Technology Counts: Virtual Shift - E-Learning turns toward district-level approaches and a focus on accountability
Published Online: March 12, 2012
Published in Print: March 15, 2012, as Marketplace Adjustments

E-Learning Providers Adjust to Market, Policy Forces

By all measurements, the market for companies that provide virtual education is growing significantly.

According to the 2011 version of "Keeping Pace With K-12 Online Learning," an annual report viewed as an authoritative work in the field, full-time public virtual school enrollment grew by at least 10 percent in 16 states between the 2009-10 and 2010-11 school years. And over the stretch from 2008-09 to 2010-11, six states saw more than 100 percent growth in such enrollment.

Meanwhile, private education management organizations, or EMOs, are playing a large part in that growth. One study from the National Education Policy Center, or NEPC, at the University of Colorado at Boulder found that nationwide enrollment in full-time public virtual schools run by private companies rose from about 70,000 to just under 120,000 during that same two-year stretch. And that says nothing of those same companies' efforts in offering services to full- and part-time online students of virtual schools managed by a district or state entity.

With that expansion in the market, some companies have merged and others have risen to the fore as they seek to take advantage of the growing popularity of this form of learning. Shifts in the market are creating opportunities for e-learning companies, both startups and established companies, while also raising concerns about the quality of e-learning in a time of significant expansion.

Following is a look at how companies are reacting or adjusting to market and policy trends.

Mergers and Expansion

The nation's largest private provider of virtual learning in the precollegiate market, Herndon, Va.-based K12 Inc., purchased the virtual education division of New York City-based Kaplan Inc. in May 2011.

Then, in September of last year, Baltimore-based Connections Education—which operates the Connections Academy virtual schools, the second-largest provider in the same market—was bought by curriculum partner and longtime education publisher Pearson, which is based in New York City.

For K12's part, Chief Executive Officer Ronald J. Packard says the acquisition and other deliberate expansion all help drive increased research and development, such as a $30 million investment into a new adaptive K-5 math curriculum.

Connections Academy President Barbara Dreyer, meanwhile, says the purchase by Pearson is helpful to the virtual school endeavor because of the publisher's experience gauging the effectiveness of content and instruction.

"Pearson has deep expertise in analyzing student performance based on growth and using that information to predict a student's future performance," Dreyer says in an email. "This is the appropriate way to ultimately determine the value of our approach—i.e., does a virtual school work at least as well as what would likely have happened to the student in their previous form of schooling, while providing the benefits of the added personalization and flexibility of a virtual school."

Growth Motives Questioned

Skeptical observers of the virtual education industry, however, suggest companies have expanded while recognizing that a lack of nuanced government oversight can lead to large, quick profits.

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On the one hand, they say, models in which funding follows students when they enroll in an online school or cyber charter school don't account for the reality that, in general, full-time virtual education should cost less per student in overhead—and ultimately, less total expense—than a brick-and-mortar equivalent. Online schools often save on the cost of facilities, transportation, and even teachers—since many full-time elementary virtual school students work with a stay-at-home parent.

On the other hand, those same models allow a new virtual school to launch at a much larger scale.

"The average charter school will grow up to about 450 students," says Gary Miron, a professor of evaluation, measurement, and research at Western Michigan University's College of Education and Human Development, in Kalamazoo, and the lead author of a study from the NEPC which examined privately run charter schools, including virtual charters. "When you get a new virtual school, some of them start with 4,000 to 5,000 students," Miron continues. "They can get to scale a lot quicker."

Friendlier State Policies

Meanwhile, both advocates and critics of full-time virtual schooling say policies, particularly at the state level, are gradually becoming friendlier to virtual schooling.

According to the 2011 "Keeping Pace" report, produced by the Evergreen Education Group in Durango, Colo., 30 states and the District of Columbia offered a full-time online educational option during the 2010-11 school year, up from 27 states the year before. Meanwhile, enrollment increased by about 25 percent during the same span, from 200,000 to 250,000.

Further, states such as Florida and Idaho have joined Michigan in passing legislation that will require students in brick-and-mortar high schools to pass a set number of online courses. Some observers argue that such requirements are a way of luring more students into a fully online education, a notion public and private virtual school providers generally dispute. Regardless, the laws still expand the market for part-time virtual students.

Company-Consumer Connections

Although full-time virtual schooling has drawn more critical examination during the past year, particularly in the mainstream media, the nature of online course delivery may lessen the impact of unfavorable publicity.

The medium allows providers more direct communication with their customers and potential customers than they might have as deliverers of a pen-and-paper curriculum. That gives companies old and new more ability to control their message, regardless of whether their brand identity is well established, like that of longtime virtual education provider K12 Inc., or still emerging.

"The company itself is paying attention to the image," says Karen Billings, the vice president of the education division at the Washington-based Software and Information Industry Association. "But what I've sensed is, it's typically more important to the public itself than the users. The users of the product have a day-to-day focus on how it's helping what they're trying to do in class or in the district."

Vol. 31, Issue 25, Page 28

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