Business Affairs Forum

Future Students, Future Revenues Creating a Principled and Sustainable Enrollment Strategy

eab.com

The EAB “MOOC Mania” Tour 3

The Hottest Topic on Campuses Across North America

©2013 The Advisory Board Company • eab.com • 27530A

Source: Education Advisory Board interviews and analysis.

Disruption Revisited: A Dialogue of Extremes Senior Leaders Divided between Alarmism and Complacency The Disruption Debate at Many Board Retreats “Our business model is doomed”

How can we compete with free?

We need to move everything online.

©2013 The Advisory Board Company • eab.com • 27530A

MOOCs?

“Great universities will survive”

We’ve never had more applications.

Students care about the campus experience.

Source: Education Advisory Board interviews and analysis.

4

The Question Behind the Question MOOC Questions Highlight Uncomfortable Issues for Higher Education Why People Love MOOCs Open

Large-Scale

Free to Students Low Cost to Provide Global Audience

Elite

©2013 The Advisory Board Company • eab.com • 27530A

What’s Wrong with Higher Education How can we improve racial and socio-economic diversity?

How can we overcome capacity bottlenecks?

Are we becoming unaffordable to most students?

Is it possible to bring down cost per student?

Are we trapped by regional demographics?

How will we ever compete with wealthier, higher ranked universities?

Source: Education Advisory Board interviews and analysis.

5

Hitting the Trough of Disillusionment 6

Another Confirmation of the Technology Hype Cycle Feb 2013 ACE recommends 5 MOOCs for credit

Jan 2013 San Jose State partners with Udacity on for-credit MOOC Nov 2012 Gates announces $3M in MOOC grants Sept 2012 Colorado State Global Campus accepts Udacity MOOC for credit Spring 2012 Udacity, Coursera and edX founded

Feb 2013 Georgia Tech MOOC is first to be canceled due to technical problems April 2013 Amherst faculty reject edX partnership

“There is no pedagogical problem in our department that JusticeX solves.…We regard such courses as a serious compromise of quality of education, and, ironically for a social justice course, a case of social injustice.” Philosophy Department San Jose State University

May 2013 Harvard faculty demand greater oversight over edX program

July 2013 San Jose State pauses partnership with Udacity due to disappointing student results

Nov 2013 Thrun: “We have a lousy product”

Fall 2011 Stanford faculty launch open courses

©2014 The Advisory Board Company • eab.com • 28135D

Source: Press releases and news outlets; Education Advisory Board interviews and analysis.

Access

The Illusion of Scale 7

Vast Majority of MOOC Registrants Drop Out By First Assignment Typical MOOC Enrollment Pattern Start Date Half of registrants are no-shows

Case in Point Bioelectricity, Fall 2012 Duke University Registered

12,725

Watched a video

7,761

Enrollment

Took any quiz First Assignment Casual “lurkers” move on

Took Week 1 Quiz

3,658

1,267

Took Week 4 Quiz

561

Attempted Final

346

Certificate

313

Time ©2014 The Advisory Board Company • eab.com • 28135D

Source: Duke University Report, February 2013

8

Let’s Not Kid Ourselves “They’re mostly taken by educational technologists, already-qualified individuals, and Tom Friedman.” Kevin Bell Northeastern University College of Professional Studies

©2014 The Advisory Board Company • eab.com • 28135D

Source: Kevin Bell, “The Hijacking of MOOCs,” Inside Higher Ed, May 6, 2013

The Unfulfilled Promise of MOOCs 9

Little of What We Hoped or Feared Has Come to Pass The Promise

The Reality

Free Credits

Students will take free courses from top universities for credit

No institution grants credit to students not enrolled and not paying tuition

Job Placement

Employers will hire people based on performance in MOOCs

Outside of computer programming, few students are being placed in jobs

Educational Access

The poor and uneducated around the world will have access to the best instructors

Vast majority of MOOC students already have baccalaureate degree, reside in wealthy countries

Better Outcomes at Lower Cost

Massive courses will reduce instructor costs while technology can maintain or improve outcomes

MOOCs are most effective when students receive instructional support

Elite University Domination

Lower-ranked institutions will disappear as elites scale up free education

MOOC providers rapidly expanding partnerships with less elite institutions

©2014 The Advisory Board Company • eab.com • 28135D

Source: Education Advisory Board interviews and analysis.

The Taming of the MOOC 10

What Universities Are Really Doing with MOOCs MOOC 1.0 “For the good of humanity”

MOOC 2.0 Achieving Institutional Goals

Brand Enhancement

Flipping the Classroom

Scaling Up Master’s Programs

Lead Generation

Investing in global publicity

Improving the quality, cost, and capacity of on campus instruction

Enabling large-scale, lowcost revenue generating degree programs

Recruiting students into existing academic programs

©2014 The Advisory Board Company • eab.com • 28135D

Source: Education Advisory Board interviews and analysis.

