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For Profit Edu Sector – Embrace Your Innovators

September 9, 2010 8 comments

Approximately 1.5 years ago, I left the innovative company I had helped build, Education Connection. I had found a new innovative company whose mission I loved, and I wanted the experience of working with the “state university” side of the online higher education industry; so I left my comfort zone and moved across the country to Dallas, Texas. I also wanted to “prove” to myself that I could be successful without my two mentors; I felt it was time for me to “grow” on my own.

This turned out to be a necessary part of my ‘journey’ as I was able to grow, learn how to interact with a different group of executives, board members, and cultures and also afforded me to opportunity to see how different working with state universities was vs. for profit universities. I was able to ‘prove to myself’ that I could be successful without my mentors, which was good and bad. Good because it made me more confident…bad because I certainly didn’t need anymore “ego feed”.

By adding this new subset of an industry and connecting with myriads of new individuals, I was able to see one thing: I had been working for (Education Connection) the most innovative and forward thinking group in the education space.

Based on the number of consulting and job inquiries I was recieving while at the second company (post working at Education Connection), I chose to start my own company. I believed this was a way for me to work with multiple companies, multiple executives, and would provide me with an unbelievable learning experience; the ability to interact and learn from the top executives in the higher education industry.

At this juncture, I’ve worked with about ten different higher education service companies, ranging from lead generation to call centers to enrollment management companies; and multiple schools. I have learned a lot, but my biggest learning was this: The only companies that will survive the new for profit education regulations would be the ones that invested heavily and believed in their innovators. In speaking with one of the executives I enjoy working with the most, a brilliant man named John Goodwin, he made a comment I use all the time now. He said, “The companies that come out of this education congressional hearings successful will be the companies that not only listen to their innovators, but more so will be the companies that have the ability to adapt the most quickly to a changing environment.” We were going back to Darwinism.

Having worked with all of these schools and companies, there is only one company that has come forth and displayed a pro-active understanding as well as comprehensive product offering to aid the for profit schools in their quest for higher graduation rates and higher re-payback rates on their loan; that company was Education Connection.

About 5 years ago, my prior CEO and mentor Richard Capezzalli said to me, “What will happen to the for profit education industry in the next several years is going to be cataclysmic.” I vividly remember this as 1) I didn’t know the exact meaning of cataclysmic and had to run and look it up. 2) We had recently started a lead generation company, Education Connection. I thought to myself, ‘why would we have started a lead generation company if the for profit industry is going to be shaken up so badly?’

In the subsequent four years and and 11 months, I learned the reasoning behind our ‘lead generation’ company; we were building a lead gen ‘model’ to learn the best ways to market to students, but the end goal was different. We were looking for students that yielded the highest graduation rates, or net tuition revenue; not solely the lowest cost per acquisition or cost per enrollment.

So after about two years of introducing ‘innovative break through’ #1 (we were the first lead generation company) that had employed prior admissions advisors and were warm transferring leads to the for profit schools at over 10% lead to start conversions; Richard, the innovator, introduced the true reason he was confident that EdConnect could take over the industry; at first, he called it “Future Scholars” (It is now called Test Drive College).

With the goal of advising and working with students who would yield the highest graduation rate, Richard quickly went back to his days of owning and running schools. He explained to his EC management team that 2 of the main reasons students did not stay in school were 1) They were not prepared for the rigors and discipline needed for online learning and 2) Across the entirety of the ‘edu lead generation industry’, we were marketing to people who were not “academically ready”. So, logically – if we were able to find a way to ensure that the students were 1) Academically ready 2) Had the ability to experience online learning (and not just a demo, a true class), the retention and graduation rates would rise dramatically. This would not only effect graduation rates in a positive manner, but would also positively effect loan re-payback rates and minimize loan default rates. There is a direct correlation between students graduating and having a higher payback rate.

The model went live with a large test utilizing two of the large for profit universities as ‘partners’ and while it took a year to get the student retention rates back, the test was wildly successful. “What is the model?” you ask. In it’s simplest form, students take an online accredited course (they can transfer into a school) for free; hence the word, “TEST DRIVE”. In order to be one of the chosen for this free course, the student first must pass a short test (SAT questions – I believe there are 20 of them), which demonstrates the student can sustain the academic climate in a college. Once the test has been passed, the student speaks with an advisor or “gatekeeper” as we liked to call them during the testing phase; whose job is to ensure that IF the student does “adapt” and is a “fit for online learning”, they will enroll in a school post taking the free online course. The goal was to ‘weed’ students out in this free course that did not like online learning. We only worked with students who were serious and who understood the value of the degree, the financial aid process, etc.

The tests were wildly successful. The hypothesis that these students would retain and have higher graduation rates was proven (patience was certainly a virtue as it took over a year for these retention numbers to come back). The company that had been the first to see these regulations would be coming (about five years before they came), the company that quickly executed on their innovative plan, the company whose tests were successful prior to any regulatory discussion taking place – this is the company that is positioned to aid the for profits in their quest to continue to help the students who have nowhere else to go. The company that was the first to embrace their innovator was Education Connection. Will you be next?

Don’t Blame For Profit’s Innovation! Blame State School’s LACK OF

July 4, 2010 7 comments

Am I one of the only people who want to say “thank you” to the for profit schools? To the online higher education market? Thank you University of Phoenix and Kaplan University and all of the other universities who had the courage almost a decade ago to take a risk. A risk that has not only provided individuals the opportunity to get their degrees even while working and taking care of families, but also paved the way and built the models that now allows state universities to offer these degrees online as well.

As congressional talks surrounding the negative impact online education has had on graduation rates and specifically loan default rates; what we are not hearing are long term solutions. We are hearing suggestions of band aids. Do I like the idea of the gainful employment laws? Yes! That said, if we are going to implement them, it should be done across the board and it needs government support to get started. What these lawmakers are failing to recognize is that it took guts, innovation, large investments; and a lot of time NOT being profitable for these for profit online education companies to get where they are today…and the model is less than TEN YEARS OLD. How can the for profit schools be expected to figure out HOW to raise their graduation rates and how to lower their default rates when most of them just recently figured out how to get students to graduate?

The disservice that has been committed in the higher education industry is not from the for profits; but rather – I blame the state universities; specifically, the marketing departments at these state universities. There are hundreds of state universities offering online programs at low to medium prices. We have seen everything from $7,000 M.Ed Programs all the way through $13,000 nursing programs. Not only are these programs far less expensive, but their graduation rates are higher. Again, as these state universities online degrees have only been around for about five years; perhaps there is not enough statistically significant data here, but it does look promising.

So instead of attempting to shut down an industry that has opened the doors for people to better their lives; why not work with the state universities to offer more of these programs that have displayed high graduation rates, low cohort default rates, and other positive statistics. The marketing teams at these schools are to blame; they are the ones not fighting for the budget or not taking the risks. If all of the for profits can run television, why can’t the state schools? It’s relatively inexpensive to run remnant television and these days, television can be run on a cost per inquiry basis. If the state universities and enrollment management companies are too “fearful” to go into the red for a couple years – maybe the government should be forcing them to hand over a portion of their revenue and allow the marketing geniuses at the for profit schools take a stab at branding and developing them.

It’s not the for profit schools that are the problem; it’s the state schools lack of motivation and understanding of how online education will better the lives of millions. The disservice is that of our state schools poor marketing, slow admissions, and fear of investment. The online for profits gave you a model to follow and then MAKE BETTER. Do it already.

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