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Each year, Jeff Silber of BMO Capital Markets hosts their Back to School education investment conference. There are a lot of challenges in education, from new regulations, roadblocks to federal funding, a sea change in technology, and changing buying patterns. This year, ABA was pleased to be included into the program’s K12 segment, with Farimah moderating a panel on the role of the teacher in the education economy. Read more below. Also, for anyone going to Ednet next week in Denver, let us know if you want to meet. We are proud to be a sponsor of the conference. Legislative and Regulatory Update Nina Rees, National Alliance for Public Charter Schools Look for continued cutbacks in federal education money, with nothing much on the horizon except a continuation of sequestration cutbacks. The Elementary and Secondary Education Act (ESEA) governs federal funding and regulations for K12 schools, and is supposed to be reauthorized every 5 years. The most recent reauthorization was the No Child Left Behind Act of 2001.While nearly everyone in Washington sees major flaws in the 2001 act, there will be no ESEA reauthorization or K12 legislation in the foreseeable future. This means that there is more action taking place at the state level, and that private foundations are having a big influence on state departments of education by lobbying and funding pet projects. Funding penalties to all states and nearly all districts for not meeting the NCLB prescriptions (legislated in 2001 and never adjusted) has given the Department of Education the opportunity to negotiate policy changes with states in return for “forgiving” non-compliance. These negotiations generally cover a two-year period, result in policies that vary state by state, and have to be renegotiated every two years. There is some pressure to change the definition of failing schools. Currently schools fail when their students to not pass grade-level tests. An alternative is that a school would fail if its students progressed at less than one year’s worth knowledge gain. If a student starts out as two years behind, there is little in the short term the school can do to bring that student up to grade level, and so the school and teacher would be labeled as failures. The change would be to recognize that perhaps the school could at least help that student from falling further behind, or start to catch up, and that that would be progress. So far, there is no change to the original definition being posited by the Department of Education, and there is little hope of any progress with the definition being changed through ESEA reauthorization in the near future, but it’s...

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Student Growth Current projections by Department of Education’s NCES are for Postsecondary enrollments to grow at 1.5% to 2.0% through 2020 (to about 21 million students), although the demographics point to a decrease in the 18-22 year old population through 2015, a greater percent of students will be enrolling. This forecast of slow growth assumes that we will not meet the Obama’s goal that by 2020 the US would have the highest college graduation rate in the world, 60%. Achieving that goal would add another 6 to 10 million students. Time to complete programs Students attending proprietary (also known as for-profit) higher education institutions tend to graduate faster than students at the not-for-profit or public ones, as shown in the following chart:   Adult learner market 38% of Postsecondary students are adult learners, and the For-Profit sector has drawn a greater proportion of these students than either the Publics or the Not-For-Profits. The 25-44 demographic is going to increase by 28% by Fall 2020 to 9.6M, and a higher percentage of them will attend Postsecondary institutions (from 9.8% to 10.8%). This translates to an increase of just over 300,000 students in this demographic in Fall of 2020 registrations. Veteran (Photo credit: Keturah Stickann) Educating Veterans Current benefits of the GI bill are $1,473 per month for 36 months. Only 6% of veterans use the full amount; and the average veteran that uses these funds uses them for only 17 months. The market leader is U of Phoenix with 17,000 veteran-students (the 3rd and 4th have 4,000 students) and $133M last year in GI Bill revenues. The biggest caveat in targeting veterans is that 54% drop out of 4-year programs, and 63% drop out of 2-year programs.   Trending Career Preferences The National Research Center for College and University Admissions (NRCCUA) conducts surveys of HS seniors, including career preferences. Below are the professions that moved up the most between the (college graduating) classes of 2013 and 2017: Trending Occupations among HS Seniors Occupation 2017 rank Move up from 2013 Journalism 39 20 Game Design and Developer 12 19 Christian Services/Missionary 35 18 Engineering (Computer) 25 15 Marine Biology 20 13 Fashion Merchandising 19 10 Electronic Technician 46 10 Software Developer 55 10 Athletics/Coaching 3 9 Veterinary Medicine 10 9 Interior Design 39 9 Travel/Tourism 50 9 Trends on online learning 2.78M (13.5%) of postsecondary students enrolled in fully online programs 2010-11. 6.1M  students (31%) took at least one online course in Fall 2010. Online enrollments are increasing at 5.5% annually compared to 1.4% of all postsecondary enrollments. $18.5B was spent on online postsecondary education in 2010-11, and will grow by...