The Bigger Issues Behind “MOOC Mania” 11

Critical Strategic Concerns for Institutional Leadership The Current MOOC Debate Governors

Administrators

Boards

Faculty

“Can we use MOOCs as low cost alternatives?”

“Will we fall behind if we don’t do a MOOC?”

“Will students abandon us for MOOCs?”

“Will MOOCs make us expendable?

The True Agenda

1

Sustaining Tuition Revenue

2

Building an Online Strategy

• Declining public funding

• Innovative program designs

• New student markets

• Improved instructional quality

• Evolving student preferences

• Economies of scale

• Challenges to affordability

• Regulatory risk

• New types of competitors

• Faculty development

• Student success challenges

• Student support services

©2013 The Advisory Board Company • eab.com • 27530A

Impressively Resilient 13

Non-Profits Outperform For-Profits and Two-Years in the Recession Annual Percentage Change in Total Enrollment by Sector, 2010-2013 4-Year Publics

4-Year Privates

4-Year For-Profits

2-Year Publics

Faced moderate declines compared to other sectors

Have continued to grow despite high cost

Plummeting figures after 2010 political controversy

Restricted by funding cuts and capacity constraints

14.8%

Census Bureau analysis attributes 90% of enrollment decline to adult students

2.7% 1.6%

1.4%

3.3% 0.5%

0.3%

-0.6% -1.6% -3.1%

-3.8% -7.2%

Fall 2010

©2013 The Advisory Board Company • eab.com • 27530A

Fall 2011

Fall 2012 Source: National Student Clearinghouse Research Center, Term Enrollment Estimates, Fall 2012; U.S. Census Bureau, “After a Recent Upswing, College Enrollment Declines, Census Bureau Reports,”; Education Advisory Board interviews and analysis.

Survival and Selectivity 14

Least Selective Institutions Are Hardest Hit by Post-Recession Downturn Selective Institutions Still Have Flexibility to Increase Enrollment Change in First-Time, Full Time Enrollment by Selectivity 5.1%

3.8%

2.4% 1.2% 1.2% 0.5%

1.4%

1.1% 0.3%

1.1%

1.0%

0.6% 0.0%

0.0%

-0.4%

-0.5% -0.9%

-1.1% -2.3%-2.4%

Very Selective 1) Selectivity defined by 75 percentile combined math and verbal reasoning SAT scores. Very selective > 1400, Selective > 1200, Somewhat selective > 1000, Not Selective < 1000 ©2013 The Advisory Board Company • eab.com • 27530A

Selective

2008

2009

Somewhat Selective

2010

2011

Not Selective

2012 Source: Education Advisory Board analysis of IPEDS data

Blip on the Radar or the New Normal? Despite Steady Aggregate Numbers, Greater Volatility for Many Institutions More Colleges Missing Their Class Than Ever Four-Year Institutions with Enrollment Shortfalls of 10% or More, n=1,349

20%

21%

20% 18% 14%

14%

Missed class by ~300 students (34%)

13%

Missed class by 110 students (23%)

Enrollment fell by 254 students (18%)

2006

2007

2008

©2013 The Advisory Board Company • eab.com • 27530A

2009

2010

2011

2012

Source: Education Advisory Board analysis of IPEDS data

15

A Good Run While It Lasted 17

Privates Leveraged Price, Publics Expanded Headcount Growth in FTE Enrollment and Net Tuition Revenue Per FTE, 2002-2010

Average Net Tuition Revenue per Fall FTE

$20,000 Privates held enrollment steady while raising prices

$15,000

Private Research

Private Master’s

$10,000

Private Bachelor’s

$5,000

Public Research Public Bachelor’s

Public Master’s

Publics more willing to expand classes

$0 0

5,000

10,000

15,000

20,000

25,000

Average Fall Undergraduate FTE ©2013 The Advisory Board Company • eab.com • 27530A

Source: National Center for Education Statistics, Delta Cost Project; Education Advisory Board interviews and analysis.

The Flip Side of Enrollment Growth 18

An Unprecedented Jump in Tuition Dependence Tuition as a Percentage of Educational Revenues for Public Universities, 1986-2012 50%

47.0%

Tuition dependence increases after recessions…

40%

…But fails to return to base levels after recovery

35.5%

30%

Historic increase in 3 years following recent recession

29.3% 26.1%

20% 1987

1992

1997

2002

2007

2012

1) Shaded areas indicate recessions ©2013 The Advisory Board Company • eab.com • 27530A

Source: SHEEO, “State Higher Education Finance FY 2012”; Education Advisory Board interviews and analysis.

Blood From a Stone 19

Cost-Savings Measures a One-Time Windfall, Not a Panacea

Prominent Consulting Engagements Achieve Savings…

… But Not a Long-Term Solution

Typical Savings: 2-3% $3.5B

~$3.5B

“Cost containment is an important issue, but once you’ve achieved it, you won’t become more efficient every year. At some point there has to be revenue growth.”

