Showing posts with label higher education. Show all posts
Showing posts with label higher education. Show all posts

Monday, April 10, 2023

EdTech Meltdown

The Silicon Valley tech downturn has been creating reverberations in other parts of the economy and in other areas of the US.

Edtech, a small subset of the tech industry that overlaps with higher education, is facing major headwinds as skepticism about higher education and the economy grows.  Even two industry insiders, Noodle CEO John Katzman and Kaplan executive Brandon Busteed have been critical of the short-term thinking and questionable outcomes of edtech. Katzman has called some companies in the space "more adtech than edtech," implying that some do little more than marketing and advertising for colleges and universities.     

Ultimately, it's US consumers who are feeling the greatest pain as participants in online education--a mode of instruction that for millions of people may have more risks than benefits--within an increasingly dysfunctional economy that produces expensive education and fewer good jobs.   

Significant problems that were observed in large subprime colleges like University of Phoenix, Corinthian Colleges, ITT Tech, DeVry University, Colorado Tech, and the Art Institutes more than a dozen years ago have resurfaced in edtech.  And other problems unique to edtech have emerged. 

Chegg is an edtech company based in Santa Clara, California, and provides homework help, online tutoring, and other student services.  The company's value grew more than 300 percent in 2020, during the Covid pandemic, but has faced headwinds for the last two years. This includes allegations that  Chegg enables students to cheat on homework and other assignments. Derek Newton has chronicled this problem in the substack The Cheat Sheet.

[Chegg shares grew in 2020 during the Covid pandemic. Source: Seeking Alpha] 

Coursera is a publicly traded MOOC based in Mountain View California.  Shares started trading in April 2021.  The company has under-performed as a profit making enterprise. Massive Open Online Courses were once seen as a wave of the future in adult education but their popularity has waned. 

[Coursera has underperformed since its IPO in April 2021.  Source: Seeking Alpha]

2U (based in Lanham, MD) and Guild Education (based in Denver) and are two edtech companies based outside of Silicon Valley. 

2U is a publicly traded Online Program Manager (OPM).  The company services major universities such as the University of Southern California and University of North Carolina with support for some of their online degree programs. 2U has received an enormous amount of funding from Cathie Wood, a major Silicon Valley investor, and has continued to receive support despite a long record of financial losses.  

Some 2U investors have grown tired of persistent losses--and it has shown in the declining share price. The company also faces increased scrutiny in DC for recruiting consumers unable to recoup the cost of education for high-priced masters degrees in areas such as social work.  2U acquired edX, the Harvard-MIT MOOC in 2021 and its profitability remains to be seen.  

In 2023, 2U sued the US Department of Education for attempting to require more transparency between OPMs and their clients.  This strategy is similar to the defensive strategy that subprime colleges have used to stop gainful employment regulations, and more recently, borrower defense to repayment rules.  


 [2U shares have dropped more than 90 percent over the last 5 years. Source: Seeking Alpha]

Guild Education is a privately held corporation that grew to an estimated $4.4B evaluation in a few years. Guild serves businesses by administering online education benefits for large corporations such as Walmart, Target, and Macy's.  While its work may help companies with their bottom line, they appear to do little for their workers. 

At least ten of Guild's investors are based in Silicon Valley, including Silicon Valley Bank and venture capital firms in San Francisco, Palo Alto, and Menlo Park, California. reports Guild's estimated value at $1.3B, a 70 percent drop from its peak in June 2022. 

[Image above: Guild's valuation in Billions from]
The Higher Education Inquirer will continue to observe changes in edtech as the College Meltdown advances.  

A ‘rigged’ economy and skepticism about college (Paul Fain, Open Campus)

How University of Phoenix Failed. It's a Long Story. But It's Important for the Future of Higher Education. 

The Cheat Sheet (Derek Newton)

2U Virus Expands College Meltdown to Elite Universities 

Erica Gallagher Speaks Out About 2U's Shady Practices at Department of Education Virtual Listening Meeting

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened.

Guild Education: Enablers of Anti-Union Corporations and Subprime College Programs 

College Meltdown 2.0 

The Growth of "RoboColleges" and "Robostudents"

The American Dream is Over (Gary Roth) 

Sunday, September 11, 2022

State Universities and the College Meltdown

State Universities are using Google Ads to boost enrollment numbers.

(Updated November 28, 2022) 

While for-profit colleges, community colleges, and small private schools received the most attention in the first iteration of the College Meltdown, regional public universities (and a few flagship schools) have also experienced financial challenges, reorganizations, and mergers, enrollment losses, layoffs and resignations, off-campus learning site closings and campus dorm closings, lower graduation rates, and the necessity to lower admissions standards. They are not facing these downturns, though, without a fight. 

State universities, for example, are attempting to maintain or boost their enrollment through marketing and advertising--sometimes with the assistance of helpful, yet sometimes questionable online program managers (OPMs) like 2U and Academic Partnerships and lead generators such as EducationDynamics.  


Academic Partnerships claims to serve 50 university clients.  HEI has identified 25 of them. 

