The document discusses the significant growth in the online higher education market, projecting a rise in online enrollment due to various factors like demographic trends and federal policy changes. It highlights the increasing role of for-profit institutions in expanding access and participation, particularly among adult learners. Additionally, it identifies key opportunities for online education providers to attract new demographics and develop programs in response to economic stimulus efforts.

1. Hot Programs and Hot Markets
Pearson Learning Solutions Summit
Las Vegas, Nevada
December 9, 2009

2. • Explaining Growth in the Online Higher
Education Market
• The Role of For-Profit Providers
• A Closer Look at Growth Sectors: Markets
and Programs
© 2009 Eduventures, Inc. 2

3. To date, online is both acyclical and counter-cyclical; low penetration/
improving brand combination should perpetuate pattern five years out
By 2014, online
160% headcount is forecast to 4,500,000
Online Headcount hit c.20% of total 3,970,720
140% 142% Growth headcount, up from 4,000,000
c.11% Fall 2009
129%
3,500,000
120%
2,903,592 3,000,000
105% Counter-cyclical
100%
tailwind- current and
previous recession 2,500,000
80% 2,139,714
1,783,095 2,000,000
66%
60%
53% 1,260,605 1,500,000
47%
40% 38% 39% 35% 1,000,000
31% 27%
20% 22% 20% 18%
16% 15% 12% 500,000
229,363
78,332 11% 10%
6,916
0% 0
Online significance in the adult market- Eduventures estimates that in Fall 2009, online headcount
represents c.24% of total adult (aged 25+) headcount at degree-granting schools and is forecast to hit 35-
40% by 2014
© 2009 Eduventures, Inc. 3

4. Online share up for all major credentials; strong associate growth;
unrivaled master’s online penetration
900,000 30% 30%
800,000
Est. Fall 2009 25%
700,000 % Growth from 2008
600,000 20%
17%
17%
500,000
12% 15%
400,000
300,000 Credential Est. Fall 2008 Online Share Est. Fall 2009 Online Share 10%
Associate 375,000 7.8% 486,000 10.1%
200,000 Bachelor’s 711,000 7.1% 835,000 8.3%
Master’s 438,000 20.9% 510,000 24.4% 5%
100,000 Doctoral 46,000 11.8% 52,000 13.3%
0 0%
Associate Bachelor's Master's Doctoral
© 2009 Eduventures, Inc. 4

5. What Factors Are Likely to Shape the OHE Market Moving Forward?
Credential Key Market Influences & Expectations
Strong growth expected as a result of:
(a) Growth in the adult learner age demographic, particularly ages 25 to 34
Overall (b) Federal policy initiatives and economic stimulus funding creating
incentives for adult learner, career transition, and online programming
(c) Credential inflation driving working professionals to seek more advanced
degrees
Very strong growth expected as a result of:
(a) Current prevalence of online courses at community and junior colleges
Associate (b) Recent federal policy activity focused on community colleges
(c) Success of online two-year schools such as Axia College and Rio Salado
College
Steady growth expected as a result of:
(a) Ongoing strength in the bachelor's degree completion market
Bachelor's (b) Continued lack of evidence on likelihood of increased online enrollment
among traditional aged college students, however, makes projections
difficult
© 2009 Eduventures, Inc. 5

6. What Factors Are Likely to Shape the OHE Market Moving Forward?
Credential Key Market Influences & Expectations
Very strong growth expected as a result of:
Master's (a) Increasing number of adult learners
(b) Previous strength and success of the online master's market
Strong growth expected as a result of:
(a) Emergence of clinical doctorate degrees as professional norm in various
fields (e.g., physical therapy, nursing practice)
Doctorate
(b) Previous growth and success in online doctoral market
(c) Online penetration at the master’s level, coupled with general credential
inflation, may generate demand for online doctoral programs
© 2009 Eduventures, Inc. 6

7. • Explaining Growth in the Online Higher
Education Market
• The Role of For-Profit Providers
• A Closer Look at Growth Sectors: Markets
and Programs
© 2009 Eduventures, Inc. 7

8. For-profit share of online market has increased, spurred by greater
demand, constrained nonprofit supply, and for-profit marketing
Est. Online Headcount by Control, Fall 2009
50% 48% 49%
Control Public For-Profit Private
46%
45% Fall 2008 865,000 700,000 225,000
42%
40% 39% 38%
Fall 2009 989,000 895,000 255,000
% change 14% 28% 16%
35%
Higher Ed, 73% 9% 18%
Fall 2009
30%
Fall 2014F 1,950,000 1,500,000 520,000
25%
20%
Fall 2008
15%
12% 12% 13% Fall 2009
10%
Fall 2014F
5%
0%
Public For-Profit Private
Source: IPEDS, school data, Eduventures analysis
© 2009 Eduventures, Inc. 8

9. For-Profit Higher Education: Central to Expanding Participation
Undergraduate Students Aged 25+
700,000 666,176
Net Gain 1997-2007
600,000
For-Profits= 77% of net gain
500,000
403,441 In 2007, without for-profits, 4-year
400,000 schools enrolled 50,000 fewer
undergraduates aged 25+
300,000 compared to 1997
190,189
200,000
107,319
100,000
40,628
14,841
0
For-Profit 4- Public 2-Year For-Profit 2- Private 4-Year Private 2-Year Public 4-Year TOTAL
Year Year
-100,000 -90,242
Sources: IPEDS data and Eduventures analysis
© 2009 Eduventures, Inc. 9