~$2.5B

$97.5M

$66.2M

Planned Savings

©2013 The Advisory Board Company • eab.com • 27530A

$82.5M

Higher Education Analyst Credit Rating Agency

Operating Budget

Source: EAB interviews and analysis

Downgrading the Entire Sector 20

Moody’s Highlights Threats to Revenue Pressure and Uncertainty Around All Revenue Sources  Household income and wealth “For 2013, Moody’s revises its outlook for the entire US higher education sector to negative… The new sector-wide negative outlook reflects mounting pressure on all key university revenue sources… The sector will need to adjust to the prospect of prolonged muted revenue growth.”

 Philanthropic support  Investment returns  State appropriations  Federal research funding  Medicaid and Medicare

 Pell grants

Elite Schools Not Immune “Over the past year and a half, the credit ratings of several prestigious liberal arts colleges have been downgraded or assigned a negative outlook by Moody’s Investor Service… These are institutions – Haverford College, Morehouse College, Oberlin College, and Wellesley College – that top students seek out…” Ry Rivard, Inside Higher Ed ©2013 The Advisory Board Company • eab.com • 27530A

Source: Moody’s Investors Service, “US Higher Education Outlook Negative in 2013” (January 16, 2013); Ry Rivard, “Prestigious liberal arts colleges face ratings downgrades,” Inside Higher Ed, August 30, 2013; Education Advisory Board interviews and analysis.

Performance-Based Funding 2.0 21

State Funding That Remains Will Have More Strings Attached Than Ever Performance Funding Spreading Across Nation (Again)

Pennsylvania Indiana Tennessee Ohio

24 states (and counting) have now approved or are currently planning new funding models

PBF 2.0

Sudden, disruptive rollouts

Gradual, phased roll outs

Overly simplistic rubrics

Rubrics customized to mission

Insignificant funds on the table

Meaningful dollars at stake

Funds offered as bonus

Zero-sum competition for base

Harder to Ignore

   

After 2010:

PBF 1.0

Harder to Kill

Before 2010:

Why This Time May Be Different

Source: Education Advisory Board interviews and analysis. ©2013 The Advisory Board Company • eab.com • 27530A

Performance-Based Funding Goes National? Obama Plan Could Lead to Less Loan Money for “Low-Performing” Institutions The President’s Proposal: “A Better Bargain for the Middle Class” August 22, 2013 Proposed Formula

Performance Incentives

Potential Impact

Lingering Questions

Access

1

Affordability

Federal aid linked to college ratings, not student choice

2

Outcomes

Students at “highperforming” schools get more Pell money, lower loan rates

High-performing schools may find it much easier to recruit students, especially from low-income families

Will institutions focused on serving disadvantaged populations be “punished”? How will educational “value-add” be defined? Source: White House Fact Sheet, “President’s Plan to Make College More Affordable: A Better Bargain for the Middle Class,” 22 Aug 2013. Education Advisory Board interviews and analysis.

©2013 The Advisory Board Company • eab.com • 27530A

22

What Got Us Here Won’t Get Us There 23

Revenue “Tailwinds” Can’t Be Relied On Going Forward Revenue

State Funding

Federal Funding

Tuition

Philanthropy

Enrollment Volume

Auxiliary Revenue

Net Tuition Revenue

Demographics

Retention

Price

Financial Aid

Decline in high school graduates

At-risk populations growing in share

Family finances under stress

Merit aid competition escalating

©2013 The Advisory Board Company • eab.com • 27530A

Source: Education Advisory Board interviews and analysis.

Demographics

Mind the Gap 24

Enrollments Will Continue to Grow, But at a Slower Rate Total Fall Enrollment, 1996-2021 (projected) 24,000,000

3.8M Enrollment gap in 2021

22,000,000 20,000,000

1.2%

18,000,000

Compound annual growth, 2011-2021

16,000,000

14,000,000

2.8%

12,000,000

Compound annual growth, 1996-2010

10,000,000 1996

2000

©2013 The Advisory Board Company • eab.com • 27530A

2004

2008

2012

2016

2020

Source: National Center for Education Statistics, Projections of Education Statistics to 2021,” Jan 2013; National Center for Education Statistics, “Table 214,” Digest of Education Statistics; Education Advisory Board interviews and analysis.

Demographics

Location Matters, Still 25

But Some Regions Will Face Significant Demographic Headwinds Net Change in High School Graduates, 2012-2022

Percentage of Freshmen Studying Out of State, 2000-2010 43K 23.2%

22.1%

Midwest

Northeast

West

South

2000

22.8%

22.8%

22.9%

2004

2006

2008

22.3%

2002

2010

-8K

-25K -38K 1) Percentage of freshmen studying out-of-state was calculated across nonprofit four-year institutions that reported student residence and migration data to NCES in each listed year. ©2013 The Advisory Board Company • eab.com • 27530A

Source: WICHE, “Knocking at the College Door,” Dec 2012; National Center for Education Statistics, IPEDS Data Center; Education Advisory Board interviews and analysis.

