The new normal distance learning and new education options

1. THE NEW “NORMAL:”
DISTANCE LEARNING AND NEW EDUCATION OPTIONS
–
WHAT IT MEANS TO HIGHER EDUCATION AND
STUDENT CHOICE
Frank F. Britt, CEO, Penn Foster
February 2013

2. Todays Objective and Scope?
• The objective of the webcast is to provide you with an
overview of the landscape of distance learning and it’s
growing importance in higher education
 We will cover how it is changing and the implications for
existing ground based schools, and more importantly why
it is an option for a growing subset of alternative students.
• More than 6.7 million students — roughly a third of all
students enrolled in postsecondary education—took an
online course for credit in fall 2012, an upturn of nine
percent. Increasingly, distance learning is being embedded
into traditional learning programs and as a stand-alone
option for a subset of students.
• Today in the world there are many options for learning
designed for a broad range of students that offer significant
value. Understanding the potential paths will help better
tailor advice for each student and their family.
2

3. A thought to frame the
day…
“The primary aim of
education is not to only
enable students to do
well in school, but to help
them do well in the lives
they lead following
school.”*
* Raymond McNulty, Chief Learning Officer, Penn Foster and formally with
Bill & Melinda Gates Foundation, International Center for Leadership in Education

4. Today’s Agenda:
• How and Why Higher Education
Changing?
• Online and Hybrid Education: Is it real?
• How Should Students Options be Framed
in the New Education Economy?
4

5. HOW AND WHY IS HIGHER
EDUCATION CHANGING?
A marketplace poised for substantial
disruption
5

6. The “consumerization” of higher education has begun..
• Higher education is increasingly recognized as a consumer
purchase based on value translated into quality, price and
expected returns
• For lower income and at-risk students, in most
instances the decision is driven by employment needs
and the ability to secure a job
• Greater expectations for value, viable multi-channel
delivery models, and need for sustained employability
• Providers of education (colleges, universities, career schools,
distance learning, etc) are being required to justify rising
prices and provide a higher level of quality and service
commitment and a certain ROE (return on education). This is
the is the essence of the new consumer education relationship
6

7. Historically, there has been a direct link between
learning and earning. The new knowledge economy will
affirm that correlation and increase returns on higher
education
$100K
80
60
40
20
0
by Level of Education, 2011
$87K
Professional Degree
Average Annual Salary
$81K
Doctoral Degree
$66K
Master's Degree
$55K
Bachelor's Degree
$40K
Associate Degree
$37K
$33K
High-School Diploma
$23K
Some College,
No Degree
Less than a
High School Diploma
15%
10
5
0
2%
Professional Degree
3%
Doctoral Degree
4%
Master's Degree
5%
Bachelor's Degree
7%
Associate Degree
9%
9%
High-School Diploma
14%
Some College,
No Degree
Less than a
High School Diploma
Note: Salary data is for ages 25 and older; Earnings are for full-time wage and salary workers
Source: Bureau of Labor Statistics
Unemployment Rate
by Level of Education, 2011

8. However, important demographic trends and K-
12 dynamics will alter post secondary
education
• Minority populations are growing
 Hispanics: Significantly high participation of Hispanics entering
workforce as the fastest growing population with both consumer and
employment implications, e.g., multilingual solutions, etc.
 Nearly half of minority undergraduates attend community college
• High School Model Still Needs Improvement: Nearly 1 million kids
that start high school every year don't make it to graduation
 4 million children will start kindergarten this fall and only 63k will make
it to post secondary schooling
 Over a lifetime, a high school dropout will earn $200,000 less than a
high school graduate; $1 million less than a college graduate.
 A 4 year degree in STEM based upon current trends
 Common core standards for high school will raise the bar for college
and career readiness and impact student assessment and teacher
evaluation

9. In the meantime, higher education has steadily increased
tuition levels well in excess of inflation to cover higher
operating cost; changes are required to reset the value
equation
Growth in Published Tuition Fees by
Institution Type, CAGR, 2000-01 to 2010-
11
Public Private
Nonprof
it
Private
For-
Profit
Source: IPEDS; Community College Times; U.S. News & World Report; Chronicle of Higher Education; InflationData.com
Inflation rate is 2010-2011 based on CPI

10. Consumers are acting; there is accelerated growth
in those attending college to not complete a four
year degree
Only about half of the credentials awarded by
undergraduate institutions are traditional bachelor’s
degrees.
The rest are either associate’s degrees or certificates,
the vast majority of which are in applied fields.

