The education landscape has drastically changed within the past few years. Not only is there rising costs in learning, there are more players and platforms to choose from and newer demands by learners.
Besides that, there is greater emphasis on re-training, with learners going out of their way to enroll in online courses and certifications instead of relying on their company’s L&D initiatives. In this week’s newsletter, we examine how the landscape has changed in the education industry when it comes to financial matters.
Sources of Funding
The main providers of education funding are as follows: Government, Household, and Donor funding. The chart below shows how a typical American family paid for tuition fees for tertiary education for the academic year of 2019-2020. Check out the graph in greater detail here.
With the recent downturn in the economy that the pandemic brought, government, household, and donor funding are expected to decrease. This can lead to a marked increase for borrowing which accounted for 21% of the total source of payment for colleges back in 2020.
However, students looking to enroll in your programs aren’t one-size-fits-all, so your available payment options shouldn’t be either. Understanding your students and their needs is key to knowing which are the best financing options for them — and having a diverse array of payment methods opens the door to more learners and increased enrollment in your courses. In this article, Climb Credit has outlined different ways you can address the various financial situations of prospective students to make sure your programs are accessible to as many as possible, including:
- If they can make the highest upfront payment
- If they need to break up payments, but don’t want to pay interest
- If they would rather make the smallest payments, even if they have to pay interest
The COVID-19 Impact
The World Bank estimates a 10% decrease in government funding for education across the globe due to governments shifting their budgets toward “health and social protection” matters. Although the report states that the cut is only for the short run, this can have a tremendous impact on the students receiving support from scholarships and grants.
The same contraction is expected for household funding as families deal with the shock of decreased incomes. Although the effect couldn’t be measured yet, families with constricted household budgets will typically allocate their money towards basic necessities such as food and housing. This will leave less room for education savings.
Lastly, donor funding sharply decreased after the 2008 Financial Crisis. It has only started recovering in recent years. If the trend continues, this financial stream will remain limited to learners for the upcoming years as well. Here is a chart showing this by the World Bank Group.
The Shift to Upskilling
Besides these issues in funding, one of the most prominent impact that the pandemic has on society is the rise in unemployed and underemployed individuals. As uncertainty brews from these situations, individuals look for ways to establish stability in their workplace or future careers.
However, companies are actually hiring more with their need for new skills such as AI and data analysis. These demands aren’t met by the job hunting market though because of the low number of individuals possessing these advanced skills.
As a response to this, people are being proactive in their upskilling efforts in order to satisfy the requirements in landing a job. For the longest time, the emphasis has been on the traditional higher education path. However, with newer avenues for learning and cutting-edge technologies, this opened up more cost-effective options for learners. Among these include online certifications, eLearning programs, MOOCs, and the like.
In fact, a survey run by BestColleges has shown that around 15% of students have said that they enrolled in online programs and pursued a different career trajectory due to COVID-19. The need for upskilling is most evident from developed countries whose technologies and industries are rapidly developing.
Student access to resources
These new learners have an additional barrier to face, however. One of the top challenges of students when it comes to deciding where to enroll is “applying for financial aid and identifying sufficient funding sources” at 18% of the total surveyed students.
Learners recognize the need for new knowledge in order to get ahead with their careers. Their lack of financial means, however, can discourage and prevent them from enrolling in courses and programs. For education to be more accessible and open, students need to have a wider access to funding and easier processing.
Climb has financing options for schools of all sizes and verticals. They currently have over 200 partners in 10+ fields. If you’re interested in learning more, please reach out to email@example.com to set up some time to chat about how to improve student financing options to drive more enrollments.