Online Learning Set for Explosive Growth as Traditional Classrooms Decline

• By David Nagel
• 01/26/11

By 2015, 25 million post-secondary students in the United States will be taking classes online. And as that happens, the number of students who take classes exclusively on physical campuses will plummet, from 14.4 million in 2010 to just 4.1 million five years later, according to a new forecast released by market research firm Ambient Insight.

Blended and Online Learning Growth
The report, "The US Market for Self-paced eLearning Products and Services: 2010-2015 Forecast and Analysis," predicted a five-year compound decline of 22.08 percent per year in students attending traditional classrooms exclusively. The number of post-secondary students taking some (but not all) classes online will grow at a compound annual rate of 11.08 percent over the same five-year period, from 12.36 million in 2010 to 21.13 million in 2015. But the real growth will be seen among students taking classes exclusively online. Ambient predicted a five-year compound annual growth rate (CAGR) of 23.06 percent in that area, from 1.37 million in 2010 to 3.86 million in 2015.

By that time, the number of students taking classes exclusively online will be nearly equal to the number taking classes exclusively on a physical campus, with a gap of just 240,000 students (a figure that represents less than 1 percent of the entire forecast post-secondary student population, including degree-granting institutions, vocational training schools, continuing education institutions, etc.)

Further, according to the report, "If this trend continues, by 2018, there will be more full time online students than students that take all their classes in a physical classroom."

Top Institutions for Online Enrollment
The report also indicated that despite the high five-year compound annual growth figures, the annual growth of full-time and part-time online enrollments at the top-10 institutions seems to have slowed in the last two years, while growth at some of the smaller institutions accelerated. The report characterized the larger institutions as "pioneers in online learning with large numbers of students" that are "approaching enrollment saturation points" and aligning with previous forecasts.

In terms of the top institutions for full-time enrollment, all of the institutions in Ambient Insight's top-5 continued to experience growth over the last two years, though that growth declined for all but one.

• American Public Education, which continued to be the largest institution in terms of full-time enrollments, climbed 31.3 percent from 2009 to 2010 (77,700 total), compared with growth of 49.2 percent from 2008 to 2009.
• Bridgepoint Education, in the second slot, saw the greatest growth among the top institutions in the same period, increasing 40.7 percent from 54,800 online enrollments in 2009 to 77,100 by the end of 2010. That growth, nevertheless, was a sharp dropoff from the 101 percent single-year growth experienced from 2008 to 2009.
• At No. 3, UMassOnline grew 14.5 percent to 45,800 in 2010. The institution had experienced 18 percent growth the previous year.
• On the heels of 17.1 percent growth from 2008 to 2009, Walden University experienced a smaller 12.6 percent growth from 2009 to 2010, climbing to 45,600 enrollments.
• Rounding out the top-5, Liberty University was the only top institution to see increased growth in the two-year analysis. Liberty U grew 24.3 percent from 2009 to 2010, reaching an enrollment level of 45,000. It had experienced significantly less growth, 15.6 percent, in the previous year.

A similar pattern emerged for the top institutions for part-time online enrollments, according to Ambient Insight. All of the institutions in the top-5 continued to experience healthy, double-digit growth from 2009 to 2010, just slightly less healthy than the growth experienced from 2008 to 2009.

• University of Phoenix Online experienced 16.8 percent growth from 2009 to 2010, down from 22.3 percent growth the previous year. Total enrollment of students taking at least one class online in 2010 was a dominant 362,500.
• State University of New York Learning Network saw 13.9 percent growth from 2009 to 2010, off slightly from the 17.6 percent growth experienced the previous year. Its total enrollment in 2010 was 111,400.
• The Ohio Learning Network saw 17.9 percent growth in 2010, down from 25 percent growth from 2008 to 2009. Its 2010 online enrollment figure was 110,400.
• Kaplan University experienced the greatest amount of growth among the top institutions at 36.4 percent from 2009 to 2010. It had experienced growth of 47 percent from 2008 to 2009. Its 2010 online enrollment figure was 75,000.
• Finally, DeVry experienced a substantial 18.1 percent growth in 2010, off from the 26.7 percent growth it experienced in 2009. Total 2010 online enrollments were 66,500, Ambient Insight reported.

Further details about the top institutions are available in Ambient Insight's report.

The report also spotlighted some of the smaller online institutions, many of which are also experiencing double-digit growth in enrollments. Some are using partnerships with commerical suppliers to accelerate that growth further. Ambient Insight Chief Research Officer Sam S. Adkins also pointed to a creative partnership between the state of Indiana and Western Governors University.

"An interesting partnership is the deal between the state of Indiana and Western Governors University (WGU) forged in August 2010," . "WGU set up a private portal called WGU Indiana allowing Indiana to launch an online school with very little upfront capital. WGU Indiana operates at no cost to the state. The Indiana governor refers to the new online school as 'Indiana's eighth state university.' As of January 2011, enrollment had tripled to reach 800 students, mostly working adults, just six months after launch. WGU Indiana indicates they are adding 'nearly 100 new students each month.' This is a unique business model that should appeal to other states if it is successful.”

E-Learning Expenditures Booming
Adkins said that all of this growth will help propel expenditures on electronic learning products in higher education to unprecedented levels (though it won't be the only factor driving spending).

The report focused on expenditures by academic institutions, businesses, and other organizations on a category of electronic learning products that Ambient Insight refers to as "self-paced e-learning products," which includes learning management, classroom management, and learning content management systems, along with student information systems and hosted learning platforms, among others. This category does not include mobile learning, gaming, or several other major e-learning categories. (Ambient Insight's detailed methodology and category definitions can be found here.)

In higher education in the United States, according to Ambient, expenditures on these types of products will grow at a five-year CAGR of 6.7 percent, reaching $6.1 billion by 2015. Combined with K-12, academic institutions in the United States alone will account for $11 billion in expenditures in this category by 2015.

Higher education isn't the only segment experiencing growth in electronic learning expenditures. Across all industry segments, the market for these electronic learning products and services grew to $18.2 billion in the United States in 2010. That overall figure will climb to $24.2 billion in 2015, according to Ambient Insight's latest forecast--a relatively modest 5.9 percent compound annual growth comparable to that of Western Europe but lagging far behind Asia (at nearly a 30 percent five-year CAGR from 2010 to 2015), Eastern Europe (nearly 25 percent CAGR), Latin America (about 18 percent CAGR), and Africa (roughly 17 percent CAGR). Ambient said Asia's growth rate will propel it to become the second-largest consumer of these types of electronic learning products by 2015, just ahead of Western Europe and just behind North America.

Ambient Insight's latest report, "The US Market for Self-paced eLearning Products and Services: 2010-2015 Forecast and Analysis," is available now from Ambient Insight for $4,825 for an organizational site license. Further information, including a free executive summary with additional details, can be found here.