11. In fact, certificates awards have risen 22% in
post secondary education over the past few
years*.
• Certificates are the fastest growing form of postsecondary credentials
in the nation, surpassing associate and master's degrees as the
second most common award in higher education after the B.A.
• Postsecondary certificates made up 22 percent of awarded
credentials in 2010, compared with just 6 percent in 1980. Over
that time, the number of certificates awarded annually has
increased from 100,000 to one million.
• The appeal is growing because they are affordable, take less than a
year to complete, and often lead to higher earnings, compared with
receiving an associate and sometimes even a bachelor's degree*.
• The most common occupations of certificate holders are
business/office work, transportation, health care, and metal
working, the report says.
11
* 2012, Georgetown University Center on Education and the
Workforce.

12. In response, many institutions are acknowledging the
tectonic shifts in learner’s needs and making
changes….(1of 2)
Examples:
1.Courses: Self-paced learning and greater education “modularity to
support learner emerging employability requirements – adult students
matter more than ever
2.Course Selection: Students will be empowered to “test drive”
programs, faculty and majors before making significant commitments
3.Educators: Abundance of ‘free’ resources and relationships made
easily accessible via the Internet will change the roles of educators
4.Student Projects: The world of school is increasingly collaborative,
driving changes in the way student-partner projects are structured.
12

13. In response, many institutions are acknowledging the
tectonic shifts in learner’s needs and making
changes….(2 of 2)
Examples:
5. Measures: New educational productivity metrics on student ROI and
emergence of alternative authoring, publishing, and researching
models
6.Digital: Digital literacy rises in importance as a key skill across
almost every discipline and profession and reshapes student and
faculty experience
7. Content & Curriculum: Education requirements increasingly driven
by employers, more than educators, with emphasis on effective and
practical employment skills. Content is designed with mobile-first
principles for a multi-screen learner with interactivity
8. Experience: Adaptive courseware powered by data analysis and
pattern recognition software will tailor content/exercises
13

14. ONLINE AND HYBRID
EDUCATION: IS IT REAL?
The Role of For-Profit Education and
Society as Accelerants of Online Learning
Demand
14

15. In the period before For-Profits and On-line,
education was traditional
• Schools beholden to faculty and tenure/research took
precedence over student engagement
• Education adhered to traditional delivery models
 Highly bureaucratic, slow enrollment process
 Ivy tower mentality – you chase us!
 Lack of innovation in the classroom
 Tenured professors had little incentive to push the
envelope on any front
• Post-secondary was aimed primarily at high school
graduates – very little adult education, very little program
choices
• Few if any schools offered career & trade training

16. The For-Profit’s changed the model and
became the original catalyst for promoting
online education
• Two different initial targets, each has evolved traditional ground
based, or correspondence modalities to online or hybrid formats
 Higher Education aimed at the working adult
• Example: University of Phoenix (Established in 1976)
 Trade / Career Readiness programs
• Example: Penn Foster
• Filled niches and created new demand that were created by
traditional higher education’s focus on the high school student
transitioning to college
 With the advent of the online offerings, these schools/businesses saw the
potential of efficient expansion and scale

17. How has it worked out for For-Profit education
players?
1. Market Value:
• Enterprise value of top 13 public schools exceeds $10B (recently
declined)
2. Demand:
• Represent 12% of all post secondary students (2.4 million)
– University of Phoenix has more than 325,000 students currently
enrolled—22 times the number at the University of Chicago
3. Regulations:
• Substantial disclosures and performance requirements such as
gainful employment and performance measures (loan repayments,
etc.)
4. Iconic Influence:
• 2015 Super Bowl being played at University of Phoenix
stadium
5. Built Cultures of innovation and market focus
• In many cases to the point of excess and abuse that are being

