00:01.40

David Brunner

Hello and welcome to another episode of Tech in EdTech. My name is David Brunner, and I will be the host today. Very fortunate to have our guest, Phil Hill, an educational technology consultant and industry analyst, but probably better known as the publisher for On EdTech newsletter. Welcome to today's episode, where we'll be picking up a conversation we started a while back on enrollment decline, and we'll be asking, " What's changed since then? What institutions are doing about it? What the edtech market look like for the people building and buying in it right now? And Phil Hill is back with us, and we're glad to have him. So thanks for joining, Phil.

00:56.62

Phil Hill

Thank you. I'm looking forward to the conversation.

00:59.32

David Brunner

Sure. So just for those that might not know you, go ahead, introduce yourself and tell us a little bit about what you're doing and what you bring to the conversation.

01:11.09

Phil Hill

Sure. So I've been consulting or doing an analysis in the edtech area, particularly around higher education, for basically about a quarter of a century at this point. And then I had picked up more of a writing role and getting more into market analysis about 15 years ago. And as you had referred to, most people know me from the newsletter, the On EdTech newsletter. And really, what I try to focus on are the strategic changes that impact teaching and learning. So the technology is not really the focus. It's where technology is enabling change in education. And so basically that's the perspective I come from, trying to understand what changes are happening and what that means for schools, for vendors, for investors, or policy makers.

02:08.34

David Brunner

Well, fantastic. Well, we appreciate you being on here, and we appreciate this perspective. So, we'll start in on some questions. So when you were last on, we talked about whether declining enrollments were necessarily a bad thing. We looked at a more recent data. The picture seems to have shifted in some areas. What's changed? And in your opinion, what's driving it?

02:34.34

Phil Hill

Well, from a broad, high-level perspective, not as much has changed. In other words, we're definitely facing, you know, what's been known as the demographic cliff. It's more of a demographic hill, but it's a real downturn that's really hitting at a nationwide level right now and is going to take at least a decade. So, what hasn't changed is that's still a real issue. And we have seen significant changes and less enthusiasm for enrollment than in past years. So, it's sort of the broader level; it hasn't changed. What I think has changed since we last talked a few years ago is that at the time, you also had this year-over-year decline that was happening. And, you know, enrollments were going down, let's say, 1% to 2% each year. And there was a concern that, hey, the picture might start getting worse around 2026 as well. What's happened, what's changed, or one of the biggest changes is in the past two to three years, there's been a little bit of a rebound where enrollments have actually been going up. In a broad base, and particularly community colleges have been the most volatile. They were losing the most before, but they've also rebounded quite significantly over the past two years, roughly. So that's one of the biggest changes that's happened. There's a little bit, it's not all good news, by the way. I think there's some real risk of complacency on the big picture because of the changes on the short term. And we can get into that a little bit more. The other big thing, and it's also going back to community colleges, is the dramatic rise in dual enrollment. Just how much of the community college enrollment picture, and somewhat with public four-year schools as well, is driven by high school students who are taking courses that also get them college credit. And, you know, it's a huge percentage in community colleges. So, that's the other risk is you might say, well, community colleges have been recovering over the past year, past two years, roughly. But at the same time, their dual enrollments have gone up so much. And that's a fundamentally different business model for them as well. So, just because that's been going up, it doesn't mean the other problems aren't there. So we have more of a mixed picture than what we had the last time we talked, which was more of a it's going down short term, and it's going down long term.

05:24.76

David Brunner

Absolutely. So it's definitely a mix of things.

05:28.31

Phil Hill

Yes.

05:29.40

David Brunner

Would you say the conversation in higher ed has moved from understanding why enrollment is changing to maybe figuring out how to structurally adapt to those changes?

