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Good afternoon everyone and thank you for joining Gray’s monthly webcast on the most recent student and employer trends in higher education. Our monthly webcast is derived from our program evaluation system that supports ongoing academic reviews at all types of institutions across the country.
Before I pass the baton over to our CEO Bob Atkins, a couple of quick housekeeping items. Please feel free to enter any and all questions into the chat window on the left hand side of the page. We will be sure to answer all questions at the end of today’s webcast. A copy of the presentation as well as the recording will be delivered to all registrants via email. Without further ado, Bob.
Bob: Good afternoon this is Bob Atkins CEO of Gray Associates; and today we’re broadcasting from beautiful La Jolla California. We’re actually today being a little bit distracted by an ocean view at our west coast offices. I’m happy however to be a refugee from the east coast where I understand it’s snowing this morning. Let’s just say the weather here is better.
Higher Education Consulting
Today we’ll be sharing with you the results from March, 2018 and the prior year. Before we get started I thought we’d take a minute and remind everyone who Gray is, especially for those of you who haven’t joined us on our webinar before. Gray is a strategy consulting firm. We focus in higher education. We differentiate ourselves with a quality of data and systems that we offer to support decisions on programs, locations, and pricing in higher ed. We do an assortment of other work as well. To support our work; we have data in four broad areas: Student demand, employment, strategic fit, and competitive intensity. Strategic fit is the one that might not might not be obvious. That’s what degree level is required to support a program, so we don’t want people coming out with a degree in a field that requires a PhD when they have an associate’s degree and vice versa so they don’t overpay for a degree that’s not required to work in the field. The specifics on that in student demand we’ll be sharing today information from Google and Gray’s inquiry database. Employment, we have data from BLS as well as Burningglass Technologies, so we can see long term trends in employment as well as very short term trends coming from the jobs posting data from Burning Glass. On competition we keep IPEDS so we can see every completion in the United States by program and location, and we keep data on wages, placement rats, demographics, and recently added a data set on employer requirements including the specific skills, tools, and knowledge that a person has to have to work in a field. Beyond that, the detailed work that they actually do, so as educators you can understand what you may need to teach people to do for them to get a job on graduation.
Now let’s just into the data. We’ll start off with national level information on demand. We’ll follow that with some information on the distinction between online and on campus programs. Take a look at cities and programs. Then I will take a deeper dive into one specific program: electrical engineering. And close with a summary.
Overall Student Inquiries (All Sources)
At a national level we’ve been reporting on this information on inquiries for several years. We have a data set that goes all the way back to 2012. The charts we’ll be sharing today use a common format. The light blue bars in the background represent 2016 data, the dark blue bars and 2017 data, and the green bars are 2018 data. The first thing to take away from the chart is that the bars have been going down, so the 2016 bars are all higher than the 2017. The 2017 bars are coming in a little bit mixed. So, we beat in January. Dropped a little bit relative to 2018 in February and we’ll come to March in just a moment. But, that’s how you read it. It goes from light blue to dark blue to green. 2016, 2017, 2018. As you look at the trends so far in the year, we’re down 10% through all of 2017. 2018 March, we’re down about 6%. We actually have been doing a little bit better, and we beat in January. As I mentioned, we were almost on last year in February, so it’s a bit distressing to see this downward trend resume. We’ve been looking at it for years, and I was really hoping that we were done with it, but it appears that’s not the case.
Google Search: All Programs
Now let’s take a look and see if that trend is confirmed in Google. The format her is the same, so the greens are 2017, the dark blues 2018, and we don’t have the three years of data for this; we’ve only got about a year and half that we’ve been collecting it. When you look at the trend, unfortunately Google confirms the downward trend. Again, it was a little bit closer in January, but March is down a full 11%. So, we’re seeing a decline in search at a programmatic level. Next month we’ll share an additional set of data with you which is brand search. We’ve been collecting search data on the top -- well, not necessarily the top, but about 20 colleges and universities in the United States that are a represented example and we’ll begin to track brand search because fundamentally students can come into the college selection process in one of two ways. Their either know what they want to do and their looking a school that offers a specific program, and they’ll do a program search, and that’s what we picked up here in the Google data. It’s also what we pick up in the inquiry data. Those are very strong indicators of demand for a specific program. But, many students come into the system not really knowing what they want to take, and t hey start with a college first search. They’ll show up under brand search. They may search for UFC in their local market, or God knows an Ivy. They fundamentally approach the market a different way and they may not make up their mind on what program they want to take until their sophomore year or later. There are different search and decision making process and we’ll begin to track both of those: the brand search and the program search in our next webinar.
