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Published in Print: October 20, 2010, as E-Learning Industry on the Rise

Virtual Education

E-Learning Industry on the Rise

Online-only courses generating revenue

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The for-profit e-learning company K12 Inc. grew 40 percent last year, generating $385 million in revenue by providing virtual courses to 70,000 students across the country.

Connections Academy, another such provider, generated about $120 million in revenue serving up online courses to some 20,000 students. And recently, the education technology company Plato Learning announced that it is now offering online Advanced Placement courses, marking the first time the company will do so as part of its courseware for school districts.

Experts say for-profit providers of online courses—long seen as an option for home-schoolers and a potential rival to public schools—are breaking into the public education mainstream as more schools mix face-to-face classes and online courses to expand their curricular offerings. With demand for that “blended” approach expected to grow, other players in the online-coursetaking marketplace, such as Apex Learning, Aventa Learning, Compass Learning, and Kaplan Virtual Education, are also seeking business in public schools.

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Read a more in-depth version of this article: "E-Education Inc. Seeks the Mainstream"

“Most of the growth is in hybrid environments,” says Michael Horn, the executive director of education at the Mountain View, Calif.-based Innosight Institute and a co-author of Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns, referring to the combined use of online and face-to-face courses in schools. “There are lots of definitions of what this means.”

‘Big Question Mark’

But the growth of such companies has also attracted critics, who say schools should take a closer look at the benefits the providers tout.

This recent Education Week special report, the second in a three-part series, examines how the K-12 system is preparing, evaluating, and compensating cyber educators. It also takes a close look at the challenges teachers face when they make the transition from classroom teaching to online-only instruction.

“I haven’t seen anything in this industry that is special in terms of its pedagogy or its delivery,” says Alex Molnar, the publishing director of the National Education Policy Center, based at the University of Colorado in Boulder.

Molnar says that hooking up school districts with online courses to fill gaps in curriculum is certainly helpful, but that using for-profit companies to do so is unnecessary.

“What benefit does a for-profit entity provide over and above what could be readily provided at a university extension?” he says. “Why wouldn’t you use a nonprofit, publicly supported university that’s transparent and politically accountable?”

Henry M. Levin, the director of the National Center for the Study of Privatization in Education, based at Teachers College, Columbia University, adds that online coursetaking may be a good option for many schools and students, but that more independent research is needed, especially at the K-12 level, to evaluate its effectiveness.

For-Profit Virtual Education Providers

Apex Learning
Cheryl Vedoe, CEO

Aventa Learning*
(Part of KC Distance Learning Inc.)

Connections Academy
Barbara Dreyer, President and CEO

CompassLearning
Eric Loeffel, CEO

Kaplan Virtual Education
Charles Thornburgh, President

K12 Inc.
Ron Packard, Founder and CEO

KC Distance Learning*
Caprice Young, CEO

Plato Learning
Vin Riera, President and CEO

“It’s a big question mark out there right now,” Levin says. “More claims are being made than are justified. Both the effectiveness and the cost side of [online coursetaking] have really not been studied carefully.”

Despite such concerns, many small companies are also entering the online-course market.

“A lot of e-learning CEOs are educators,” says Susan D. Patrick, the president and chief executive officer of the Vienna, Va.-based International Association for K-12 Online Learning. “They’re looking for a better way.”

Part of that “better way,” she adds, is bringing research and development and economies of scale along, too.

That’s the aim of K12 Inc., based in Herndon, Va. Ron Packard, who has a master’s degree in business administration and once worked at Goldman Sachs, founded the publicly traded company 10 years ago.

Packard and others believe that for-profit schools offer a decided advantage: access to capital. That translates, they say, into the ability to scale up at a much faster—and more cost-effective—rate than public schools can.

The biggest challenge, though, is developing course content from scratch, which cost K12 Inc. $30 million last year. Besides the cost of developing content, money is also needed for K12’s technology needs.

Some critics have said that such content-development costs have prevented for-profit online-course providers from adding the kinds of multimedia features that are the hallmarks of high-quality online courses. They say that in many cases, traditional content is merely placed online.

Vol. 04, Issue 01, Pages 40-41

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