18. In the meantime, innovative Non-Profits have
also decided to enter the marketplace for
Online College
• Several non-profits decided to place an emphasis on
building fully online programs
 Liberty University Online is one of the best examples
• Spin-off units from ground-based schools
 Penn State World Campus, Drexel University Online,
Southern New Hampshire University
 University of Maryland University College was created
by the state
• But for traditional schools it requires re-evaluating the
faculty relationships and charting a new path for
curriculum design and delivery

19. At the same time…society and
education are changing
19

20. The rate of change in society is changing life
across all demographics…and will reshape
education
• Access: YouTube’s EDU portal has been viewed 22
billion times
• Data: More data has been created in the last three years
than the previous 40,000.
• Mobilization of Consumers and Workers: there will be
five billion Internet devices by 2013. Most people in the
world will experience the Internet in their hand, not their
desktop or their lap.
• Socialization of Everything Online: There are 960
million social network users; eight years of video
uploaded every day to YouTube.
• Gamification: Use of game-like thinking exploding with
use of game mechanics and dynamics like badges,
leadeTrhbeosaer ddysn, aemtcic.s will lead to the reimagination of education

21. And at the same time, kids today are very
different
GenY sensibilities:
• Multi-screen & social is becoming the defacto
way for life
• Learn anywhere, anytime, with and from
anyone including peers
• Always on, always connected, expecting
collaboration
• Need to be engaged and involved
• Demand personalized learning experiences
• They are tech dependent – not tech savy

22. Disruption never looks inevitable
until it suddenly is

23. Disruption never looks inevitable
until it suddenly is

24. Disruption never looks inevitable
until it suddenly is

25. Online/Hybrid
Learning
• Who is out there and what
do they offer?
25

26. Education is being re-imagined. Providers are
introducing online learning, hybrid learning and
collaborative models that broadly target wide
audiences with different needs.
One-to-many Self-Serve One-to-many Traditional Universities
Alternative education delivery options focus on a range of consumer
targets, content types, price points, and accreditation standards
Online
Only
Hyflex/localized
Learning
Traditional /
Ground Based
Community Colleges
Instructor-Led
Traditional Online
Universities
Incubator /
Shared Space
Peer Learning
Self-serve Online
University Courses
Online-Enabled
Peer Learning
Online-Enabled
Corporate
Training
Accredited
Self-Learning
26

27. The new education economy will include
various delivery models at a class specific and
course level
Course Level – Split Model
1. Pure Brick & Mortar (100%)
2A. Blended
(80%-20%)
2B. Hybrid
(20%-80%)
3. Pure Online (100%)
Mixed Delivery
Class Level
Supplement classroom
lectures and activities
with online content
Online lectures with a local
facilitator providing
support on the ground

28. ON-LINE & HYBRID DELIVERY
CASE STUDY: WHO IS PENN
FOSTER?
28

29. We believe we can create a better world through
knowledge and skill with a focus middle skilled
students
We stand for possibilities through knowledge . . .
PREPARE MOTIVATE ELEVATE
Learners with
relevant
knowledge and
skills.
Learners to
take on the
challenges that
come.
Learners to
the goals
you’re reaching
for.
. . . With the belief that a good education should not be a
privilege

30. A history of helping working men and women
30
In 1890, a newspaperman named Thomas J. Foster recognized that
working adults needed a more convenient way to learn advanced skills. He
developed the distance-learning method to help anthracite coal miners
become mine superintendents and foremen.
The school became a stunning success. By 1945, 5,000,000 students had
enrolled in Penn Foster training programs. Today, that number has grown to
more than 13,000,000. In fact, Penn Foster is now one of the oldest and
largest learning institutions in the world.