Inquiry to Application: Overall Conversion Rates
Now, up until recently, the decline in inquiries have been significantly offset by an increase in conversions. Before I go into this any further let me tell you what a conversion actually is because it’s a bit confusing. An inquiry converts when someone does really almost anything beyond the inquiry stage. Often times that filling out an application. It may be actually starting in some schools. It’s got a lot of different definitions at the school level. We group all those under this general heading of conversion and recognize that it’s messy, but it’s been, if you will, consistently messy, so I think it’s still a good indicator of what’s happening, and the degree of which the inquiries are progressing through the fund. That metric was improving for quite some time. There’s one other dimension to this that matters, and that is, “When do we count and inquiry as a conversion?” We count the conversion in the month in which the inquiry took place. Someone inquired in January and then converted in March, we count them as a January conversion. If you will, the way to think about that is that it was a January inquiry that converted, so it counts in the month in which the inquiry was received. It takes a few months for these to mature; that is for people to decide to convert. Typically three months, but that cycle has gotten a little bit longer., so we’re looking backwards. Q3 is what we would call mature. It’s been at least three months passed since the inquiries came in. That was up very strongly: 51% over our baseline. Unfortunately, the last quarter is now mature 2/4/2017. It’s only up 26%, so while it’s still ahead of baseline, it’s almost 15 points behind where we were a month ago. That’s a bit distressing. It means that the conversion volumes will not be -- They won’t offset. This rate won’t offset the decline in inquiries, so we’ll see a net decline in demand. Now, you see Q1, 2018 is quite a bit lower than Q4. That isn’t too meaningful yet because Q1 is long -- we’ve got two more months for it to mature, and I would expect to see those numbers to up by 40 to 50%, so it may be stable with Q4, but it’s extremely unlikely that it will reach the Q3 level. So, we’re seeing some sort of a change in conversion of inquires in a way that’s not helping.
Overall Student Inquiry Conversions (All Sources)
Now, as you can imagine, if inquiries are down, and conversion rates are down, conversions are also down. We can see in December 2018, which is now mature, we were down a full 12%. You look at January, February, March, the green bars on the left. January is close. It’s got another month to do to mature. I don’t think it will beat last year, but it’ll be close. February will get to last year in all likelihood. Might be slightly better, but more likely flat. March, not clear. As I look at this, it might beat last year, but again remember that -- well it should almost double. There’s a chance March will beat last year. So, while the rates are declining we are still seeing probably flattish year over year conversions in a whole.
Average Price for Pay per-Inquiry
Now, a lot claim to get those inquiries, but the answer here is that the cost of inquiries are going up. Which was fine when the quality of inquires was going up, that is the conversion rate, but now that we’re seeing declining conversion rates in the face of raising cost per inquiry that’s a bad sign for the total cost of getting a student. Both indicators, if you will, running in the wrong direction, so the cost to get a converted lead here is going up substantially as we look forward. We’re at about 46.64 right now and this is our fourth month over 46 bucks. We seem to be sustaining that and even trending a little bit towards 47.