05:44.02

Phil Hill

I think, you know, if you just did a broad picture across the industry, not that much has changed. I guess there's more acceptance that we are talking existential issues because it combines with the financial crisis. That's the other picture, in the past few years, the cost of running an institution has changed dramatically because of inflation, the Fed funds rate, the impact of inflation on the cost of running things. And when you combine that with enrollment, I think there's much more of an existential view of we've got to deal with this. So, but you asked the question, if they move beyond the whys to sort of the structure, and what do we do about it? You definitely see a lot of very good, more good examples today of individual institutions or systems who are doing that type of work, who are actually trying to restructure, take a more strategic approach to what do today's students need and where is that going to go? But, you know, the majority of institutions still are just following others or being very passive. So there... there's been change. It's just we need faster change and more aggressive change in the market. So, individual examples, yes, we've seen a lot more good examples. But broad-based, we need to rethink how we approach this problem and not just react to it. That's where the challenge is, is really getting more of a broad-based view.

07:30.42

David Brunner

Yeah, absolutely. And you mentioned that institutes are following more of what other institutes are doing. But, you know, a lot of institutions are now running multiple models simultaneously, you know, like fully online, hybrid, and on campus. How should they be thinking about this strategy rather than just operational?

07:55.42

Phil Hill

Well, I guess the short answer is start first with student needs and student demands. In other words, in the past, I think there was very much a modality first view, you know. So, 10-15 years ago, when the non-profit schools really started expanding what they were doing, it was still, oh, let's do online, and online was the point. And it was a new revenue opportunity. And they were able to reference non-traditional students, but the online itself was sort of the focus. And, I think a lot of what's needed now is two things. One is, it's more of a spectrum than a binary. You don't have this face-to-face or online. And you mentioned hybrid, but it's not like there are three choices. There are different support models across the spectrum. And the real issue is start first with what student needs are. So there's a reason… there was just a rise point, just put out their voice of the online learner report, which they've been doing for years. And it has a history back, back to learning house days before the companies got acquired. And they had a good way of putting it in the report, talking about, you know, the table stakes for so many working adults, for example, is flexibility in the online, anywhere, anytime type of model. But, at the same time, they demand more and more connectivity. In the past, that tended to get interpreted as, let's do online asynchronous period. We have to go for you know easy access any anytime, anywhere, and don't mess that up at all. But what you're seeing now is students are demanding, yes, but we need greater connectivity. I need to engage with my faculty members more. I need to engage with my fellow classmates. I need to feel connected to the program I'm in. And so, very slowly, too slowly, we're starting to recognize as an industry, wait, we need to sort of mix and match to address, you know, multiple needs from today's learners. Yes, they need to be able to do this while they're raising a family, working, doing their schoolwork at night, all the things we've been dealing with for years. But at the same time, we have to increase their engagement opportunities. And often that's going to require, sometimes, a hybrid where you come in partially. We need programs that are mixed between online and face-to-face. Sometimes it might be more of an asynchronous-synchronous type of match. But we need to view modality as more like a tool, you know, a set of tools, and we pull and mix them in the right way for today's students. So... I know it sounds somewhat generic, but we've really got to be much more aggressively looking at student needs and the modality as a set of tools to apply to meeting those needs on where they are. And increasingly, what you're going to find is that's where you get more of that mixed type of mentality that you need to be doing more than one thing at a time.

11:24.25

David Brunner

Absolutely. And, you know, students' needs are absolutely the thing that the institutes need to be looking at first. And you mentioned a couple of different modalities. And, you know, geography still plays a surprisingly significant role in online learning adoption. And what is data telling us that most institutes are not paying attention to in regards to the geography and where the students are taking those online courses?

11:56.71

Phil Hill

Sure. Well, actually, I think it's becoming, it's pretty well known, sort of the main premise you're mentioning that, you know, online is not, for the most part, is not a, it doesn't matter where the institution is. There's a handful of schools that applies to. The Western Governors University, the Southern New Hampshire, the national brands. There's a handful of schools that, for the most part, location doesn't matter that much. In the past, there was too much focus on that model, and then, you know, people just assumed it. But, over time, we're looking at student selection, and you're realizing that the majority, more than 50% of students, in online programs have chosen an institution that's within 100 miles of where they live or within the state. And, I think we've done a pretty good job where a lot of education leaders understand that fact and understand that, for the majority case, location does matter. When you ask the question, what are they not paying attention to? I would argue that one of the big things is state-by-state policy is not well understood. So, we recently looked at NC SARA, which is an organization that administers the state authorization reciprocity agreement that helps with the bureaucracy of doing different, you know, serving students in different states than where the institution is. And if you look at that data, you really have a lot of different markets depending on which state the student is in or which state the institution is in. And, a lot of that's based on state policy and regulations and laws they've passed. And that has a pretty big impact on what's possible, what student expectations are, and how difficult it is. So I guess what they're not, yes, geography matters. And surprisingly, it still is a big issue of how close you are to the institution. But, we need to do a better job of understanding it's almost as if we have 50 different online markets. That's a little bit taking it too far, but it's not one market where geography is a factor. There's a bunch of individual markets, and a lot of that is driven by state policy and state offerings on where they are. So that's where schools need to better understand those types of dynamics. Which state to try to serve is a big decision. It's not just what's closest, but which state from a policy level.

