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December 18, 2009, 04:00 PM ET

New Report: For-Profits Gobble Up More of Online Market Amid Recession

Regulatory heat. Loan default worries. Bad publicity.

That's the storyline about for-profit colleges lately, but here's some other news: They just keep gobbling up the online-education market.

According to new research from the consulting firm Eduventures, for-profits' share of the 2.1-million-student online sector rose from 39 percent in 2008 to 42 percent in 2009, as the recession drove students back to college and severe budget cuts strained public universities.

That may not seem like a big increase, but you can see how skewed that online penetration is when you compare it with for-profits' chunk of the total higher-education market: about 9 percent. And consider that for-profits' share had been projected to stabilize or even shrink.

Meanwhile, says Richard Garrett, managing director at Eduventures, some nonprofit online pioneers “have stalled.”

"It’s just more competition," he says, "and compared to the biggest for-profit players, no comparable means to spend their way out of it."

Comments

1. arrive2dotnet - January 05, 2010 at 06:54 pm

One reason that for-profits may have an advantage in gaining market share is that it may be easier for prospective students to get into them. Potential students may feel they do not have the level of credentials required for admission by nonprofit and public colleges ... but at the same time these potential students may feel that they HAVE the will and ability required to earn the degree ... if they could get in. I wonder how many students aren't accepted by the nonprofits and publics, and how many may be dissuaded from applying by published admission requirements. Indeed, the publics and nonprofits may not be in the same market segments as the for-profits. The publics and nonprofits, and for-profits may all be in the GPA=3+ segment, where maybe the for-profits are also heavily in the GPA

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