Student Inquires: 10 Largest Inquiry Budgets
Where are people spending the most on inquiries? This shouldn’t be a surprise. Business administration and management is actually the program with the highest budget for inquiry purchases. Medical/clinical assisting is second behind that at about 72% the size of business administration. Then we get healthcare/healthcare administration at 46%. Then really what we’re seeing on this stage is a number of trades: Medical coding, one general program is psychology. Then we got medical assistants, web page/digital multimedia development, another core trade of HVAC, public administration, and finally graphic design. One of my take a ways on here is the sheer size of business administration and medical clinical assisting relative to everything else. Business administration is almost double every program besides healthcare and medical and clinical assistance; another 50% over every other program at least. So, we’ve got some monsters in here, and if you’re in one of those two you can expect a very competitive market.
Student Inquires: Budget Spending for 10 Largest Programs
What’s the trend? This is actually pretty interesting when you look at it. The largest program in business administration and management you see about halfway, a little bit more than halfway down the page, minus 7%, so that’s very concerning. We’ve got people reducing their spending in that program. On the other hand, some of the ones lower on the page did pretty well. Graphic design, you recall, was 10th, but it’s grown 28%. Healthcare administration was in the middle and it’s up 28%. Web page/digital multimedia up 26%. Public administration jumping back up to the top was the fastest grower with people spending almost 38% more on increase in that space than they did the prior year, so we’ve got some significant increases in spending towards the top. So, we’re seeing a decline in the two medical administrative sorts of roles. Medical clinical assistant and office assistant both down over 20%. I’ve been tracking medical assistance for some time. It’s been a program of interest to us for a variety of reasons. It was a very good entry level program for people who wanted to get a post secondary certificate and get out in the work place in a field with growing job demand, but with a decline in the fore profits and the closure of many medical assisting programs, I think the other piece being improving employment environments made this job less attractive. Medical and clinical assisting has been declining at a very fast [13:40- inaudible]. Completions last year were down by 75,000 at a national level, so this program is seeing very rapid decline in a -- I don’t think this is in our control. I think this is really the economy taking over and making these very relatively low paid entry level jobs less attractive.
Inquiries for Online Programs
Now let’s take a look at what’s happening between online and on campus. First, online overall in 2017 was up 5%, so it was bucking this downward trend. Unfortunately as we look at this year that trend has shifted and we’re actually down 12% in March even for online, and that’s very unusual. You’d have to go all the way back to September of last year to see a diff -- year over year, and that was very small compared to this month, and 10 out of 12 months last month actually beat the prior year -- I’m sorry, 19 out of 12 months in 2017 beat the prior year, so it’s very concerning to see that number drop, especially double digits.
Inquires for On-Campus Programs
As we look at on-campus, not a surprise here. Inquires on for on-campus have been going down for some time. 15% declined overall in 2017. We look at the 2018 trends down every month this year, and March was down 12%, so we continue to see a sustained decline in a pretty rapid decline in increase for on campus programs. The world has been shifting to online and that substituted for this and it’s very worrisome now that we’re seeing a decline in online as well as on ground. That means it may become more difficult to substitute online for on-ground students and sustain total enrollment.
Student Inquires: The Big 5 Cities
Let’s take a look by city and program and here we’re going to focus in on biggest cities. Fastest growing cities and the biggest and fastest growing programs. First, the five cities with the most inquiries since January2012 are Philadelphia, New York, Chicago, Houston, and Los Angeles. Not surprising names. Last year, these markets all fell and three out of five of them fell by double digits. Philadelphia, Chicago, and Houston all down 15, 14, and 20% respectively. This year those declines are decreasing. Philadelphia’s flat year over year. New York’s only down 2%. Chicago and Houston down 8 and 9%. Los Angeles down 12%, the only one that actually increased where the decline in increase year after year. We’re seeing a moderation in the rate of decline, but it’s difficult to imagine a healthy market in which the major cities are all in a decline. I’m hoping to see this one turn around though. I don’t really envision that given where the data trending right now.
The Big 5 Programs: March Growth Year-over-Year
As we look at the largest programs, we have one grower: healthcare administration. One that’s basically flat: criminal justice. And three that are down, but not by the kinds of numbers we saw in the prior page. Registered nursing, one of the largest programs in the US, down 2%. Business administration down 9% and medical clinical assistance down 22%, consistent with that decline in overall completions that I mentioned a moment earlier, so that program’s really in a bit of a tailspin.
