Unpacking 3 major trends in ed tech and for-profit education

Over the past few weeks, CEOs of major education companies have briefed analysts on their most recent financial quarters. And some of them dropped major news during earnings calls. 

That includes education company 2U, which announced it was parting ways with the University of Southern California — one of its oldest and largest clients — on most degree programs they worked on together. 

Meanwhile, the CEO of Grand Canyon Education accused the U.S. Department of Education of retaliating against the company by slapping a $37.7 million fine on its largest client, Grand Canyon University. Brian Mueller, who also serves as the university’s president, said the institution has endured government retaliation due to an ongoing lawsuit against the department. 

Company leaders also gave insight into how the ed tech and for-profit college sectors are faring. Below, we break down three trends playing out across some major public companies. 

Education companies double down on degree programs

Officials at Coursera, a high-profile MOOC platform, touted gains they made in 2023’s third quarter. That includes adding 6.5 million registered users to its platform, bringing the total to around 136 million. 

Coursera’s lesser-known business — which hosts online degree programs — also saw growth. Its degree segment rose to $11.7 million, up 13% from the year before due to rising enrollment. 

In total, more than 20,000 students are enrolled in degrees on Coursera’s platform. 

During an October call, Coursera CEO Jeff Maggioncalda said the company planned to focus on offerings called “pathway degrees.” 

These programs allow Coursera users to count open courses they complete on the platform toward credit for degree programs. Students can also be admitted to degree programs based on their performance in these courses, Maggioncalda said. 

Coursera recently announced it had built several of these pathways to master’s degrees offered by Illinois Tech. Coursera users can now complete professional certificates offered on the website — including from Google, IBM and Meta — as credit toward these programs. 

2U is also continuing to focus on its degree business, although revenue was flat for this segment in the third quarter, at $137.6 million. 

Company officials remain optimistic about the degree business. 2U announced this month that it struck deals with six colleges to help them launch and run 50 new degree programs, most of which will debut next year. 

Alternative credential offerings were a mixed bag

During the third quarter, Coursera’s overall revenue skyrocketed 21% year over year to $165.5 million. Officials attributed part of the increase to strong demand for professional certificates on its platform, including new offerings from Microsoft and Amazon. 

Coursera also expanded its work with the University of Texas System by giving its 240,000-plus students and affiliates access to the company’s Career Academy, a skills training platform for colleges and companies. The academy provides access to over 40 professional certificates. 

“These certificates are being integrated into the curriculum and often offered as career electives for credit for students pursuing traditional degrees,” Maggioncalda said last month. 

Udemy, another MOOC platform, also saw increases during the third quarter. Its total revenue increased to $184.7 million, up 17% compared to the year before. 

Most of the company’s gains were driven by its Udemy Business segment, which gives employers access to online courses to help train their workers. Revenue for this segment jumped 30% compared to the year before, rising to $109.1 million. 

However, 2U’s alternative credentials didn’t fare as well.

The company’s alternative credential revenue fell to $92.1 million in the third quarter, down 3% from a year prior. 

The company attributed the decline to lower enrollment in its coding boot camps, though 2U CEO Chip Paucek said other programs — such as those in data — saw growth. 

“Coding itself is where the problem was,” Paucek said. “We think that that is related to coding jobs in the market, and I’m sure influenced some by AI.”

Enrollment ticks up at for-profit colleges

Several public companies operate for-profit colleges, offering a glimpse of how these types of institutions are performing. During the most recent financial quarter, many of those colleges reported big enrollment gains.

That includes American Public Education, which runs the American Public University System, Rasmussen University, the Hondros College of Nursing and Graduate School USA. All but one of those institutions saw gains, helping boost the company’s revenue to $150.8 million for the quarter. 

American Public University System, which encompasses two for-profit colleges, accounts for most of the company’s enrollment, with roughly 90,000 students. Its net course registrations increased 8% compared to the year before, according to the company’s estimates. 

However, Rasmussen University — which has 13,500 students — saw a 10% decline. 

Adtalem Global Education also experienced enrollment growth. The company, which owns Walden and Chamberlain universities, saw a 1.9% year-over-year enrollment increase, bringing headcounts to over 80,000 students. 

Strategic Education, the owner of Strayer and Capella universities, is another for-profit college giant. Enrollment at those two institutions rose above 82,000 students during the third quarter, up 9.9% compared to the same period last year. 

Grand Canyon Education doesn’t own any for-profit colleges. 

However, the educational services company’s biggest client is Grand Canyon University, which the U.S. Department of Education treats as a for-profit college for Title IV financial aid purposes. The company takes 60% of the university’s tuition and fee revenue. 

The university’s enrollment rose to around 118,000 students by the end of September, up 6.6% compared to the year before. 

Perdoceo Education Corp. was an exception. 

Both of its institutions, American InterContinental University System and Colorado Technical University, had third-quarter enrollment declines. The drop was especially dramatic at the university system, whose enrollment plummeted 34.2% year over year to 10,000 students.