Retention

Shifting Student Mix 26

Demographics Will Require Greater Investment in Student Success Projected Net Growth in High School Graduates by Race, 2011-12 to 2021-22

Distinct Challenges Facing Hispanic Students 65%

62% $55K

154K

50% $39K

37%

60K

White

Black -53K

Asian

Hispanic

First Generation Median Family Complete Income Degree Within 6 Years White

Hispanic

-139K

©2013 The Advisory Board Company • eab.com • 27530A

Source: Western Interstate Commission for Higher Education, “Knocking at the College Door,” Dec 2012; Education Advisory Board interviews and analysis.

Price

The Art of Price Discrimination 27

Even Publics Increasingly Rely on Full-Pay Students Net Price by Income Level for Public and Private Institutions, 2012

Difference in Net Tuition at Publics for Highest and Lowest Income Brackets

Net Price $60,000

Price advantage of publics nonexistent for families making under $75K…

…But wealthy families contribute much more at privates due to high sticker price

$5.6K

$17K Net price gap for incomes of $200K+

$40,000

$4K

$20,000

$0

Income Level

1992

1) Data comes from 318 public and private institutions. ©2013 The Advisory Board Company • eab.com • 27530A

2008

Source: Greg Perfetto, “Landscape of Higher Education: Net Price,” Presentation at Middle States Regional Forum, 2/13/2013; Education Advisory Board interviews and analysis.

Price

More Reliant Than We Knew on the 1% 28

Declining Wealth of High-Income Households Threatens Tuition Revenue Share of Average Net Tuition Drawn from Each Income Bracket, 2012 60%

Median Income Falling for High-Income Households 1990

45% 39%

$146K

2000

$172K

2010

$161K

29% Median Net Worth Falling for High-Income Families 16%

1992

$327K

11% 2001 2007 Low-Income (<$30k)

Mid-Income ($30k>$100k)

Public

High-Income (>$100k)

$693K $575K

Private

1) For the purpose of household income and net worth calculations, “high-income” refers to households with more than twice the national average income. Median household income is adjusted for household size.

©2013 The Advisory Board Company • eab.com • 27530A

2010

$570K

Source: Greg Perfetto, “Landscape of Higher Education: Net Price,” Presentation at Middle States Regional Forum, 2/13/2013. Scott Jaschik, “Clashes of Money and Values: A Survey of Admissions Directors,” Inside Higher Ed, September 21, 2011. Pew Research Center, “Fewer, Poorer, Gloomier: The Lost Decade of the Middle Class,” August 2012; Education Advisory Board interviews and analysis.

Price

High-Income Families Cut Back 29

Falling Family Income Threatens Ability to Pay Average Amount Paid for College by Income Group, Year-over-Year $31,245

$32,000

Steepest drop among high-income families

$30,000 $28,000

$25,617

… and no sign of recovery

Why are the wealthy now paying less?

$26,000 $25,760

$24,000 $22,000

$21,040

$23,817

$23,913 High Income Middle Income

$20,000 Low Income

$18,000

Discounting The recession Price transparency

$16,000 $14,000 $12,000 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

©2013 The Advisory Board Company • eab.com • 27530A

Source: Sallie Mae, “How America Pays for College 2013; Education Advisory Board interviews and analysis.

Price

The Path Dependency of Total Cost Reducing Degree Costs through Articulation and Faster Time to Completion Four Years at Private University

Typical Option

$164 K Six Years at Public University

Typical Option

$110 K Three Years in BA Program

Two Years in Master’s

$90 K

3+2 Two Years at CC

Two Years at Private

2+2 Private

$88 K Four Years at Public University

“On Time” Graduation

$74K Two Years at CC

Six years of room and board significantly increase total cost With this option, degree from private university costs less than six-year degree from public

Two Years at Public

2+2 Public

$43 K

By far the cheapest option, in part due to fewer years on campus

1 Assumes in-state tuition at public four-year ($8,244) and two-year ($2,963), tuition at private university ($28,500) and room / board while at the public four-year ($8,887) and at the private four-year ($10,089) ©2013 The Advisory Board Company • eab.com

Source: College Board, Trends in College Pricing 2013.

30

Financial Aid

The Merit Aid Arms Race The Unintended Consequences of the High Tuition, High Aid Model Proportion of Students Receiving Need-based or Merit Aid Public Universities 18%

Private Universities 44%

43% 42%

Revenue Over Mission?