Google ads also follow consumers across the Web, with links to enrollment pages.  And enrollment pages include cookies to learn about those who click onto the enrollment pages. Schools share the information that consumers provide with Google Analytics and Chartbeat.  

                                       A pop-up Google Ad for Penn State World Campus

Advanced marketing will not improve institutional quality directly but it may raise awareness of these state schools to targeted audiences.  Whether this becomes predatory may be an issue worth examining.


In order to stay competitive, state universities have to have a strong online presence and spend an inordinate amount of money on marketing and advertising.  Ohio University and other schools now offer programs that are 100 percent online.  


State universities have joined for-profit colleges in the television advertising space. 

Despite marketing and enrollment appeals like this, we believe the financial situation could worsen at non-flagship state universities when austerity is reemployed--something likely to happen during the next economic downturn

While state flagship universities have multiple revenue streams, they are often unaffordable for working families.  Elite state universities, also known as the Public Ivies, have increasingly shut out state residents--in favor of people from out of state and outside the US--who are willing to pay more in tuition. 

Aaron Klein at the Brookings Institution calls this significant (and dysfunctional) out-of-state enrollment pattern as The Great Student Swap.  

State Universities with more than 4000 foreign students include UC San Diego, University of Illinois, UC Irvine, University of Washington, Arizona State University, Purdue University, Ohio State University, Michigan State University, and UC Berkeley. 

People fortunate enough to attend large state universities as undergrads may feel alienated by large and impersonal classrooms led by graduate assistants and other adjuncts.  There are also significant and often under-addressed social problems related to larger universities, including hunger, substance abuse, sexually transmitted diseases, hazing and sexual assault.  

Online only versions of flagship schools may not be of the same quality as their brick and mortar counterparts. Purdue University Global and University of Arizona Global Campus, for example, are open enrollment schools for working adults which produce questionable student outcomes.  These "robocollege" schools hire few full-time instructors and often spend a great deal of their resources on marketing and advertising.  

EducationDynamics is a lead generator for "robocolleges" such as Purdue University Global and University of Arizona, Global Campus.  


                    Purdue University Global has used questionable marketing and advertising.

The Higher Education Inquirer has already noticed the following schools in the Summer and Fall 2022 that received media scrutiny for lower enrollment, financial problems, or labor issues:


More schools will be added as information comes in. 
Related link: College Meltdown 2.0 

Tuesday, August 30, 2022

US Department of Education Projects Increasing Higher Ed Enrollment From 2024-2030. Really? (Dahn Shaulis and Glen McGhee)

The US Department of Education (ED) continues to paint rosy projections about higher education enrollment despite harsh economic and demographic realities--and increasing skepticism about the value of college degrees.  

Image from Digest of Education Statistics (2022) 

Since 2011, higher education enrollment has declined every year--a more than decade long trend. The Covid pandemic of 2020 to 2022 made matters worse with domestic and foreign enrollment-- (temporarily) ameliorated by government bailouts and untested online education.  Foreign enrollment continues to languish. And the enrollment cliff of 2026, a ripple effect of the 2008 Great Recession, is now just around the corner. 

ED is projecting enrollment losses in 2022 and 2023, but why is it projecting enrollment gains from 2024 to 2030?  Apparently, one of the problems is with old and faulty Census projections made during the Trump era that were not corrected.

Based on these Census numbers and other factors, the Department of Education's National Center for Education Statistics (NCES) projects increases in high school graduation numbers.  The Western Interstate Commission for Higher (WICHE), in contrast, projects declines in high school graduates starting about 2025. (see graph below). 

For ED, relying on overly optimistic projections for high school graduates creates a statistical train wreck that's made even worse by what's not in their formula.  

Popular opinion about college has been declining for years, and there is no indication that attitudes will improve.  A growing number of younger folks have joined the "educated underclass," becoming disaffected by underemployment and oppressive student loan debt.  While progressive policies could change attitudes, deep skepticism about the value of education is an important statistical wildcard.

This is not the first time that the Higher Education Inquirer has questioned overly optimistic US Department of Education projections. While NCES has updated projections from time to time, it seems to have relied too much on the past and been too slow to change.  

Related link:  Millennials are the first generation to prove a college degree may not be worth it, and Gen Z may be next (Chloe Berger, Forbes/Yahoo Finance)

Related link: America’s Colleges & Universities Awarded $12.5 Billion In Coronavirus Bailout – Who Can Get It And How Much (Adam Andrzejewski, Forbes)

Related link: Online Postsecondary Education and Labor Productivity (Caroline Hoxby)

Related link: U.S. Universities Face Headwinds In Recruiting International Students (Michael T. Nietzel, Forbes)

Related link: Demographics and the Demand for Higher Education (Nathan Grawe)

Related link Why U.S. Population Growth Is Collapsing (Derek Thompson, The Atlantic)

Related link: Economic Well-Being of U.S. Households in 2021 (Federal Reserve)

Related link: Many US States Have Seen Enrollment Drops of More Than 20 Percent (Glen McGhee and Dahn Shaulis) 

Related link: Community Colleges at the Heart of the College Meltdown

Related link: Projections of Education Statistics to 2028 (NCES)

Related link: US Department of Education Fails to Recognize College Meltdown (2017)