The Fast 5 Programs: The Higher Education Programs with the Fastest Inquiry Growth
Now let’s look at the good news. There are programs out there growing and they’re growing at a good [17:16- inaudible]. Electrical engineering which we’ll talk about in more depth in just a minute doubled year over year. Management science up over 100%. Public administration inquiries up 75%. Cyber security up 72% and game and multimedia design up 52%. So, we’ve got a few here that are growing very quickly. To give you a little context about why program selection is so important, we looked at the total change in completion volumes over a five year period ended in 2016. Total completions in that period increased by 119,000. There was an increase, but unfortunately that’s on a base of five million, so it was a very very small increase; half a percent approximately. As you compare that to the 10 fastest growing programs over the same period, those programs grew by over 170,000 completions. So, that is to say that if you’re in one of the 10 best programs, you captured all the growth in programs that was generated by the other 1400 programs that are offered in the US. So, 10 out of 1400 counted for effectively all the growth, so it becomes extremely important that you’re in really a handful of the right programs in order to sustain to growth.
Electrical Engineering: Salary
Now let’s take a look into a little bit of a deep dive on one program in particular. That is electrical engineering. Now no surprise to anyone, electrical engineers make a lot of money, and we see the majority of them making over $75,000 a year. So, it’s a very well paid profession if you’re smart enough to be able to do the work and are interested in it.
Electrical Engineering: Education (Minimum Advertised)
As we look at what degree level is required, it’s pretty interesting for something that’s so technical, that the vast majority, 96% of all job postings only require a bachelor’s degree. The remainder of the training happens on the job as you do your work. So, it’s a bit different than other highly technical fields where you may have to get an advanced degree in order to be effective in the workplace. Here bachelor’s is just fine, and my interpretation would be that the master’s and doctorate’s are probably going to people who are most interested in teaching in this field, rather than being out working as electrical engineers.
Electrical Engineering: Employer Requirements
What do you need to know on the job to be able to do this work? So, what we’re looking at here is some data we get in cooperation with skills engine, which runs out of Texas. They analyze job postings, and they analyze resumes to see what sorts of skills people have in these fields and what skills are required by employers. This may look pretty logical for an engineer when you look down the list, but there’s one thing that’s quite different here. So, we’ve got design electronic or computer equipment, so first off, a lot of electrical engineers end up in the computer and system space. They also look at costs, and there’s several items here that are related to estimation of cost. In this case design or construction materials and you’ll see several others as we look down. Next is design electrical mechanical equipment or systems and so forth down the list and I’ll give you a minute to just read through it. What’s different is normally when we look at work activities and skill requirements, general skills come really close to the top of the list. That might be budgeting, or scheduling, or using Excel, PowerPoint, and Word. In this case, everything we’re looking at is really specialized engineering work, so again that makes this profession a little bit unusual compared to others, that the general skills are not as critical here as very specific engineering skills.
Electrical Engineering: Program Scorecard
Now, that doesn’t really answer the question how attractive this program is, and whether you might want to offer it. There are a wide range of factors you’d want to consider before you decided to offer an electrical engineering program. Let’s take a look at a few of those. In particular I think this is a good representation of the attractiveness of the market for electrical engineering. Let’s start at the top left hand corner of this page with inquiry volumes. You can see total inquiries for this particular program in the trailing 12 months 22,903. Like me, you probably have no idea whether that’s a lot of inquiries or a few inquiries. So, we give you a little visual aid and we color code that, and you can see it’s the second darkest green shade. Down at the bottom of the page you’ll see a percentile ranking that’s color coded and that medium green if you will indicates that that’s in the 95th percentile compared to 1400 other programs we track in our system. Think of that as being in the top 70 programs out of that total population. That tells you it’s pretty big. Interestingly it’s that 1800 online inquiries. That’s not that large, we’re in the 90th percentile. It’s still big, but not as big relatively online. Perhaps more disturbing though is a very significant drop in inquiry volumes to that program. A 27% drop specifically. So, you see those colors shift to red and orange. Any time you see red or orange you know it’s trouble. So, green is good on here; red and orange, not so great.
