Dive Brief:

• Three markets are driving the growth in online education, according to a new report by consultancy Entangled Solutions: online education for graduate students, online courses for traditional undergraduates and fully online education for undergraduates. 
• Graduate and professional online programs are the most competitive, with about one-third of graduate students taking all their courses online. In comparison, fully online undergraduate education, which primarily targets adult learners, has "significant room for growth," and online courses for traditional undergraduates is the "least developed" market. 
• Although the online education space has become increasingly crowded, most of the growth has been concentrated. The 10 institutions with the largest online-only enrollment account for about 20% of fully online students, while the top 100 institutions account for about half. 

Dive Insight:

More and more colleges are looking to expand their reach online as a way to stave off enrollment declines and tap into new markets. Indeed, enrollment has grown to about 3.1 million online-only students and 3.6 million students taking at least some online classes, according to the report. 

Meanwhile, the sector has partially shed its reputation as a watered down version of an institution's in-person offerings. In 2015, a Gallup-Lumina survey found nearly half (46%) of Americans think online colleges offer high-quality education, rising from fewer than one-third (30%) who said the same in 2011. 

"Online learning is well on its way moving from the fringe to the core of institutional strategy and mission," Scott Lomas, a partner at Entangled and co-author of the report, said in a statement. "[T]he challenge for institutions is developing a comprehensive strategy that addresses the disparate needs and interests of online students and the evolving online market."

However, these changes come with their own challenges. Colleges can no longer simply launch a program online and expect students will enroll, the report's authors contend, writing that "easy wins have become increasingly hard to find." As such, those hoping to compete need to target their strategy and dedicate resources for online growth. 

Large public university systems are making moves to compete online at a national scale, in some cases turning to online program managers for help doing so. The University of Massachusetts System last month announced plans for a national online university to create a buffer against looming enrollment declines. 

This past summer, as the State University of New York (SUNY) was issuing a request for information on ways to grow its online footprint, system Chancellor Kristina Johnson wrote in an email to SUNY presidents that the system "cannot be left behind" while other colleges gain traction online. 

Some observers say these fears aren't totally unfounded, arguing that institutions that don't enter the national realm will be replaced by those that do.

However, the Entangled report's authors say there is another way forward for some colleges. Although national universities — such as Western Governors, Southern New Hampshire (SNHU) and the University of Phoenix — have strong footholds in the online market, the authors note some colleges have shown "real strength" in their regions. 

The University of Maryland, Baltimore County, as one example, is taking more of its master's programs online, hoping the move will fuel more enrollment from students in the "immediate region," the authors write. And some of SUNY's community colleges, which face stiff competition from SNHU, have focused their online offerings on regional workforce needs. 

Taking advantage of local brand recognition can pay off for colleges. About 75% of online-only students are enrolled at an institution within 100 miles of where they live, and nearly half (44%) are enrolled in one fewer than 25 miles away, according to the report. 

"Even in a more mature market, there is plenty of room for institutions with strategy and financial commitment to join the 100 largest online institutions," the authors write, "and especially to become a regional powerhouse."