It may not be immediately apparent amidst the ongoing national political discourse around school re-openings, but online education has formally begun its transition from a niche product to an essential element of the college experience. Out of necessity, universities and students are embracing education technology to ease their way into online learning. That’s sending massive amounts of capital into EdTech companies. In venture capital circles, EdTech is also attracting more investment than other sectors. This makes for a perfect storm that could give EdTech a greater share of the education market permanently.
Related ETFs: Global X Education ETF (EDUT)
The evolution of educational technology has been steady, though not particularly remarkable, up until this point. In classrooms once dominated by blackboards and textbooks, interactive whiteboards have slowly come to replace chalkboards, while increasing number of students have been showing up at school equipped with iPads in place of textbooks.
In our February 27 DIBs report on EdTech, MRP remarked that “today’s coronavirus outbreak may do for educational technology (edtech) what SARS did for ecommerce.” The report also made reference to Michael Trucano, a World Bank specialist on education and technology policy, who in 2014 had described the importance of “tipping points” to push educational technology into the mainstream, adding that an epidemic could be the catalyst for such a paradigm shift. It would seem that Mr. Trucano’s argument stands.
History may look at 2020 as the turning point, when an educational format that has changed little over several millennia took a giant leap forward. While it may not be immediately apparent amidst the ongoing national political discourse around school re-openings, online education has formally begun its transition from a niche product to an essential element of the college experience. That’s because universities, students, and the investment community are all embracing education technology at the same time, each of them for different reasons.
As such, massive amounts of money is going into the sector, capital that EdTech firms can use to streamline their offerings and increase market penetration. As schools and students invest time and resources to ease their way into online learning, some habits and educational programs built around virtual learning will stick, giving the industry staying power even after the COVID-19 pandemic has burnt out.
A Quick History on U.S. Online Learning
The U.S. first institution to offer degrees online was Jones International University in 1993. By 2010, more than 2 million students — a tenth of all college students, many of them adult learners and members of the military — were enrolled in for-profit online institutions. The industry collapsed after 2012 when investigations and lawsuits revealed fraudulent practices, low graduation rates, high levels of student indebtedness and poor career placement records.
An article on Quartz explains that, while traditional universities could have filled the gap at the time, they were occupied with a different agenda: expanding universal access to high-quality education through massive open online courses (“MOOCs”). Hundreds of courses from the nation’s top universities were…