14:52.40

David Brunner

Yeah, I mentioned to you before this call that my previous history has been in enrollment management as Director of Enrollment.

14:59.42

Phil Hill

Yeah.

15:00.60

David Brunner

And we could see our online student base was a 50-mile radius from where our campus was. And that was always, just say, a question mark.

15:07.48

Phil Hill

Yes.

15:09.65

David Brunner

How can we expand that out? And that's something that is still an issue with directors and enrollment management across the spectrum. 

15:20

Phil Hill

Yeah, absolutely.

15:21.78

David Brunner

So…

15:21.88

Phil Hill

Yeah. And there's…, but I would mention there's also, there's a real opportunity there as well that, you know, because so much of what's needed is picking your niche. We're not going to, most schools aren't going to compete with Western Governors. What you should be looking at in the majority of cases is here's our unique identity. We do have locations close to you. We do have close ties to the local workforce. You know, we embrace the fact that we're not a national brand. And, there is a lot of opportunity in that perspective as well.

15:57.30

David Brunner

Yeah, yeah, creating that branding has been and will always be a main focus for sure. There's a vocal narrative that, moving gears a little bit to LMS, there's a vocal narrative that the LMS is becoming obsolete. And you've pushed back on this. What is the argument you keep having to make?

16:24.86

Phil Hill

Basically saying, no, it isn't. It's changed over the years, but it really is the same argument. So the immediate thing today is Generative AI changes it. It's so easy to write software now with coding agents, with Claude Code or Codex from OpenAI, that the value of the companies, particularly LMS companies, is just… they're becoming commodities and going away. That's today's argument that I'm pushing back on. And, we've written recently, I'll get back into the details of why we think that's a wrong argument, but for historical perspective, it's interesting that we had very similar arguments back even in the late 2000s. Google Wave was coming along, and there was an argument up this is going to disrupt the LMS market, and they're all going to go away. And, you know, there's another Microsoft Teams, well, that changes the environment. Now you can do all the individual functions of an LMS without needing it. And yet, we go through this, and we still have the LMS serving the basic functions, and the market is not getting disrupted. And so I guess my point is this has been a long-running argument. And a lot of times it's better… the arguments better represent what people wish were true rather than what's actually true. You know, they'd like to have the LMS not be as dominant as the front door for virtual academic activity for a university. But that's what the LMS does. It enables learning at scale. People often say yes, but the LMS doesn't actually help students learn in so many cases. It's doing the administrative efforts. But that's part of the point. The LMS enables an entire institution to do the learning. And a lot of times that learning support will be through courseware, specialized learning apps, stuff they've developed at the university. And it's not a weakness of the LMS that that's happening through a third-party system. It's actually a strength. The LMS provides the... the security, it provides the, well, more and more, it provides the ability to deal with accessibility requirements, data reporting, student rostering, help and also just helping students know how to manage a course, know where the assignments are, have a place to submit assignments, to, you know, do the basics, which are boring, but they have to be done. So the LMS is an enabling technology at its core, but it also serves as the front door. So it's very mission-critical. So I don't see that changing. I have not seen realistic changes to that perspective, even today with generative AI. And more recently, I've pushed back, saying, well, listen, the generative AI might handle the code, but it's not like the code software itself is the primary reason why schools pay these companies. They're paying them to navigate procurement, regulatory, all of the broader services issues. So even though the coding is changing because of AI, that doesn't change the need for the LMS. And so, having said all this, I do think we're going to be seeing some functionality changes driven by Gen AI that will change the industry for better and worse. But that's different than saying the LMS is becoming obsolete. I would argue more the LMS is entering into a period of necessary change, but it's not going obsolete.