Every data source has its issues. Inquires are no exception. Let’s take a look further down and see what the other sources suggest about electrical engineering. First there’s Google search and here we can see it confirmed as a very large program. 491,000 searches. In our darkest green color puts it in the top 2% or the 28th largest program in our system. But, that growth decline we saw in the inquiries, that’s repeated here although not as extreme. Down 38,000, 39,000 searches in this period. A 7.3% decline. That’s a bit worrisome for this particular program.
Third source to cross check is completions. Dark green in terms of total volume. 32,000. Dark green also in unit change, and the completions would suggest that engineering is growing up 10%. So, what can we conclude? I would say we can be pretty sure it’s a very big program. Inquires, Google search, and completions are all at at least the 95th percentile or higher. What’s not so certain is the growth rates of this program. Let’s take that apart a little bit.
Completions are the best news, and they’re growing 10%. Now, if we think about completions though and what they represent, that decision to become an engineer was made some time ago. We’ve got 2016 is the most recent IPED’s data that’s out. So, those decisions to become an electrical engineers were made whenever people chose that prior to 2016, so we’re going to be going back four years, it’s a four year degree, and probably on average closer to six years given completion times for degrees. So, we’re really looking at data here in the completion side that goes all the way back to 2010, or 2012, and is now showing up, if you will, as a completion, but the decision was made a long time ago. Showing up, if you will as a completion. The decision was made a long time ago. When you think about what students are doing now. That’s where Google search and inquires kick in. So, I would say there’s a reasonable chance that long term engineering’s been healthy, but short term, most recently there appears to be a decline in interest in this program. So, again that’d be -- if I’d keep watching this, when the data disagree and it’s difficult to be certain, but that’s how I’d interpret it and I said I can be keeping a very careful eye on it to see it if I’m facing a sustain decline or this is more about a short term blip in demand.
Number of other things we can take away from this report chart. Let’s take a look at institutions. We’ve got 381 institutions in the US offering this program. That’s about 70% tile in the light blue. Interestingly we have eleven new entrances. So, a bunch of folks are looking at this and entering this market, which I would not have expected for a mature and traditional degree. Cost per inquiry is getting up there at $67. You remember our average is $48, so it’s now almost 50% above the average. Certainly not the most expensive thing now. It’s only the 90th percent tile. We have a market saturation index. So, this is gonna be average, because we’re looking at national data for this specific program, not a specific market. You can see it’s shaded in that light blue color. IF we were in a specific market this would be comparing, completions for electrical engineers in one city versus a hundred of other cities in the US., so we can see that local market was relatively saturated.
Google search cost per click, very inexpensive actually at $8. A competitive index here is very low at 0.29, so that competitive index comes on a zero to one scale from Google and 0.29, that’s at the better end of the scale one is most competitive, so you can get out there and compete for these students and it isn’t all that expensive to do.
Program size typically 84 completions the median is 22. I’m sorry, the average is 84. More typical would be the median at 22 and importantly that is going up. Median completions are up two year over year, which suggest this is not yet saturated. The people who are offering this program are still growing the overall size of their programs.
At very bottom of the page in orange you can see the online completions and institutions we’ve got some 80 institutions offering electrical engineering online. Not a huge share, 14% and not a huge share of completions at 17%. But a bit of a wakeup call, because that means someone out there has figured out how to do this degree online and take care of lab requirements for this program. Even though it’s an online environment, so if I were offering this on-ground, to me would be quite worry-some that there may be a group of people coming at you, if you will, who figure out how to do this program and do it in an online context.
