Special Report
Federal

E-Learning Industry Evolving

By Katie Ash — March 24, 2009 8 min read
  • Save to favorites
  • Print

Even in today’s gloomy business climate, market experts predict that the K-12 online education industry will continue to grow, albeit at a somewhat slower pace, as rapidly increasing enrollments in virtual schools begin to taper off and the country’s economic troubles persist.

“Because the market is growing as fast as it has been, we’ve had plenty of access to capital in a time when so many other companies are seeing diminished access to capital,” says Caprice Young, the chief executive officer of the Portland, Ore.-based KC Distance Learning, a company that provides distance-learning programs for high schools. “And that makes it possible for us to build the kinds of high-quality products and services we provide to schools.”

According to a September 2008 education industry report published by the Toronto-based BMO Capital Markets Corp., a financial-services company, “the virtual school market, while still relatively new, has been growing dramatically” and will likely continue to grow at a moderate pace. The report cited increased enrollments in K-12 virtual schools, as well as other factors, such as an increase in the number of home-schoolers and students interested in online-only Advanced Placement courses.

The economic downturn will likely slow the growth in the industry, says Jeffrey M. Silber, a managing director in New York City for BMO Capital Markets. But while state and district funding levels for students may flatten, enrollments in virtual schools will likely continue to grow, although not as quickly as in past years.

James Maher, a senior research analyst for the San Francisco-based investment bank ThinkEquity LLC, who specifically follows K12 Inc., a Herndon, Va.-based provider of online-learning services, agrees that the virtual school market is growing.

“I think the opportunity to use online delivery for at least some of the curriculum for K-12 [public education] is likely to be something that gets embraced more going forward,” he says. “It may be challenging right in the midst of budget difficulties, but over time it permits a school district to have more flexibility and capacity.”

Plus, more districts may turn to private providers for online education services as a way to save money, says Terry M. Moe, a professor of political science at Stanford University and the co-author of a forthcoming book about technology and education called Liberating Learning.

“If the districts literally don’t have the money to have their own physics class, then private providers can come in,” Moe says. “The main cost in education is personnel, and it is a huge advantage of technology that it is cheap compared to the cost of the labor of teachers, and distance learning involves a much smaller number of teachers per student.

“If it’s done right, over time the cost will go down even more dramatically,” he says.

But before districts decide to partner with private, third-party providers for online curricula or other services, it is imperative that school officials do extensive background research on the services and set up a system of continuous oversight, cautions William R. Thomas, the director of the Atlanta-based Southern Regional Education Board’s Education Technology Cooperative.

“There are some private-sector companies just out to make a dollar,” he says. “Their primary motivation is profit, so they will cut corners in terms of the teacher or the teacher’s qualifications, or the way that the course is designed.”

As long as there is enough communication and evaluation, however, “outsourcing to a third-party provider makes a huge amount of sense,” says Thomas.

Barbara J. Dreyer, the president of the Baltimore-based Connections Academy, which provides virtual education services to 16,000 students in 14 states, argues that private companies have a strong incentive to provide high-quality, effective learning tools because their future depends on it.

“We have the students, we have the families, we have the teachers, we have the legislative community, and we have whatever regulatory authority is involved, and we have to try and give them what it is they want,” she says. “If we’re not giving them what they’re looking for, they’re not going to pay us anymore. It gives you a much more deliberate focus.”

But while partnerships between private companies and school districts can be beneficial for both parties, districts should ask critical questions and do their research before signing any contracts, says Pamela H. Ice, the online-support director for the Colorado Department of Education.

“Third-party providers are creating curriculum at a national level, so they’re trying to meet the needs of a whole nation,” says Ice. As a result, “individual states or districts must do their own alignment with their state standards.”

Most companies have software programs that will align their curricula to state standards, says Ice, but even then educators should manually go through the materials, “because there are going to be some holes.” And while some companies allow school districts to tweak the curricula, others don’t, she says.

Similarly, for districts or states that are considering using comprehensive virtual education services—including curriculum, teachers, and support services—she says school officials need to take a hard look at the structure of the organization and make sure it fits with district and state policies.

“When you sign a contract with a third-party provider, and it’s one of those turnkey solutions, they’re in control,” Ice says. “You really need to have a clear idea and a clear understanding of what’s in your control and what’s not in your control in order to really make an informed decision.”

Unlike most public school districts, which are required to balance their budgets every year, companies in the private sector can make bigger investments in research to create high-quality products, says Ron Packard, the chief executive officer of K12 Inc., which works with more than 55,000 students in 21 states.

“The amount of capital and expertise [in the private sector] is tremendous,” he says, and that money can be leveraged from the private sector to improve public education.

Charles Thornburgh, the president of the Hollywood, Fla.-based Kaplan Virtual Education, agrees that the budget constraints on school districts keep them from investing the money and time needed to start a program such as a virtual school and see the payback.

“It’s a cost-intensive process. That kind of investment is difficult for a school district to make when they have to balance their budget every year,” he says.

Private companies can afford to take a longer-term perspective, he says, which allows them to earn back the investment over five or 10 years.

