Concentrated or Fragmented? The U.S. Market for Online Higher Education

Abstract

As the financial challenges facing the U.S higher education industry mount, colleges and universities seek new activities that can improve their financial situation. Online education programs are often viewed as a promising option due to growing student interest and the substantial net revenue generated by early entrants that leveraged economies of scale and scope. The number of schools that can experience similar outcomes will depend upon whether the online market is primarily concentrated, with a small number of higher education institutions enrolling most students, rather than fragmented, with large numbers of institutions enrolling meaningful amounts of online students. We examine this topic by providing the first detailed study of market concentration in online education. We first introduce a theory from economics, Sutton’s model of endogenous fixed costs, to the higher education literature to highlight key dynamics that shape concentration levels. Using institution-level enrollment data for the population of Title IV postsecondary institutions, we then empirically examine concentration levels in online education. We find that relative to in-person education, national online enrollment patterns are heavily concentrated. The online market has a distinctive structure, consisting of a small number of large national providers and a large number of small local providers. Online enrollment patterns became less concentrated between Fall 2012 and Fall 2018 due to major enrollment declines of large for-profit providers. Concentration levels, however, plateaued by the end of the period due to rapid enrollment growth at large national nonprofit providers.

Pressure to Plagiarize and the Choice to Cheat: Toward a Pragmatic Reframing of the Ethics of Academic Integrity

“…Increased financial strains on universities may also incentivize them to reduce costs and increase revenues. To address financial challenges, universities may consider increasing throughput using strategies to decrease time to degree (TDD) or increase online course delivery [36,37]. Shortening the time-to-degree (TDD) can be framed as a way to help both students and universities.…”

“…Denning, Eide, Mumford, and Sabey suggest that the decreasing time to degree must come from the supply side, or the university side, of the relationship because the demand side is seeing an increase in factors that lengthen TDD [43]. Other ways to increase throughput include offering more large classes like large lectures or online classes [37]. In a systematic review, Fehrman and Watson raise concerns about the quality of high throughput pedagogy, like asynchronous online discussions, because there is little agreement on alternatives or best practices, especially for newer online modalities [44].…”

Digital quality’s role in US online higher education

“…An online course may include a requirement that students and teachers meet once or periodically in a physical setting for lectures, labs, or exams, so long as the time spent in the physical setting does not exceed 25% of the total course time (U.S. News, 2010). US online higher education is defined as an industry (Cheslock and Jaquette, 2022) that comprises stand-alone US colleges and universities that do not offer traditional degree programs in a face-to-face (F2F) format but rather rely exclusively on online course delivery formats (OHEIs).…”

“…News, 2010). US online higher education is defined as an industry (Cheslock and Jaquette, 2022) that comprises stand-alone US colleges and universities that do not offer traditional degree programs in a face-to-face (F2F) format but rather rely exclusively on online course delivery formats (OHEIs).…”

The business models employed by U.S. colleges & universities

“…The for‐profit 4‐year category contains a handful of large national online institutions enrolling tens of thousands of students and a much larger number of small local in‐person institutions whose enrollments number in the tens or hundreds. These large institutions gain greatly from the economies of scale present in online education but must spend heavily on marketing and recruitment to maintain their enrollments (Cheslock & Jaquette, 2022; Cellini & Chaudhary, 2020). Public 2‐year institutions also vary dramatically by enrollments, but the business models for these institutions are not as influenced by enrollment size.…”