The online degree market has been one of the fastest-growing and most resilient segments of American higher education over the last two decades.
Today, more than three million students pursue higher education fully online, representing a $20-billion market. While online students are still only about 15 percent of all higher education enrollment in the U.S., it’s an area that is likely to continue to grow and make up a larger piece of the overall pie, given growing interest from students, more offerings from colleges, and increasing acceptance by employers
However, as the online degree market reaches a state of maturity, it is entering an entirely new era in its evolution – an era characterized by a changing competitive landscape, new technological developments and consumer preferences, and growing overlap with non-degree learning.
A Consolidation in Market Leadership
Even as more colleges offer online degrees, the biggest players are gaining market share on the strength of their national reach and brands. According to U.S. Department of Education data, out of the thousands of institutions operating online programs, the 100 colleges and universities with the greatest online enrollment accounted for 47 percent of all online students in 2016, up from a 43 percent share in 2012. The 10 largest institutions alone—which include the University of Phoenix, Western Governors, and Southern New Hampshire—enroll one in every five online students.
These institutions are operating with truly national reach, and leveraging massive (and expensive) marketing efforts and faculty networks to offer hundreds of degree offerings.
In the past, it was relatively easy for a university to bring a new program online and grow it—but today’s market is increasingly saturated. In some academic disciplines, such nursing and criminal justice, more than half of all students pursuing master’s degrees do so online.
It’s a game where the big get bigger, and increasingly only the institutions with the strongest brands and the most differentiated programs are experiencing growth.
Toward a More Blended, Hybrid Market
At the same time that a set of large-scale online providers with national reach has emerged, data shows that much of the online-education market is highly localized. More than 75 percent of online students enroll at an institution within 100 miles of their homes, according to recent research from The Learning House (and consistent across past surveys over time). A majority of online students visit campus to access services and support, or to attend events and in-person courses, in a true blending of online and in-person.
At Northeastern University, many of our 17,000 online and hybrid students access our campus network with locations in Boston, Charlotte, Seattle, Silicon Valley and Toronto. Earlier this year, online education services company 2U–which powers many leading universities’ online programs–announced a partnership with shared workspace firm WeWork, creating an opportunity to embed its online programs in WeWork locations in cities around the world. And, earlier this month, Southern New Hampshire University acquired community-based non-profit LRNG, in a play that seeks to give Southern New Hampshire’s online programs a physical location in a host of cities. Additionally, in another example of blending of online and in-person education, Coursera has begun a pilot offering its online MOOC courses to students at its campus partners. Just as in retail, financial services, and a host of other domains, the business of online education is converging with the offline variety.
A Landscape Increasingly Shaped by MOOC-Based Degrees
Arguably one of the most significant (yet still relatively unheralded) new developments in the online degree market is the arrival of MOOC-based degrees–full degree programs built from MOOC content and courses, which as a result are offered at significantly lower prices and are more scalable. The first of these programs, launched in 2014 with Udacity, was Georgia Tech’s master’s in computer science, which costs only $7,000 and now enrolls more than 6,000 students, making it the largest computer science master’s program in the U.S. Another key MOOC-based degree is the iMBA at the University of Illinois, launched in 2016 with Coursera–a $22,000 program that now enrolls more than 1,000 students.
The success of these early examples led to announcements of six more low-cost MOOC-based degrees on Coursera this spring – and earlier this month, six of the first degrees on EdX, extending from its MicroMasters programs. What started as a trickle of pilots has now become a growing tidal wave—with approximately 40 MOOC-based degrees now available worldwide.
At around one-third the cost of a traditionally-delivered degree, these MOOC-based degrees are driving a new round of price competition in the online-degree market. They also introduce existential questions about what an “online degree” is, and what level of service, support, and faculty interaction earning an online degree should entail. These programs also disrupt online education’s traditionally advertising-heavy (and correspondingly expensive) student recruitment approach, by tapping into the pool of more than 80-million MOOC students–many of whom wish to stack their courses or certificates into a degree, resulting in a much lower cost of student acquisition for universities. In addition, the rapid growth and achievement of scale that the Georgia Tech and University of Illinois programs have experienced are further evidence of the consolidation of enrollment in a smaller set of market leaders.
A More Modular, Open Market That Extends Well Beyond Degrees
The growth of MOOC-based degrees also illustrates how the higher-education market is evolving to include more modular and “unbundled” offerings, including stackable certificates. The upstart world of microcredentials–which to date has been relatively isolated from the awarding of degrees–is now beginning to integrate into the online degree market as colleges offer and students demand shorter-format programs and just-in-time learning. This direction is also highly appealing to employers, who are increasingly subscribing to MOOC course libraries for corporate learning and development–and who also favor sharing the investment in full degrees with employees.
Increasingly, new types of pathways are developing as the boundaries blur between non-credit programs and for-credit degree offerings, as seen in examples such as Northeastern’s academic credit pathways for Google’s IT support professional certificate and IBM’s digital badges, as well as Harvard Extension School’s offering degree credit for the HBX Credential Of Readiness and the MITx MicroMasters program, among a growing number of other examples.
Steadily, academic institutions are recognizing learning that happens outside of the ivory tower – opening up significant new opportunities for learners, while converging—for the first time—the “classic” online degree market with spaces and student needs that have long been adjacent.
Although these new directions will take many more years to play out, we stand on the cusp of an exciting and entirely new era for this ecosystem six years after the “Year of the MOOC” and two decades since the launch of the first online university degrees.