31. We service the nontraditional student within a
typically underserved demographic
• Ethnically diverse (often 1st generation)
• At-risk of being “Left behind” by traditional
educational models
•“Burdened” by familial obligations and “restrained”
by financial realities (e.g., underbanked)
•Value/require support on career, academic, and
financial issues
•Younger have GenY sensibilities - multi-screen &
social
75% enroll with Penn Foster to get a better job/find a new
job

32. We have created a range of on ramps for
learners on their path to training, re-skilling
and personal achievement
High School College Adult
Largest high school in
the U.S.
Degree programs in
high growth technical
careers. Best value
associates degree
options
200+ certification and
diploma programs. #1
market share in career-focused
distance learning
43,000
Students
28,000
Students
63,000
Students
Licensed by the Pennsylvania State Board of Private Licensed Schools

33. Courses designed to train individuals for
today’s workforce
Health
• Medical Coding and Billing
• Pharmacy tech
• Medial Assistant
• Physical Therapy Aide
Business
• Marketing
• Paralegal
• Bookkeeping
• Criminal Justice
Trade
• Auto mechanic
• HVAC technician
• Motorcycle repair
• Plumbing
Avocation
• Gunsmith
• Gourmet cooking
• Travel Agent
Industrial
• Welding
• Diesel engine repair
• Utilities
• Facilities Management
Other Relevant
Courses
• Small Business Management
• Health and Safety Courses
• Customer Service
Penn
Foster
Course
Families

34. HOW SHOULD STUDENTS
OPTIONS BE FRAMED IN THE
NEW EDUCATION ECONOMY?
A Path to Helping Traditional and Non-
Traditional Students
34

35. The framework for college matching is well
established
1. Major/degree type
2. Geographic/Distance
3. Cost (net price, with
financial aid)
4. Reputation
5. Cultural Fit
6. Size of school
7. Other activities
(abroad programs,
sports)
8. Standardized test
requirements
9. Type of school –
private, public,
community
10. Accreditation
35
Traditional Factors
Traditional post secondary options assume four year
college and
ground-based delivery approach

36. However, a broad set of valid alternatives
extend well beyond traditional post secondary
paths
36
Risk Factors
High Medium Low
Traditional College
Path
Alternative Path*
* community colleges, vocational, apprentice and certificates

37. For example, a career focused on the
Manufacturing sector is undervalued, yet has
amazing options
• After decades of outsourcing, the United States is
enjoying a manufacturing revival – re-shoring has
arrived
 US and foreign firms (Samsung, Toyota) building
in the US
 Moving production to US for cost advantages
(energy, etc.)
 By 2017, total cost of producing many products
with 10-15% of China even on US east coast
• Wages are rising and skills gap growing
 Examples: South Dakota School of Mines and
Technology 2012 graduate earns 16% higher
than Yale University
• Middle skill and industrial labor shortage getting
worse, even as youth unemployment reaches
record levels
 Industrial and middle skilled employment and
37 education opportunities are significant

38. The merits of sub-baccalaureate programs for a
subset of high school grads is real and growing
What? Apprentices
38
• Formal, on-the-job
training
Certificate
Pathways
• Range from 900 to
3,600 contact
hours
Community
Colleges
• Associate degree
• Certificates
How Many
Enrolled?
• ~465k • ~1-2 million • ~10 million
Goal? • Marketable craft,
trade and vocation
• Employment
• Stepping stone to
degree education
• Employment
• Stepping stone to
degree education
How?
(delivery)
• Worksite, campus or
online (hybrid)
(often paid a wage)
• Campus, online
(hybrid)
• Campus, online
(capacity
constraints)
Credential?
• State-level/federally
recognized
• “organized
program of study”
certification
• Associates degree
• Certificates

39. Even for college bound students, many could be
better served with an interim step before major
financial commitments
Of students who enter a four college, 83% believe they will
finish in four years
• 35% of students will drop out during the first year
• 38% of students complete college in four years; 56%
within six years
• Only 32% of all students leave high school ready for
college level material
• An even smaller proportion among Hispanics and
blacks
• 1/3 of all first year college students are required to
take remedial courses - states vary significantly in
how to handle remedial development programs
"Pathways to Prosperity" study by the Harvard Graduate School of Education, 2011 &
Getting to Graduation: The Completion Agenda in Higher Education

40. Online schooling can play a role across
traditional and new pathways
40
High School
Apprentice
Certificate
Associate
Degrees
4-Year
College
Grad
Vocational, Community College,
Online School
Employment School