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Sloan’s Blended Learning Conference was held April 23-4, 2012 in Milwaukee, Wisconsin. This is primarily a postsecondary conference, although there were a few sessions on K12 blended learning implementation. K12 often follows where higher education leads, so if you are primarily interested in K12 education, this might be a glimpse into your future as well. Blended learning methodology graphic (Photo credit: Wikipedia) Blended learning is expanding, in types as well as numbers.  The face to face component might occur incidentally once or twice, or might meet as often as twice a week.  The drivers for expansion are both monetary and pedagogical, although, as you’ll see below, there are certainly obstacles and wrong turns in its implementation.   We think it’s important to note that this conference dealt with Higher Ed as it functions today, and did not provide a glimpse of future changes we might see there.  Perhaps that will be more apparent at the Innovations Conference Sloan runs in the summer.  Cost drivers for blended learning To the extent that money drives educational decisions, blended learning may be the most viable solution to two problems. There seems to be a growing national shortage of classroom space, and no money to build more. Institutions are thus pressuring instructors to reduce seat time requirements for their course. In fact, the original definition of blended learning stated that 30 to 70% of class time be replaced by online activities.  There are only two ways to substantially adapt to the huge cuts in state spending for higher education: raise tuition (the prime reason tuition rates have increased dramatically over the last 10 years), or increase efficiencies (larger classes, more classes per instructor, use of more adjunct faculty). Blended learning is looked on as a way to allow an instructor to teach larger classes and also potentially reach a larger audience, since there is a lower requirement to be in the same classroom. Changes in financial aid have also made it possible to spend less “seat” time to accomplish learning. Improved pedagogy for blended learning While these economic factors are probably driving the institutions to expand blended learning, there is a potential for more effective teaching as well. In fact, many students seem to prefer blended to online or face to face classes, and some studies indicate greater effectiveness of blended over either of the other two methods. After all, how engaged is a student in the back row of a 400 person class listening to a lecture? Some of the enhancements that are now available include: Heterogeneous groups: Greater diversity often results in greater learning. One example is small groups consisting of students from...

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Educause 2011, the huge higher education technology conference took place last week. There was a lot of buzz around online learning and the changing face of IT. On a broad brush, students are increasingly taking one or more online classes during their higher education tenure and more schools are offering classes and programs of study. The schools are grappling with how to develop and fund these courses, and then how to support the students and faculty. Below are case studies from three sesions: Outsourcing Online Learning at USC, Engaging Learner Across Time and Space at U of Minnesota, and Effective Support for Online Learners at Bay State. Technology departments have been facing declining budgets for four years, but technology demands have not receded. Additionally, IT is being asked to provide better and more usable data to drive academic and business decisions. These concerns are summarized in Problems Faced by CIOs, CTOs and Technology Departments and Data to Dashboards below. Outsourcing Online Learning Joan Falkenberg Getman, Susan E. Metros, Jade Winn, all from USC Why did USC start online programs? The goals for establishing new programs were and continue to be: Remain current and competitive Reach working professionals Reach new markets Extend global reach Build new revenue USC made the following requirements for all new online programs: Only graduate programs; undergraduates should get the full brick and mortar USC experience No tuition differentiation; same costs as face to face programs Only where there were new revenue opportunities; not in areas that would cannibalize existing students There had to be both synchronous and asynchronous content and interactions with the students (and faculty) There had to be active learning activities and rich interaction (interaction with content and also with other students and faculty). USC wanted to make the online experience as good as a good face to face classroom experience. USC used Embanet and 2Tor to help develop and offer the two programs. There are relatively few quality providers to partner with, and they can be very different. It’s important to find a provider that matches weel with the particular program at the institution. Different programs for the same institution may work better with different providers, depending on chemistry, outlook, reach, and financial considerations. Who was responsible for what? The partner financed all of the development, there was no upfront cost for USC. Partner paid USC faculty for subject matter expertise and curriculum design, coordination, and approval, and did the graphic and interactive design. USC Professors develop the content, the partner works with the professors on online instructional design, and the partner does the graphics and develops any videos, animations, or interactive media....

