Program Innovation

State Champions: Sizing Up the Online Learning Contenders

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What is online learning for? In higher education, we would say: Online learning helps non-traditional students fit study around family and work responsibilities, and reduce indirect costs such as travel. Online learning means schools can reach many more students, and students have a much wider choice of schools.

But let’s pan back a bit. After years of offering online degrees, how does it play out at the state level? While there is evidence that some states are going above and beyond to leverage online learning  to widen access to higher education or address other big goals, others are not.

Why some and not others? For starters, this Wake-Up Call considers population density, specialist providers, educational attainment, and state funding. These differences matter to college and university leaders trying make decisions about their online strategy. For some schools, the appeal of online learning is the promise of reaching a national market. For most, however, the brightest future is in serving local students in new ways.

Why do some states enroll a lot more residents in online programs than others?

For simplicity’s sake, let’s focus on undergraduates at four-year schools. In fall 2015, state residents studying fully at a distance as a proportion of all undergraduates at in-state schools ranged from 0.6% in Rhode Island to 18% in Maryland. The national average was 5.5%.

The table below shows the five states with the highest and lowest ratios.

Online & Offline

  Top Five
Maryland 18.30%
Alaska 17.50%
South Dakota 13.20%
Nevada 11.20%
Florida 10.6%
  Bottom Five
New York 2.70%
Iowa 2.60%
Massachusetts 2.40%
Vermont 2.10%
Rhode Island 0.60%

Source: Eduventures analysis of federal IPEDS data

Population density.
 General population density explains a lot. High density states, such as Rhode Island, Massachusetts, and New York all exhibit low in-state, online, undergraduate ratios, while sparsely populated Alaska, South Dakota, and Nevada are at the other end of the spectrum. Distance learning isn’t called distance learning for nothing.

Then why do Vermont, Iowa, Montana, and West Virginia, all states in the bottom half by population density, report very low in-state, online, undergraduate ratios? And why are high-density Maryland, Florida, North Carolina, New Hampshire, and Ohio all top-15 states by the proportion of in-state, online undergraduates? Few residents of these states live far from a college or university.

Controlling for population alone doesn’t seem to explain very much. Alaska and South Dakota, each with about 100,000 people aged 25-34—the sweet spot for online undergraduate programs—report a 5% in-state undergraduate distance participation rate. But giant Florida, with over two million 25-34 year-olds, is not far behind at 4.2%.

At the other end of the scale, states as diverse as California, Massachusetts, South Carolina, and Vermont enroll less than 1% of state residents aged 25-34 in undergraduate distance programs.

What else helps explain state online activity?

Specialist providers. Having a big online learning institution in your backyard makes a difference. University of Maryland University College enrolls a massive 90% of Maryland’s in-state distance undergraduates at four-year schools. Southern New Hampshire University (SNHU) accounts for 72% of its in-state distance undergraduates.

Educational attainment. If online learning is a way to enroll more non-traditional students, states with lower levels of educational attainment might invest in online learning as a way to boost participation. Census data shows that the four states with the highest rates of educational attainment among 25-34 years olds—Massachusetts, New York, New Jersey, and District of Columbia—all have a low ratio of residents studying wholly online at the undergraduate level. But only two states in the bottom 10 by educational attainment—Nevada and New Mexico—are in the top 10 states by ratio of residents enrolled in fully online undergraduate programs.

It is notable that these two states have the lowest educational attainment rates in the country. Are Nevada and New Mexico using online learning as a policy tool or are residents taking the initiative?

States that confound any association between low educational attainment and high enrollment in online include Maryland and New Hampshire, which are in the top on both metrics, and West Virginia, the only state in the bottom 10 on both metrics. Maryland and New Hampshire might be viewed as using online learning to grow educational attainment from a high base, while West Virginia might be missing an opportunity.

State funding. Another lens through which to understand online learning could be state funding. State Higher Education Executive Officers Association (SHEEO) data is a reminder that many public institutions suffered major funding cuts during the Great Recession, and in most states per-student appropriations have yet to recover.

Online learning is sometimes championed as a way for schools to develop programs and serve students more efficiently. Therefore, are states with low per-student appropriations and/or sizeable reductions in funding more likely to exhibit high levels of in-state online enrollment at the undergraduate level?

Among public, four-year schools most affected by state funding the in-state, distance, undergraduate ratio ranges from less than 1% in Rhode Island, Delaware, and California, to 14% in South Dakota, 18% in Alaska, and 21% in Maryland. Alaska schools enjoy the second highest per-student funding in the nation, combining geographical distance, generous public funding, and high participation in online learning.

New Mexico, in the top 10 for residents enrolled in distance undergraduate programs, is also among the top 10 best-funded, but appropriations are down 18% per student. Is an above-average level of online enrollment evidence of performance-based funding or a cost control strategy?

It is striking that there is little obvious correlation between state funding and online enrollment. There is no overlap between the 10 states with the lowest per-student allocations and biggest funding cuts and the 10 states with the highest state resident undergraduate distance enrollment ratios among public, four-year schools.

When private nonprofit and for-profit schools are added, only New Hampshire stands out as a state with very low per-student funding, big cuts, and an above-average distance undergraduate ratio for state residents. Does this mean that SNHU’s online entrepreneurship is New Hampshire’s solution to serving more residents after cutting state funding? Is that smart? Purdue’s move to acquire Kaplan University is positioned as, in part, a way to boost degree attainment among Hoosiers.

Yes, but, if…

More to explore. This preliminary analysis just scratches the surface of understanding state online higher education trajectories and judging return on investment.

Some states appear to be leaving online learning for non-traditional students to market forces, while others are using technology to connect state residents and local providers. The data considered so far calls out a few states as leaders in ratio terms—Alaska, Florida, Maryland, Nevada, New Mexico, and South Dakota are good examples at undergraduate level—but the influence of state policy, institutional initiative and other factors need further investigation.

Where does this data come from?

In 2012, schools were first required by the federal government to report their distance students, and we now have four years of data. These days, “distance” is a good proxy for online. Institutions are still aligning definitions, so the numbers are not perfect, but it’s a good start. The distance data can be sliced by student location (in-state, other U.S., and international).

Online might encourage enrollment and widen access but be associated with high attrition. Whether online programs lower costs is a complex question; and in-state distance enrollment trends over time must be considered. Some states might see blended learning as a better fit for non-traditional students, and the best way to hold on to local markets.

What about enrollment in out-of-state schools? All the big online players, both for-profit and nonprofit, rely on out-of-state students for the bulk of their enrollment. In fall 2015, only 43% of distance undergraduates at four-year schools were enrolled at in-state schools. The State Authorization Reciprocity Agreement (SARA), which now counts 47 states as members, is designed to make out-of-state online enrollment simpler for schools and states.

State residents might be well-served online by a combination of in-state and out-of-state schools, but state officials could regard low online enrollment in public or in-state schools as an inefficient use of public money.


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