20:31.94

David Brunner

Well, let's kind of piggyback on that. So, how are the learning platforms transforming from course management tools into something broader? And what does that mean for how institutes should be evaluating them?

20:46.20

Phil Hill

Well, one of the answers it's that ecosystem. You know, if you take… go back to the broad thing, back in the 2000s, we knew even back then that it was an ecosystem, multiple systems patching together that serve students. The difference was, it wasn't as standard space back then, and it was much slower to develop. And one ed tech used to be called IMS Global was a major player in enabling more of a plug-and-play type of ecosystem that's out there. So, going from pure course management into better supporting learning, so much of that is the broad ecosystem strategy. So, how should institutions be evaluating LMSs? They need to have… they need to have a better understanding of how the other non-LMS platforms support their learning mission and how they can develop the comprehensive strategy of what they do. Procurement is the biggest problem in this. The university procurement process is the biggest problem. And it tends to lead schools into almost doing a scoring system on specific LMS features and not thinking strategically about an ecosystem and roadmaps, how things are going to be changing moving forward. So, it sort of forces you into a backward-looking feature-counting perspective where we need to do things differently. Put another way, I think most university leaders understand the ecosystem and that learning you know gets served from multiple platforms working together. But, when they get to the evaluation process, too often that gets constrained into a feature-counting, backward-looking perspective. And that's the biggest challenge, I think we need to work in this area.

22:52.66

David Brunner

Absolutely. And as we've seen, heavily leveraged EdTech companies, they've been struggling. And actually, they've loed been restructuring here in recent years. Kind to piggyback what we were just talking about, what does that pattern tell us about what goes wrong when commercial pressure and institutional needs fall out of alignment?

23:17.72

Phil Hill

Well, first of all, there's some bad assumptions that have always been around. And, like you see the arguments, particularly from academics about, oh, these companies are just taking money and stuffing their pockets with it. And, you know, it's almost like they're playing Monopoly and that's their view of how for-profit companies work. The reality is, the LMS market sticking with that, but it's even broader than that. Broad EdTech has actually been losing money over the years, losing. It's not a let's take profit and we're just, you know, banking that profit. It's more of an investment. Let's take in venture capital money, private equity money. Well, let's try to grow and let's invest in what we're doing. So there's a bad assumption about profitability that distorts this question. And, one of the things that's changed is very little is in venture capital investment mode these days, like it was in the 2000s, where a lot of these companies were getting invested in for growth. The market has matured a lot, and that's where private equity has played a much bigger role, and it dominates the ownership of most EdTech platforms. It's private equity. There, I know this is a gross simplification, but the main point there is instead of investing for growth, they prioritize profitability in terms of let's get the company running effectively and make sure it's not losing money. Yes, we'll invest to grow, but our top priority is getting the operations fixed. And so, there's been a lot of necessary corrections to EdTech companies, essentially saying you can't go on forever losing money. One of the main weaknesses of the private equity model is so often it's leverage. That's where you hear leverage, buyouts, et cetera. Meaning that there are large amounts of debt associated with companies when they get acquired in this private equity-driven space. And, that debt really, we have two recent examples to you, the OPM provider and Anthology, which had purchased Blackboard and has now gone through bankruptcy and is Blackboard again. But these are two leading EdTech companies that went bankrupt because they had pre-existing debt that was based on pre-2021 assumptions or 2021 and earlier. And that was essentially the cost of money, the amount it takes to borrow money, the percentage rate on a loan was very low, you know, often lower than the inflation rate, which essentially means the money is free. Like, you'd be crazy not to take on more debt. Well, the problem was with the inflation that I referenced, particularly in 2022, that changed. And now interest rates on debt went up high. And I realize this sounds mundane, but that's what drove both of those companies to go into bankruptcy. The cost of servicing their loans. And, because of that, there have been a lot of restructuring layoffs. And those are not the only two companies making changes. They're just the most visible because of bankruptcy. And a lot of that is driven because of the private equity model. And I'm not arguing that private equity is bad. I'm just saying one of the biggest risks of that model, which is dominant in EdTech today, is managing debt. And that's causing big changes in the market right now. So there's a lot of universities might say, I don't want to get involved in that type of thing. But it's, yeah, that's… it's affecting you whether you want it to or not. And so, you better have a better right idea of what it is. And when you're choosing partners, you need to look at the financial stability of the company serving you. And if the bets they're making because of this ownership and debt, are they the bets that are going to align with what you want later on? And if you don't mind one other tangent, and we're being specific here, look at Coursera. Coursera started out heavily VC-funded, and it was all about the best universities in the world that are free. And they enabled a lot of universities to have an online presence. And quite a few of them are making significant money from this relationship. However, if you look at the financing of Coursera, it was inevitable that they needed to have a more solid market. So, they've gone more into vendor relationships, serving Google, serving corporate training type of activities. And in the AI era and, based on financial pressure, now they're really focused on developing their own content using AI. Now, you might look at that and say, well, that's good because they're developing content quicker and there's a lot of opportunities there. But a university has to ask, is that in alignment with what we are using them for? And so that's a company whose core mission has changed dramatically on where they're going, which bets they're placing. And universities need to figure out, is that in alignment with my needs? Is this good or bad? So, there are concrete examples why this really does matter.

