Enrollment in Online Courses Increases at the Highest Rate Ever

Despite predictions that the growth of online education would begin to level off, colleges reported the highest-ever annual increase in online enrollment—more than 21 percent—last year, according to a report on an annual survey of 2,600 higher-education institutions from the Sloan Consortium and the Babson Survey Research Group.

In fall 2009, colleges—including public, nonprofit private, and for-profit private institutions—reported that one million more students were enrolled in at least one Web-based course, bringing the total number of online students to 5.6 million. That unexpected increase—which topped the previous year’s 17-percent rise—may have been helped by higher demand for education in a rocky economy and an uptick in the number of colleges adopting online courses.

Although the survey found sustained interest in online courses across all sectors, there was a spike in the number of for-profit institutions—a 20-percent increase over last year—that said online education is critical to their long-term strategies. However, more public colleges than  private for-profits—74.9 percent versus 60.5 percent—say it’s part of their long-term plans.

Elaine Allen, associate professor of statistics and entrepreneurship at Babson College and co-director of the Babson Survey Research Group, said that the disproportionate increase in the for-profit sector may mean that online programs are becoming their “bread and butter.” Colleges are telling themselves that “if we want to grow and have profits, we need to be in the online sector,” she said.

Increased government scrutiny of the for-profit sector has complicated plans for expansion online. Approximately 32 percent of for-profit institutions—compared with about 17 percent of public colleges—said it will be difficult to comply with government regulations on financial aid. Those new regulations include a pending “gainful employment” rule that could cut off federal aid to programs with high levels of student debt relative to what students make after graduation—a move that could slash revenue for institutions dependent on student-aid money. “For the first time, we saw the government regulate financial aid and some kind of return on investment,” Ms. Allen said. “The for-profits are feeling the pressure there.”

Administrators also continue to wrestle with the question of quality in online education. According to the survey report, “Class Differences: Online Education in the United States, 2010,” 66 percent of college administrators say that online education is the same as or better than face-to-face classes—a slight decline from last year. Still, Ms. Allen said it appears that more faculty members are warming up to online education as a quality alternative to face-to-face learning and are finding new ways to use the technology.

Ms. Allen expects Web enrollment to plateau as more competitors—whether they are Web programs from established universities or from new for-profit institutions—hit the market. And for-profit colleges will probably take advantage of their more-nimble business models to expand much more rapidly online than will their government-reliant public competitors. As more budget cuts loom, public institutions are already beginning to “feel competition from the for-profits,” she said.