16% 13% 24% 8%

Need-Based 1995-96

Merit-Based 2007-08

 More publics moving to high tuition, high aid model  Out-of-state students have significantly higher incomes  Perception that out-of-state students are crowding out minorities ©2013 The Advisory Board Company • eab.com • 27530A

Need-Based 1995-96

Merit-Based 2007-08

 19% of freshmen with SAT scores below 700 receive “merit” aid  12+ institutions charging Pell students over $20K  Net tuition falling despite price increases

“Rather than compete for students based on educational quality or the extent to which institutions were effectively meeting their stated missions, usually oriented toward public service and equitable opportunity, colleges and universities competed by developing a variety of strategies with prestige and revenue concerns at the forefront.” Scott Schulz and Jerome Lucido, Enrollment Management, Inc.

Source: Stephen Burd, “Undermining Pell: How Colleges Compete for Wealthy Students and Leave the Low-Income Behind,” May 2013; Scott Schulz and Jerome Lucido, “Enrollment Management, Inc,” Jan 2011; Education Advisory Board interviews and analysis.

31

Financial Aid

How High Can It Go? 32

Tuition Discount Rate Continues Its Ascent Average Discount Rate at Private Institutions Higher at Small Schools Slow growth

45.0%

Fast growth 42.0% 39.9%

38.4%

38.1%

39.7%

38.6%

37.2%

36.9%

36.4%

Average Freshman Discount Rate by Institution Type

46.2%

Small Institutions

41.4%

Research Universities

40.0%

Comprehensive and Doctoral Universities

35.1%

34.5%

34.3%

2002

2004

33.5%

2000

2006

First-Time, Full-Time Freshmen

©2013 The Advisory Board Company • eab.com • 27530A

2008

2010

2012

All Undergraduates

Source: NACUBO, Tuition Discounting Study (2012); Education Advisory Board interviews and analysis.

Financial Aid

No Relief in Sight 33

Net Tuition Revenue Growth Weak as Discount Rates Rise Net Tuition Revenue per Full-Time, First-Time Freshman at Private Institutions, 2002-2012, in Constant 2012 Dollars (n = 383) Inflation-Adjusted Annual $30,000 Growth Rate $24,115 $25,000 $21,035

Research

1.4%

Comprehensive/ Doctoral

1.9%

Small Institutions

0.7%

$20,102 $20,000

$16,703 $15,000 $15,651 $14,697 $10,000

Net Tuition Barely Keeping Ahead of OpEx

1.8%

$5,000

Average annual increase in operating expenditures among private institutions, 2000-2010

$2002

2004

©2013 The Advisory Board Company • eab.com • 27530A

2006

2008

2010

2012 Source: NACUBO, Tuition Discounting Study (2012); Delta Cost Project, “Spending: Where Does the Money Go”

How We’re Responding 34

Delaying the Demographically Inevitable

Running To Stay in Place

Ruinous Competition

Deploying the Entire “EM Playbook”

Net Tuition Revenue

Discount more heavily

Weaker Pricing, Escalating Support Costs

Better articulate the college’s brand

Flight to Quality Price Shopping Across Income Levels Higher Academic Support Costs

Expand recruitment to far-flung states  Nationalized Recruiting Increase applicant pool

 Everyone Trying Everything

Unsustainable Discounting

 Net Price Transparency

Today

©2013 The Advisory Board Company • eab.com • 27530A

Five Years Hence

A Decade and Beyond Source: Education Advisory Board interviews and analysis; http://chronicle.com/article/The-Admissions-Playbook-Is-Up/141625/

The Rising Costs of Traditional Students Enrollment Costs Rising at Both Selective and Non-Selective Institutions Different Challenges, But Similar Effect on Costs Open Access

Moderately Selective

The Completion Challenge

The Competition Challenge

Low cost to recruit, High cost to retain

Up to 40% of instructional expenses spent on remedial education and students who never graduate Exacerbated by demographic trends that emphasize performance gaps

©2013 The Advisory Board Company • eab.com • 27530A

Highly Selective

High cost to recruit, Low cost to retain Growing costs from both recruitment and retention

Up to 40% of gross revenue spent on tuition discounting, with growing emphasis on merit aid Exacerbated by growing competition for static pool of high-income students

Source: Education Advisory Board interviews and analysis.

35

Seeking Sustainable Frontiers 36

Diversifying Today to Reach Students of Tomorrow Sustainable Frontiers Low-Income, High-Ability ?

English Language Learners Community College Transfers Adult Degree Completers

Net Tuition Revenue

Professional Master’s

Critical Attributes

Running To Stay in Place

 Fast-Growing  High Net Revenue  Strong Student Success  Low Competition

Ruinous Competition Today ©2013 The Advisory Board Company • eab.com • 27530A

Five Years Hence

A Decade and Beyond Source: Education Advisory Board interviews and analysis.

Finding High-Growth Adjacencies 37

Peripheral Markets More Promising Than Core

English Language Learners Professional Master’s Graduate Students

UnderRepresented Populations Low-Income, High-Ability

International Students

Core Markets

Working Adults

Degree Completers

Traditional Age UnderGraduates

Transfers

©2013 The Advisory Board Company • eab.com • 27530A

Source: Education Advisory Board interviews and analysis.

