A Surprising Victim Of Online Learning

mba online

As technology continues to fuel vast changes in higher education, who would have thought that the most ravaged victim to date would be the institution that was a pioneer in distance learning?

The University of Phoenix, the often maligned for-profit educational player, has suffered a massive decline in enrollment, revenue and profitability in recent years as increasing numbers of students flock to the online offerings of traditional universities.

The contrast between the decline of the University of Phoenix (UoP) and the rise of Massive Open Online Course providers (MOOCs) is remarkable. I would not suggest that the latter is the cause of the former, or that every student UoP lost went to a MOOC provider, but certainly MOOCs and online degree programs, with their ability to significantly lower the cost per student, are the principal causal factors in the upheaval occurring in post‑secondary education.

The chart below shows the remarkable damage done: A 45% decline in UoP’s average degreed enrollment and 61% decline in new degreed enrollment over the past five fiscal years.



The table below shows, in addition to the enrollment decline, the 41% reduction in revenue and 66% reduction in operating profit.


In contrast, consider the table below that shows the growth of the three most popular MOOC providers: Coursera, EdX, and Udacity, all of whom have attracted millions of users in less than three years from a standing start.


UoP’s publicly available financial report for the fiscal year ending August 31, 2014 provides an extremely insightful comment on the competition ravaging the industry:

“The higher education industry is also experiencing unprecedented, rapidly developing changes due to technological developments, evolving needs and objectives of students and employers, economic constraints affecting educational institutions and students, price competition, increased focus on affordability and other factors that challenge many of the core principles underlying the industry. Related to this, other education providers are testing and adapting new education and operating models focused on reducing costs, time to education outcomes and operational complexity. These recent innovations include competency based and adaptive learning, intensive skill focused boot camps and career pathways, tools and services. In addition, an increasing number of traditional four‐year and community colleges are offering distance learning and other online education programs, including programs that are geared towards the needs of working learners. This trend has been accelerated by private companies that provide and/or manage online learning platforms for traditional four‑year colleges and community colleges. As the proportion of traditional colleges providing alternative learning modalities increases, we continue to face increasing competition from traditional colleges, including those with well‑established reputations. Already, this type of competition is significant. As the online and distance learning segment of the postsecondary education market matures, we believe that the intensity of the competition we face will continue to increase.”

In the fall of 2014, Georgia Tech, in collaboration with Udacity and AT&T, launched a one‑year masters degree in computer science, online, degreed program targeted at highly qualified students unable to attend an on‑campus program that would be, ostensibly, the same as the one offered on-campus except for one important factor. The cost of obtaining the Georgia Tech degree would be $6,600 instead of the $46,000 out‑of-state tuition expense for an on-campus degree. Some 1,286 degree candidate students enrolled in the program, more than quadruple the number of on–campus enrollees.


Questions about this article? Email us or leave a comment below.