Rapid growth in online instruction could wane, study says

“There may be some clouds on the horizon,” Allen said. “While the sluggish economy continues to drive enrollment growth, large public institutions are feeling budget pressure and competition from the for-profit sector institutions.”

Impending federal regulations on for-profit colleges—which represent some of the country’s leading online programs—could hinder enrollment at institutions like the University of Phoenix, DeVry University, and Strayer University, according to the survey.

These rules—known as “gainful employment” rules—could make it more difficult for for-profit colleges to sign up students for online college classes, the Babson College study said.

The federal Education Department (ED) has pushed for stricter regulations on for-profit schools that take in billions in federal student aid every year. ED officials—along with many former students and employees—have accused for-profit schools of shady recruitment practices that burden students with loans they can’t afford to repay.

ED’s push for stronger for-profit regulations has provoked strong reactions from both sides of the issue, but the Babson study reports that an “overwhelming majority of academic leaders are neutral on whether these rules would result in a level playing field among higher-education institutions.”

Respondents from for-profit institutions were more than twice as likely as their nonprofit college counterparts to say ED’s coming regulations would have a negative impact on their campus.

Only one in 10 academic leaders said the debt-to-earnings ratio—measuring how much income a student will earn after graduation, compared with his or her student loan debt—“is a good measure of whether a school’s training leads to gainful employment.”

This argument was used repeatedly in public hearings on the “gainful employment” policy held at ED’s headquarters in Washington, D.C., Nov. 4-5.

Although “there is no compelling evidence that the continued robust growth in online enrollments is at its end,” the Babson study concludes that the way online instruction has grown could mean the enrollment momentum soon could slow.

Almost all online enrollment growth over the past year has stemmed from existing web-based programs expanding their course offerings, and not from colleges and universities launching new online education programs, the report says.