Choosing Where to Compete 38

Five Emerging Student Segments

Professional Master’s 1.3M

?

Adult Degree Completers

Net Revenue Potential

3M

20M

Community College Transfers

?

3M

5M

English Language Learners 35K

500K

Low-Income, High-Ability 2.8K

35K

Market Size Current

©2013 The Advisory Board Company • eab.com • 27530A

Potential

Source: Education Advisory Board interviews and analysis.

Pathways to Success 39

A Model for Recruiting and Graduating Non-Traditional Students Traditional Undergrads

High School

Low Income, High Ability

Summer Bridge English Language Learners

First Year

Second Year

Third Year

Fourth Year

Graduation

ESL Pathway

Community College Transfers

Community College

Adult Degree Completers

Prior Learning Assessment

Competency-Based Learning

Advantages of Pathways 

Widen recruiting funnel



Assess readiness



Maintain selectivity



Increase diversity



Improve success rates



Generate revenue

©2013 The Advisory Board Company • eab.com • 27530A

Source: Education Advisory Board interviews and analysis.

The Bigger Issues Behind “MOOC Mania” 41

Critical Strategic Concerns for Institutional Leadership The Current MOOC Debate Governors

Administrators

Boards

Faculty

“Can we use MOOCs as low cost alternatives?”

“Will we fall behind if we don’t do a MOOC?”

“Will students abandon us for MOOCs?”

“Will MOOCs make us expendable?

The True Agenda

1

Sustaining Tuition Revenue

2

Building an Online Strategy

• Declining public funding

• Innovative program designs

• New student markets

• Improved instructional quality

• Evolving student preferences

• Economies of scale

• Challenges to affordability

• Regulatory risk

• New types of competitors

• Faculty development

• Student success challenges

• Student support services

©2013 The Advisory Board Company • eab.com • 27530A

With Us or Without Us Local Physical Distribution Models Displaced by Remote and Fully Digital Approaches

Local Distribution Models 1990s

Global Digital Models 2000s

Cloud Based Models 2010s

©2013 The Advisory Board Company • eab.com • 27533C

Convergent Media Services (music, video, books)

43

From “Whether” to “How” We Will Go Online 44

Rising Above Misconceptions and Semantic Debates Modality Debate Misses Important Distinctions Online is not a market

Key Lessons in Starting a Productive Conversation Different populations require different programmatic strategies

Online is neither more nor less effective

Wrap-around services and design standards critical to student success

Online is neither more nor less profitable

Costs and revenues driven primarily by instructional model and class size

Online will not replace your campus

Online is not a strategy

©2014 The Advisory Board Company • eab.com • 28134D

Instruction and services will be delivered in multiple modalities

Institutional priorities and goals should drive decisions about technology

Source: EAB interviews and analysis

Breaking the Iron Triangle Proponents Argue Online Learning Avoids Traditional Trade-Offs

45

Bill Bowen, Then and Now 2000 Access

“All the talk of using technology to ‘save money by increasing productivity’ has a hollow ring in the ears of the budget officer who has to pay for the salaries of a cadre of support staff, more and more equipment, and new software licenses— and who sees few offsetting savings.”

2012 Cost

Quality

“I am today a convert… online learning, in many of its manifestations, can lead to at least comparable learning outcomes relative to face-to-face instruction at lower cost.” Bill Bowen President Emeritus, Princeton University

©2013 The Advisory Board Company • eab.com • 27531B

Source: William G. Bowen, At a Slight Angle to the Universe: The University in a Digitized, Commercialized Age, Romanes Lecture for 2000, University of Oxford, Oct. 17, 2000; Ibid., Higher Education in the Digital Age, Princeton University Press, 2013, p. 45

Access

Serving the Multi-Modal Student 46

Flexible Formats Critical to Growth and Access “Multi-Modality” at the University of Central Florida Head Count by Location, Fall 2010

Growth in Student Credit Hours 2010-2011 32%

Secondary Campus Students (2,472) 1% 1%

1%

4%

1%

Main Campus Students (47,926)

Web Students (17,172)

18%

60%

7% 1%

2% 3% 4%

Regional Campus Students (5,251) ©2013 The Advisory Board Company • eab.com • 27531B

Classroom

Online

“Classifying a student as ‘main campus’ or ‘extended campus’ or ‘distance’ becomes meaningless in an environment where students take whatever courses they need in whatever location or modality best suits their requirements at the time.” Thomas Cavanagh AVP of Distributed Learning University of Central Florida

Source: Thomas Cavanagh, “The Postmodality Era: How ‘Online Learning’ is Becoming ‘Learning’,” EDUCAUSE Game Changers, May 2, 2012

Access

Relevance to Core Becoming Clearer 47

Technology Will Enhance, Not Replace, Undergraduate Experience Path to Graduation Eased by Online and Blended Coursework Self-paced online “catch up” course after dropping pre-med chemistry