41. Which students should be considered for
distance or hybrid learning pathways?
Which students should be advised to at least consider making a
diffeCraenndti dcahtoeisc:e?
41
• Remote locations
• Special populations (not ethnicity)
• 1st generations, disability, etc
• Complex life factors/circumstances
• Time scarcity (inter-day and elapsed) due to job, family,
etc
• Affordability pressures
• Learning models
• Peer preference, hands-on orientation, extreme
individuality
For candidate where life demands constrain ability to attend
• Desire to start a career without debt
traditional school retaining control of learning pace and
delivery is essential and for others it could be the best option

42. How do you evaluate distance learning? What
to look for?
 Accreditation: What type of accreditation does it carry? What is
the portability of the credits?
 Community: Who are the students? Are they engaged? What do
they think?
 Leadership: What are the credentials
 Career-focused: What do employers think? Are there strong
employer relationships and feedback?
 Track record: Is it proven?
 Support system: How does it work?
42

43. Summary
• Education changing
• Students are freed from traditional “one path only”
education
• Return on Education Investment becoming core
issues
• Career progression mindset becoming even more
essential
even to affluent students
• Online schools and hybrid delivery are valid options not
limited to the adult learner – can be a great compliment
traditional school
• Change is happening in higher education and online
learning is a major disruptor to traditional pathways

44. QUESTIONS?

45. Appendix – School
Profiles
45

46. Originally Correspondence – Career Training has
Gone Online
School Name Penn Foster Ashworth U.S. Career Institute Career Step
Description
• Online institution offering
career diplomas,
certificates, associates,
bachelors, and maters
degrees
Note: Cost assumes no credit given for past academic work
Source: Company websites and interviews
• Online institution offering
career diplomas,
certificates, associates,
bachelors, and maters
degrees
• Online provider of
certificates for various fields
• Provides online courses to
be completed in as few as
two months
Diploma/Course
Types
• 180+ course offerings in
business, health care,
marketing, technology,
trades, and education
• Large variety of areas of
studies including business,
health care, marketing,
technology, trades, and
education
• Wide range of career
training programs
• Offers six different programs
in medical and
administration fields
Accreditation
• Regionally accredited by
Middle States and
Nationally accredited by the
Distance Education and
Training Council
• Nationally accredited by the
Distance Education and
Training Council
• Nationally accredited by the
Distance Education and
Training Council
• None
Title IV Funding • No • No • No • No
Delivery Method • Online only • Online only • Online only • Online only
Price Range • ~$500-$1,500 • ~$500-$1,500 • $500-$2,000 • $1,500-$2,000
Payment Options
• Monthly payment plans
available
• Monthly payment plans
available
• $5 down payment • Monthly payment plan up to
12 months
Discount Strategy
• Significant discounts for up-front
payment and auto-pay
over time
• Significant discounts for up-front
payment and auto-pay
over time
• Significant discounts for up-front
payment and auto-pay
over time
• Limited time $400 discount
for up-front payment

47. Career-focused Online Schools
School Name ITT Technical Institute Lincoln College Online Western Governors Allied American
Description
• Career-focused private
college systems with 6
different schools: IT,
Business, Electronics,
Criminal Justice, Drafting and
Design, Health
Note: Cost assumes no credit given for past academic work
Source: Company websites and interviews
• Online campus of Lincoln
Technical Institute
• Not-for-profit online university
in education, business, IT,
and healthcare
• For-profit institution offering
Bachelor’s and Associate’s
degrees, and certificate
programs
Diploma/Course
Types
• Offers Associate’s,
Bachelor’s and Master’s
degrees
• Associate’s and Bachelor’s
degrees offered
• Bachelor’s and Master’s
degrees
• Certificates offered in
criminal justice, business,
computer information
systems and health care
Number of
Students
• ~70,000 • N/A • ~18,000 • N/A
Accreditation
• Nationally accredited by the
Accrediting Council for
Independent Colleges and
Schools
• Regionally accredited by the
New England Association of
Schools and Colleges
• Regionally accredited by the
Northwest Commission on
Colleges and Universities
• Nationally accredited by the
Distance Education Training
Council
Title IV Funding
• Yes • Yes • Yes • For degree-seeking students
only
Delivery Method
• 140 U.S. Campuses
• Online Option
• Online only • Online only • Online only
Price Range
• ~$40K for two year
associates degree
• ~$2,890-$4,250 per semester • $5,040-$16,800
Payment Options
• Payment plans devised with
financial aid
• Payment plan for the length
of the course
Discount Strategy
• No discounts • No discounts

