrary raises $3.5 million: The open-source cyber security course platform (or library, as they allude) has had 1.3 million users since its creation in 2015, and it has 12,000–16,000 sign ups per week. The platform works by curating user generated content. They argue that cyber security knowledge should be open to all. They intend to make money by charging for certificates and allowing some organizations to run paid-for courses (history doesn’t repeat itself but business models do). Being more of a marketplace of user content might mean they steer closer to Udemy’s model. The same model could allow them to crowd out low-cost competitors, who wouldn’t be able to compete with them on breadth and turnover of content (here).
China’s online education set to grow 20% per annum: The market valued at $24 billion in 2016 is set to grow to $41 billion by 2019. The demand will be fueled by growing household income, elimination of the one child policy, and a huge secondary market for educational goods and services. Key growth areas are livestreaming classes, automation of essay marking, and virtual tutors. However, the same report notes that intense competition will erode profit margins ( here).
AppAcademy switch to deferred tuition to avoid legal quandaries: AppAcademy were one of the first coding bootcamps to use income share agreements; however, a New York law which prevents different fees for the same service has forced them to change. To avoid being sued, AppAcademy are offering $17,000 up-front fees or a deferred fee of $28,000 when the graduate has a job that brings in more than $50,000. The move may be temporary (if New York’s law for ISAs were to be clarified) and other bootcamps have opted to stick with ISAs (here).
Pluralsight receive $21.5 million tax break to stay in Utah and build their new HQ: Created in 2004, Pluralsight arguably have the most sophisticated B2B proposition: workforce training model for technology-related courses, as well as substantial B2C. They have over 6,000 on-demand courses and count 40% of the Fortune 500 among their clients ( here).
ProctorU to launch an AI proctoring service, ProctorU Auto: ProctorU, an online proctoring service, has developed an AI version. The system tracks eye movement and flags suspicious behavior. An ever-vigilant eye movement tracking computer is sure to settle people’s nerves before a big test. Human invigilators will still be involved (albeit less so), so the machine effectively triages on their behalf. Presumably as the AI improves it will reduce the number of invigilators required, reducing ProctorU’s costs (here).
OPM (Online Programme Management)
The economics of part-time study: Part-time study in the UK collapsed between 2004/5 and 2015/16 by 45% (337,000 to 184,000), yet full-time education numbers rose by 19%. London Economics, an economics consultancy, argue in a new report that underlying economic indicators explain some of the difference.
Full-time study is counter-cyclical: when the economy is doing poorly (particularly if jobs become scarce), people drop out of work or opt to delay entry into the workforce by going into education. Part-time study by contrast is pro-cyclical: when the economy is booming in jobs and wages are growing, people take up part-time study. One explanation is that if people substitute work hours for study hours, they’ll need wages to be sufficiently high to still support themselves and their household. As the UK has seen stagnant wage growth, part-time study has declined.
This is a problem. Part-time study is critical for those requiring flexibility in their studies, good for social mobility, and important in an economy that needs to reskill. Policymakers need to consider financing (fees have gone up) and more affordable loans to overcome debt aversion, but the solution could also be supply-side if online options can provide cheaper, PAYG financing options for part-time study ( here (PDF)).
QS, THE, Google?: Universities are increasingly finding that Google (i.e. discoverability) is as important as their ranking in terms of getting international students through the door. This may seem obvious to anyone familiar with marketing, but many universities still lack expertise. OPM providers know this, which is why their core competency (if not their biggest spend) is on marketing ( here).
Global Higher Education
English-taught Bachelor degrees continue to boom across Europe (and Turkey): Although growth has dropped into single digits, there are now 2,900 English-taught Bachelor degrees across Europe, with notable increases in Turkey and the Czech Republic. English provision is popular to attract foreign lecturers and international students, and to prepare workforces for a global economy. The Swiss and Dutch lead the way with over 75% of their universities having at least one degree in English. This ought to be positive for MOOCs (still predominantly English) as students test and improve their ability to speak and learn in English (here).
Nationalism and internationalism for universities: Boston college professors Hans de Wit and Philip Altbach argue that rising nationalism in the West threatens universities as businesses and purveyors of internationalism. They argue that an embrace of neoliberal economics has led to rising inequality, and this has led to a resentment of elites and their perceived liberal ideology. Universities are not removed from this, although on a ladder of social mobility they are in a society with stagnant wages for those at the bottom; a means of discriminating as the educated gain well paying jobs, and those without degrees have seen stagnant wages.
Not only are universities symbols, if not enablers, of this unequal society, but their internationalism (as an ideology and as a business model via international students) is a direct affront to the resurgent nationalism promoted by some of the disaffected. The authors argue that Western universities will come under attack through their funding, and visa restrictions will limit their attractiveness to international students, who will go elsewhere.
The evidence seems to support their logic. Responding to populist pressure, Trump and May have both attacked aspects of universities — be it endowments, Vice-Chancellor pay, internationalist values, or indeed their entire raison d’etre: expertise. It’s not obvious that universities can do much beyond emphasizing their contributions to local economies and the benefits they bring to society (here).
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