Online remedial math course prior to Fall start

Year 1

Year 2

Online summer course to complete missing pre-requisite

Year 3

Hybrid gen ed course with online lectures and discussion boards

Year 4

Two online courses to stay on track while studying abroad

Even Yale “Yale College students in New Haven, subject to the approval of their DUSs and their residential college deans, may take one (but not more than one) online course for credit during their fall and spring academic semesters.” Report of the Committee on Online Education, Dec. 2012 ©2013 The Advisory Board Company • eab.com • 27531B

EAB interviews and analysis

What Students Want 48

Common Attributes of Effectively Designed Programs Flexible Delivery Accommodates adults with competing professional and personal commitments May expand audience to include new geographic and demographic markets

Stackable Credentials

Accelerated Format Reduces opportunity cost for those taking time off work for degree May also reduce price, depending on credit and tuition structures

Interdisciplinary Pathways

Allows students to pick out modular, often specialized, parts of degrees

Tailors content and pedagogy to students formally trained in another discipline

Encourages students to later apply credits toward advanced credentials

Provides common knowledge base to students with varied backgrounds

Practical Experience Fulfills growing employer demand for new hires with work experience Enhances employment outcomes by producing better prepared graduates

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Professional Development Encourages application of program content in current work setting Allows for networking, mentorship, and other career advancement benefits

Source: Education Advisory Board interviews and analysis.

Access

The Indelible Middle Man 49

Even MOOCs Resorting to Coaching Model to Get Results A Herculean Task

4,356

Number of forum posts by Penn professor Al Filreis in first MOOC

Never Again “The time demands, logistics, and politics of developing a MOOC will bury you.” Karen Head Assistant Professor, Georgia Tech

The Necessity of Course Assistants Harvard professor asks alumni to help moderate upcoming MOOC

Udacity hires dozens of tutors to support new partnerships

New startup, “Course Pods,” brings live tutoring to Udacity online courses

Study finds offline help biggest predictor of success in MOOC

©2013 The Advisory Board Company • eab.com • 27531B

Source: Breslow, DeBoer, Ho, Pritchard, Seaton, & Stump, “Studying Learning in the Worldwide Classroom: Research into EdX’s First MOOC,” Research & Practice in Assessment, June 2013

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The Unavoidable Cost of Success "What we've learned is the computer program alone, a MOOC alone is not likely to be a good educational medium for large numbers of people, except for the truly highly selfmotivated. To be successful, we need people on the ground to do things, to provide educational services." Sebastian Thrun

©2013 The Advisory Board Company • eab.com • 27531B

Source: David Carr, “Udacity CEO Says MOOC ‘Magic Formula’ Emerging,” Information Week, Aug. 20, 2013.

Access

Toward a Blended Future Multi-Modal Delivery Both More Popular and More Effective

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Bullish on Hybrid Anecdotal Evidence Backs Statistics on Role of Region

Within Your Reach

Even online students want to come to campus and be part of our community

“About 80% of online students live within 100 miles of a campus or service center of the institution they attend, and the large majority live within 50 miles. Geographic proximity is a major advantage in attracting online students.”

Students value our connections with local employers and industry Known regional brands hold signal value for nontraditional students leery of slick for-profit marketing pitches

“Online College Students 2012” Aslanian Market Research

A blended approach helps mitigate the common persistence gap we see in fully online programs

“Instruction combining online and face-to-face elements had a larger advantage relative to purely face-to-face instruction than did purely online instruction.” US Department of Education Evaluation of Evidence-Based Practices in Online Learning, 2010

©2013 The Advisory Board Company • eab.com • 27531B

Source: “Online College Students 2012,” Aslanian Market Research and The Learning House, Inc, 2012; EAB interviews and analysis

Quality at Scale

Winning on All Fronts with Course Redesign Alternative Model Expands Capacity, Improves Quality, and Costs Less

Faculty

TAs and Peer Mentors   

Pre-Reading

Pre-Quiz

Lecture

Pre-Lecture Prep

Concept 1 Concept 2 Concept 3

Practices

Problem Solving

e-Tutor

Embedded Videos

12%

Reduction in DFW rate

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Homework e-Tutor

Mini-Tests

45%

Increase in enrollment cap

31%

Cost savings per student

Source: “Physics Large Course Redesign Project Report,” UNC Charlotte, Center for Teaching & Learning, Sept. 8, 2011.

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Few Excuses Left Course Redesign Gaining Traction Across Institutional Types and Disciplines Physics

“I always thought I was a pretty good lecturer, but … I had come to a realization that even my most successful students weren’t retaining a lot of the material I’d covered from one course to the next.”