48. New Delivery Models and Funding Models
Emerge from Schools and Education Delivery
Channels
Straighterline
New Charter
University
(UniversityNow)
Rio Salado
College
Southern New
Hampshire
University
Coursera Udacity MITx
Description • $99/month for
college courses
($999 for entire
freshman year)
• Fully
transferrable to
partner colleges
• Accredited AS,
BS, BA, and
Master’s
• Fixed tuition
($796/4 mos. for
undergrad) for
unlimited courses
• Community
college
offering online
Certificate and
Associate’s
degrees
• Online
accredited
undergraduate
and graduate
degrees
• Free university
classes from
partners like
Stanford,
Princeton, U. of
Penn., U. of
Michigan
• Free university-level
classes
online
• Backed by
Charles River
Ventures
• Free online MIT
courses
• Also provides
online tools for
current on-campus
MIT
students
Online
Enrollments
• Over 4,000
students served
through 2011
• Degrees in
business and
public policy
• Enrollments of
20K in 20
program areas
• Over 80 liberal
arts and
business majors
• 30 classes
through early
2013
• 130K enrolled in
first 2 courses
as of March
2012
• 120K students
in its first course
in March 2012
Online
Experience
• Self-directed
online courses
with readings,
presentations,
review activities,
and homework
• Online, self-paced
with
exams via
webcam
• Personal advisor,
direct faculty
access
• Uses
RioLearn, a
customized
online LMS,
for commun-ication
assignments,
and tracking
• Experience run
through
Blackboard
• Access to
resources like
an online library
• Video lectures
(10-15 min.)
• In-video quizzes
with auto-correct
• Q&A community
for students
• 7-week classes
• Video lectures
with quizzes,
homework due
regularly
• Online forums
• Interactive
instruction,
online labs, and
communication
among students
and professor
Reviews /
Press
• Named one of
the "10 Most
Innovative
Companies in
Education" for
2011 by Fast
Company
• Subsidiary of
UniversityNow,
(affordable high-quality
postsec.
ed. advocate)
• Profiled by
Forbes
• The largest
online public
community
college in the
nation
• Only university
on 2012 Fast
Company list of
the World's 50
Most Innovative
Companies,
ranked #12
• Raised $16M in
venture capital
in April 2012
• Twice profiled
by the New
York Times
• Highlighted in
TechCrunch,
the Wall Street
Journal, etc.
• Reviewed by
the New York
Times and
Boston Globe,
among others

49. There are many different paths to the student
specific end game of 21st century career
readiness
49
Leaner
Capabilities*
Support
Systems*
Goal: a blend specific core academic skills, technical
and employability skills and expertise
* Learner capabilities: four proven skills needed to sustain “employability” (arches of the rainbow).
* Support systems: four areas including standards, curriculums, professional development, etc (pools at the bottom)

50. Online and Ground-based programs can be
evaluated based on accreditation
Paths to Accreditation
Department of
Education
Regional
Accreditation
Specialized
Accreditation

51. How Does the DETC stack up against Regional
Accreditors
•DETC is recognized by the US DOE under the same criteria as the
regionals
•DETC is recognized by CHEA, as are the regionals
•NACIQI has recommended that DETC’s accreditation be renewed
without condition
Recognition
•DETC standards for degree programs track with and meet or exceed the
standards of regional bodies
•In addition to meeting these standards, DETC schools meet specialized
standards for distance learning
Accrediting Standards
•DETC requires the same amount of credit hours and general education
credits for degree programs as the regional accreditors
•DETC reviews all programs before being offered; the regional
accreditors do not
Program Offerings
•DETC standards for faculty are the Faculty same as each of the regional bodies
•DETC requires schools to employ frequent proctored exams to better
measure comprehension
•DETC schools utilize frequent online interactive activities with
instructors, which provide further measures of assessment
Assessments
•DETC institutions undergo rigorous review every five years for renewal
•Regional accreditors use 7 or 10 year review cycles Institution Review