10. Similar, if Less Striking Evidence at Graduate Level
Graduate Students Aged 30+
Net Gain 1997-2007
300,000 270,998
250,000
200,000 For-Profits= 47% of net gain
150,000 126,264 122,481
100,000
50,000 22,253
0
For-Profit 4-Year Private 4-Year Public 4-Year TOTAL
Sources: IPEDS data and Eduventures analysis
© 2009 Eduventures, Inc. 10

11. • Explaining Growth in the Online Higher
Education Market
• The Role of For-Profit Providers
• A Closer Look at Growth Sectors: Markets
and Programs
© 2009 Eduventures, Inc. 11

12. Participation Rates, Population Patterns Signal Online Opportunity
25% Higher Ed Students by Age- Fall 2008 U.S. Population by Age- July 2008
Est. Online Headcount %
22%
21%
20%
19%
16%
15%
10%
9% 9%
5%
3% 0.2%
1%
0%
Age 18-19 20-21 22-24 25-29 30-34 35-39 40-49 50-64 65+
Key takeaway. U.S. higher education remains a fundamentally front-loaded system, with the 18-25 age
band vastly over-represented. The online higher education market is concentrated in age bands where
participation and population are most closely aligned. In absolute numbers, the 18-24 band (participation)
and 50+ band (population) look attractive, but historically have either been unreceptive to online programs or
to higher education generally. To sustain growth, online must develop current markets and seek new ones.
Online Opportunities? 1) Build on online interest in 25-49 band to grow participation (develop fields,
credentials, differentiate to build market share); 2) Attract key segments of 18-24 band, including “traditional”
graduate students, to online; 3) Grow 50+ demand; 4) Diagnose unmet subgroup demand (gender, ethnicity)
© 2009 Eduventures, Inc. 12

13. Est. Online Bachelor’s Market- top 10 unchanged from 2008 to 2009; most
with average or better growth; handful of fields with real penetration
300,000 30%
Best Growth: Criminal Est. Online Headcount, Fall 2009
257,400 27%
Justice and Education- c.22% Est. % Growth from Fall 2008
250,000 25%
Est. % Online, Fall 2009
200,000 20%
19%
16%
150,000 15%
14%
13%
98,600 12%
100,000 48,800 10%
73,200 9%
62,640 8%
6% 41,760 6%
50,000 28,250 25,850 25,740
5%
16,660
0 0%
Field of study skew- vulnerability or opportunity? At bachelor’s level overall, these ten fields
represent c.55% of enrollment. In Fall 2009, these fields represent c.81% of online enrollment. The
online market is steadily broadening by field of study, but remains very skewed by enrollment
volume. Outside the top 10, no major field stands out as up-and-coming. Greater diversification is
visible within key fields compared to total field range. This skew may signal longer-term growth
limitations, as well as opportunities for disciplinary innovation.
© 2009 Eduventures, Inc. 13

14. Est. Online Master’s Market: top 10 unchanged from 2008 to 2009; business
and education dominate, but online is mainstream in other fields, too
140,000 50%
Est. Online Headcount, Fall 2009
117,000 45% Est. % Growth from Fall 2008
45%
120,000
105,300 Est. % Online, Fall 2009 41% 40%
100,000 35%
30% 30%
80,000
26%
23% 24% 25%
60,000
19% 19% 20%
19%
40,000 33,320 15% 15%
25,080
19,210 19,200 17,700
10%
20,000 12,650
9,360 6,900 5%
0 0%
Master’s programs remain by far the most developed online higher education market: master’s
programs offer the best combination of student maturity, short length, career focus and institutional comfort
with experimentation- hence often very high online penetration. The big question is how deep might online
penetrate, particularly in fields where online is already thoroughly mainstream. Outside the top 10, no major
field stands out as up-and-coming. Compared to bachelor’s level, the online market is somewhat less
skewed by field of study (c.72% v. 81% for top 10 fields by enrollment). This skew is in fact not much greater
than for the top 10 fields in the master’s market in general- c.65% of enrollment.
© 2009 Eduventures, Inc. 14

15. The Stimulus Package Presents Opportunities over the Next Few Years
for Distance Learning Providers to Develop Programs Targeted at the
Needs of New Market Segments
• The stimulus seeks to spur workforce development in key growth sectors and
address broader infrastructure concerns:
– $3 billion for the Workforce Investment Act
• Targeting workforce development in energy efficiency, healthcare, teacher training/educational
technology, and green jobs
– $7 billion for investment in broadband access, particularly in rural areas
• Designed to spur economic development more generally, but targeting telemedicine and distance
learning
• Community computer centers and training improved technology access for rural populations?
• Echoing the educational initiatives from the early months of the
Administration, ARRA funding is likely to generate opportunities for online
higher education providers to:
– Attract new market segments through programs to serve targeted /innovative industries
– Forge industry and government alliances
© 2009 Eduventures, Inc. 15