The next question of course is, “Are there jobs for graduates?” Here I’m looking at the upper right-hand side of the chart. Job postings 112,000. There are a lot jobs that’s 98% tiles, we have a lot of job posting out there. But, again, I’m a little bit concern. We’ve got a decline in those job postings, so some almost 6,000, so that’d be worrisome to me. Bureau of Labor Statistics a little rosier picture, 202,000 people employed in the field. 13,000 job openings. A little bit of an issue there, because that’s based on BLS’s predictions going forward and 85% of those predictions are off by 50% or more. So, a bit of a problem there in terms of trusting that value. One thing we can be sure of though, this job pays well. BLS wages at 66,000. The national American community survey comes in at 60. For those over 30 the wage is average out to 117,000. So, if you can do the work, this pay’s very well.
Down below you can see what percentage of the work force is by degree level. So, we’ve got 48% of the work force at the bachelor’s lever. 50% of all completions at the bachelor’s level and we don’t carry cost data for this, since it’s a four year program and at the moment we only have a two year cost indexes.
But take now -- step back think about what this would mean if you were considering entering this field. I would say you know it’s big, it’s not as competitive as many other fields, and there’s still good job outcomes for graduates. On the other hand we’ve got some issues with current growth. They may make it tough for new entrance. That’s true both in terms of student demand and the employment outlook in job postings. So, I’d say it’s mixed, I would not be certain that this is a good idea and there are a lot of things that would concern me is 11 people are coming in. So, it’s getting more competitive, not less.
That’s how we would think about looking at this programs and in general looking at any program understand it’s relevant attractiveness. Many of you may be looking at the spacing, while it’s a busiest page I’ve ever seen. Understand that, but we’ve made a really conscious choice here. To try to get all the information you might need about the program onto one page. So you don’t have to hunt around through a variety of documents to find the information you need. That’s a logic behind it, I hope it’s helpful to you.
Electrical Engineering: Market Rank
The next question you might ask yourself about this program is, “If I’ve got it, where should I be marketing it? Especially if I’m an online provider.” I could be marketing anywhere in the United States. But some markets like programs are more attractive than others. So, what we do is to take the same data on student demand, employments, strategic fit competition and use it to rank markets in the US. We take the population weighed center of each of these cities. We draw a radius around it and we pull a relevant data for each city, so you can see where you may wanna be doing this. Unsurprisingly enough, San Francisco comes to top of list for field where one of the primary working activities is designing computer systems. You can see how the rest of the top 20 US markets play out below that.
Key Demand Trends and Observations
Let me take a moment to just summarize that we’ve heard today. First that the decline in total inquires resumed: March inquires fell 6%. Unfortunately the downward trend is confirmed by an 11% decline in Google searches. So, the first time in 5 months, the searches for online programs also fell, dropping 12%, which maybe one of the most concerning statistics we shared today. But we’ve got another in competition with that which is the conversion rates also declined. So, for a number of months the increase in conversion rates offset the decline in increase, that’s no longer happening. What do you need to do in response? First we believe, you need better data than most folks have to inform decisions on programs and the markets you wanna invest in. It’s increasingly difficult to grow or even sustain enrollment. So you need the best radar you can to find those find those spots where growth possible. Second, you’re going to need to look at marketing and admissions. Make sure you have the ability to take share and that’s the only way to sustain enrollment, when the market itself is declining.
Another concept I want to leave you with, Because aren’t many people looking at marketing admissions, when enrollment declines and say, “Let’s beat that up, see if we can do better, just by selling harder.” I think there’s another potential interpretation here, and we were interviewing one of the larger and faster growing institution a few weeks ago. We got a very interesting message, which is, “Growth without academic excellency is not only difficult it may be impossible.” and the other path to grow is make a sustain investment in the quality of education you provide, which in turn will help you attract additional students. At lower cost you can attract them if you were trying to do that through brute force marketing and admissions. For all of you, who responsible for academics, I think there’s a real burden to understand how you can make it better and importantly, “How can you differentiate your academic offerings in a market that is increasingly competitive. That’s it for this month, thank you all very much for joining us. I look forward to speaking to you next month, when we’ll be sharing results for April. I also wanna invite any of you who are based in the West Coast, well be at the WASC a crediting conference WASC ARC conference coming up next week. I’ll be glad to see any of you who want to drop by our booth and say, “Hello.” Thank you.