• Clickers and frequent feedback opportunities keep students on track

Elizabeth Alexander Texas Wesleyan History Professor

English

• Students grouped based on answers to questions

• From 3 hours to 1 hour in class per week

History

• Additional time spent in one-on-one sessions, peer tutoring, and multimedia lessons

• Historical Methods class won “Radically Flexible Classroom” award • Movable furniture and tech-enabled classrooms facilitate group work

Math • Emporium model: 1 hour in class, 2 hours in large computer lab • Significantly improved completion and retention rates

“Do our students actually learn during class, or do they simply feverishly scribble down everything we say, hoping somehow to understand the material later?” Eric Mazur Harvard Physics Professor

• 19% instructional cost savings ©2013 The Advisory Board Company • eab.com • 27531B

Source: The National Center for Academic Transformation (www.thencat.org); “Texas Wesleyan’s Classroom.NEXT: 21st Century Learning in Action,” Campus Technology, April 10, 2012.

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Quality

Diverging Views on Quality 54

Third Side of Proverbial “Iron Triangle” Toughest to Bend

Outcomes Reputation Association with highlyregarded institution implies superior content and experience

Course results in satisfactory grades, persistence, or career placement

Interaction Students are actively engaged with one another in discussion and projectbased activities

Faculty Expertise Leading researchers in field provide access to most up-to-date and engaging content

©2013 The Advisory Board Company • eab.com • 27531B

Learning Assessment Rigorous psychometric assessment design ensures full retention of material and ability

Standardization Skill Acquisition Students attain desired competencies in defined trades or general skills for personal advancement

Professional Design Sleek user interface and high production value engage and retain students

Clear, detailed standards set for all courses ensures consistently smooth experience

Source: EAB interviews and analysis

Ready for the Big Time? 55

New Business Disciplines Required to Compete in New Markets Traditional Program Launch Program decisions driven by: • Faculty desire and capacity • Academic quality standards

The New Reality • More competition (both for- and non-profit) More Volatile Markets • Rapidly shifting student demand • Specific employer desires Missed Market Peaks

Approval process driven by: • Calendar-based committees • Multiyear evaluation cycle • “All or nothing” launch philosophy Program design process intended to: • Prioritize curricular considerations over infrastructure issues • Assume stable enrollment growth Marketing apparatus designed to: • Reach “traditional” student groups • Advertise the institution as a whole ©2014 The Advisory Board Company • eab.com • 28134D

Shorter Program Lifecycles Long Approval Process

Higher Risk • New tech investments for Financial • Risk of enrollment revenue Loss “whipsaw” • “Search and shop” behaviors Savvier • Want program-specific info “Customers” • Desire information and interaction, not a sales pitch Source: EAB interviews and analysis

If We Build It, Will They Come? 56

Ensuring Sufficient Demand Before Program Launch Require Data-Driven Market Analysis Before Launch Internal Data

External Data

• Application and inquiry trends in comparable F2F programs

• Graduate figures, by field and by competitor (IPEDS)

• Yield and conversion rates

• Employment trends (BLS)

Harness faculty expertise to validate analysis

1 2

Informed Go or No-Go Decision

3-Year Viability Audit: Are Targets Being Met?

©2013 The Advisory Board Company • eab.com • 27533C

Next-Generation Employer Data

Highlighting Hot Markets

Mining for Emerging Job Titles and Skills Central seed funding based on initial needs and growth potential

Opportunity to reassess target market or curricular offerings

Source: EAB interviews and analysis

Know Your Competitors 57

Compare Rival Programs Using (Mostly) Public Information Price Components of a Typical ProgramLevel Competitive Analysis

Brand

Size Location Completion Time • Can students complete competitors’ programs in less time than ours?

Marketing Message Equally Critical Yet Underappreciated Dimensions of Competition

• Are competitors’ programs pitched to career changers, promotion seekers, working parents, etc.?

Curriculum • Do competitors offer particularly unique courses or experiences?

Flexibility • Are competitors’ programs fully asynchronous? • Do competitors’ programs include self-paced options? ©2013 The Advisory Board Company • eab.com • 27533C

Source: EAB interviews and analysis

Education for Whom? 58

Differentiating the Major Market Segments

Goals

Typical Program Structure

Residential Undergraduates

Professional Master’s Students

Adult Degree Completers

Opting for Convenience and Enrichment

Investing in Career Advancement

Looking for Fast, Flexible Degrees

On-Time Graduation

Promotion

Salary Bump

Exploration

Career Change

Personal Fulfillment

Summer Sessions

Part-Time

Competency / PLA

Hybrid Courses

Project-Based

Accelerated Programs

Location Selection Process

Reputation Cost

©2013 The Advisory Board Company • eab.com • 27531B

“Search and Shop” Reputation in Industry

“Search and Shop” Cost Convenience

Source: EAB interviews and analysis

EAB Contact Information State University of New York Business Officers Association

Replace with Headshot

www.eab.com

©2013 The Advisory Board Company • eab.com

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Matthew Pellish Senior Director, Strategic Research 202-266-6215 [email protected]

Allison Perez Dedicated Advisor 202-266-6419 [email protected]

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