And after the curricula are created, companies can contract out to provide those services at a lower cost than if school districts were to build the content on their own, says Cheryl Vedoe, the executive director of the Seattle-based Apex Learning, which provides online curricula for students.

“One of the greatest benefits of online education is that it has the potential to be a very cost-effective way for learning opportunities for students who otherwise wouldn’t be able to take those classes,” she says.

But although contracting out services may be a cost-effective option for districts, Young, from KC Distance Learning, warns against turning to online education options solely to save money.

“Lots of states are under the misperception that online learning is less expensive,” she says. “But really, the investment is in a different place. Instead of investing in bricks and mortar, we’re investing in technology,” as well as teacher training and one-on-one coaching, she says.

Another advantage of partnering with private companies, says Packard of K12, is the ability to scale instruction.

K12, for example, offers a range of services from providing learning assistance to a handful of struggling students in one district to supplying curricula, teachers, and operational support to entire schools, he says.

“Although,” he adds, “sometimes the policies have not kept up with the demands.”

One state policy that Young, from KC Distance Learning, believes legislators should avoid is capping the number of online education providers allowed in the state.

“That’s exactly the wrong thing for them to do if they want to improve quality. That guarantees that the companies [that are already there] are not going to do any better,” she says.

Private companies also have more flexibility to change, says Dreyer, from Connections Academy. “We can see what’s working and what’s not,” she says and quickly adapt to improve the program.

“It’s the difference between the speedboat and the aircraft carrier,” Dreyer says. “It’s not easy to change when you may have thousands of teachers involved.”

Still, experts caution schools not to embrace the speed of change unless it clearly leads to improvement. Because online learning is still a relatively new development in education, especially at the K-12 level, researchers are just beginning to evaluate its effectiveness. As it is, there are no definitive studies proving that e-learning is more effective than traditional learning.

Experts such as Ice recommend that schools ask lots of questions upfront and avoid making hasty decisions about going in this direction. "[Third-party providers] really do provide some valuable resources, and districts just need to do their homework so that it can be an optimal education opportunity,” she says.

Dreyer points out that if you look at higher education, online education started with private companies, and that movement continued to grow because of increased student demand.

“That’s why, ultimately, even though [the K-12 sector] is much bigger, and it has the unions and bureaucracy, which makes it much harder to change than higher ed was, it was the student demand,” she says, that was the catalyst in higher education, “and I think you’re going to see that same thing really kick in in the K-12 space.”

Events

Jobs Virtual Career Fair for Teachers and K-12 Staff
Find teaching jobs and other jobs in K-12 education at the EdWeek Top School Jobs virtual career fair.
Ed-Tech Policy Webinar Artificial Intelligence in Practice: Building a Roadmap for AI Use in Schools
AI in education: game-changer or classroom chaos? Join our webinar & learn how to navigate this evolving tech responsibly.
Education Webinar Developing and Executing Impactful Research Campaigns to Fuel Your Ed Marketing Strategy 
Develop impactful research campaigns to fuel your marketing. Join the EdWeek Research Center for a webinar with actionable take-aways for companies who sell to K-12 districts.

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Federal Low-Performing Schools Are Left to Languish by Districts and States, Watchdog Finds
Fewer than half of district plans for improving struggling schools meet bare minimum requirements.
11 min read
A group of silhouettes looks across a grid with a public school on the other side.
Vanessa Solis/Education Week via Canva
Federal Biden Admin. Says New K-12 Agenda Tackles Absenteeism, Tutoring, Extended Learning
The White House unveiled a set of K-12 priorities at the start of an election year.
4 min read
U.S. Education Secretary Miguel Cardona participates in a roundtable discussion with students from Dartmouth College on Jan. 10, 2024, on the school's campus, in Hanover, N.H.
U.S. Education Secretary Miguel Cardona participates in a roundtable discussion with students from Dartmouth College on Jan. 10, 2024, on the school's campus, in Hanover, N.H.
Steven Senne/AP
Federal Lawmakers Want to Reauthorize a Major Education Research Law. What Stands in the Way?
Lawmakers have tried and failed to reauthorize the Education Sciences Reform Act over the past nearly two decades.
7 min read
Sen. Bill Cassidy, R-La., left, joins Senate Health, Education, Labor and Pensions Committee Chairman Bernie Sanders, I-Vt., left, as Starbucks founder Howard Schultz answers questions about the company's actions during an ongoing employee unionizing campaign, at the Capitol in Washington, on March 29, 2023.
Sen. Bill Cassidy, R-La., left, joins Senate Health, Education, Labor and Pensions Committee Chairman Bernie Sanders, I-Vt., left, at the Capitol in Washington, on March 29, 2023. The two lawmakers sponsored a bill to reauthorize the Education Sciences Reform Act.
J. Scott Applewhite/AP
Federal Will the Government Actually Shut Down This Time? What Educators Should Know
The federal government is once again on the verge of shutting down. Here's why educators should care, but shouldn't necessarily worry.
1 min read
Photo illustration of Capitol building and closed sign.
iStock