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The BMO Back to School Education Conference was held on Thursday, September 15, and there was a ton of information. With three concurrent presentations, it wasn’t possible to follow everything, but here is a distillation of some of the points made by the CEOs running leading publishers, charter schools, and for-profit colleges. General Observations from Farimah Schuerman The conference expanded its program this year to include more general and informational panels. As usual, Higher Ed had the lead role, but not as much as in past years, and with a much sharper and defensive tone. The For-Profit Higher Ed sector has been under a lot of pressure, with some organizations seeing declining enrollments, and facing increased scrutiny from Congress, the Dept of Education, the press, and the states. In Postsecondary, the core technology segments (LMS, SIS, course tools) are pretty mature, and newcomers aspire to be absorbed.   Image by York College of PA via Flickr There seemed to be a lot more Private Equity activity than Venture Capital, and there seemed to be a number of folks managing private wealth (possible Angel Investors) who were investigating but not yet investing. Of course, these may reflect more the people we know and work with, since we gleaned this information from our conversations.   There was more interest in K12 than in the past. The acquisitions from Pearson and News Corp seemed to have spurred some real interest, and possible transactions involving McGraw-Hill wove their way into conversations. There is lots of room for innovative, specialized applications. Textbooks and instructional materials are in upheaval still, with rental, online, and freemium instructional materials vying for market share, and new online channels competing against the existing sales forces. A few companies talked about their success this year, in that they maintained revenue levels. This leads one to believe that not slipping is cause for pride in this difficult market. Companies seem to be looking for new positioning and expanding their market niche in order to access other revenue opportunities and not give up ground. Difficult economic conditions call for creativity (which is both true and a blatant self plug for Academic Business Advisors). Ronald Klausner, CEO, Cambium Learning Education is a $4.6 Billion industry. The current twin concerns are to reduce costs and increase effectiveness. With teachers accounting for half of all spending, districts and states are looking for tools to reduce the number of teachers and make the surviving teachers more effective. In addition, there is going to be a big shortage of teachers, with 1/3 of all new teachers leaving the profession in their first three years, and 1/3 of...

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These are the slides and notes from a webinar I gave for the SIIA. The webinar is an introduction to the SIIA's Expert's Guide to the Postsecondary Market. There is a sampler from that report on the SIIA website. I'd written a section of the guide, Five Things You Need to Know About the Postsecondary Market, which is part of the sampler. These are the five different aspects of the postsecondary marketplace that are reviewed in my report. If you are going to sell into higher education, you need to know how the market size and demographics, online courses and content, accountability for postsecondary institutions, new technologies, and student attitudes toward e-content and online classes are changing the face of higher education. Because the report is available free here, rather than repeat what’s already in the report, I decided to talk about three other aspects of the market which are also critical to success, the fact that there are at least four different markets, not one, the content areas that are growing fastest, and a little about the financial drivers for higher education. If you develop a product or service, and then go into one of the large public university systems and tell how you’ve been successful at Trinity College or some other small liberal arts institution, you are not going to be successful. You can’t be successful speaking to Higher Education with a one size fits all approach.   The most common breakdown is shown above, Public 4-year, Public 2-year, Private not-for-profit, and Private for-profit are the four main sectors. The last two, dealing with private 2-year schools are tiny in comparison.   Over the past 15 years, the private for-profits have been on a roll, growing from less than 1% of the market to almost 10% of the four-year market. However, changes in how the federal government finance student tuitions (loans and grants) to for-profits may throw a curve at the industry. For example, one pending policy is that these institutions, in order for their students to receive tuition assistance, will need to show that most of their students do, in fact graduate and earn enough to pay back student loans. This touches on the broader accountability issue which is covered in greater depth in the Five Things report.   Notice the big difference at the 2-year schools, where almost twice as many of the students are part time. That means that the way you define and position your services for two year schools may need to be very different from the way you talk about them to four year schools.   These are just two examples...

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