29:14.87

David Brunner

And I agree 100%. And actually, kind of a question I have, and I feel like it all works together is, with AI. And so we talked a little bit about AI earlier when we were talking LMS. But how is AI changing learning platforms in practice? And where are institutions constantly getting the implementation wrong?

29:40.98

Phil Hill

Well, in practice, I think one of the first, the immediate reaction in EdTech to AI, and we're talking generative AI, large language models that have really changed things since 2022. The first thing was, are students cheating, and can we catch them cheating? And that was not a productive approach. But you asked, like, what's actually changed? The academic integrity cheating debate, which hasn't been that productive, but that was the first reaction. The second reaction was more... EdTech vendors providing AI-enabled features that schools could use. So, hey, instead of having to create your own rubric, have the platform create a rubric that you then go edit. So you, faculty member, we're making your job easier to administer your course. We're making it easier to come up with quizzes, even based off of your content that you've actually written. So that's the biggest change that's happened to date in implementations on campuses is the introduction of these new AI features that are mostly targeted towards making the faculty instructional designer, the course design process, easier, particularly on the administrative task. And ideally, that enables people to focus more on the actual feedback to students, the teaching and not the administration. So that's where it's hit the most, where I don't think it's really hit yet, is theoretically this should really enable quicker development of new capabilities, even if it's not an AI feature, it's just quicker delivery of features that they can use, which also then gets into a lot more, and I've realized this word is loaded, but personalized features. So much more of an ability to serve individual, unique needs. And I think there's going to be a lot of discipline-specific focus on learning tools that's going to really increase due to AI. I don't think that's really hit the campuses and true implementation yet, but I think that's going to happen. So then, if you ask the question, what are institutions consistently getting wrong? I don't see mistakes right now. The developing mistake is it's too much looking at the past two years as opposed to looking at what's going to happen in the next two years. Schools are looking at 2023, 2024 issues right now way too much. And they're ignoring what's going to be happening in 2026 and 2027. So that's… it's it's not been like calamitous mistakes necessarily. I just think that we need to look forward more than we have been doing as an industry.

32:58.07

David Brunner

So if you were talking to university leadership and the teams working with a constrained budget and competing technology priorities, where should they be investing now? You talk about future and investing. Where should they be investing, and where should they be holding back?

33:18.85

Phil Hill

Well, I'll tell you the holding. Let me use just sort of a subset of this to illustrate the point. It goes back to that original thing where I think there was a focus on academic integrity. That is a real issue because there's a changing nature of what does knowledge mean. And the two competing, or two opposite ends of this view is, one is, ah nobody thinks anymore. And anything that students do, if it touches AI, that's essentially cheating. Therefore, we need to catch it and nip it in the bud. And I won't let AI in my classroom. A lot of that type of attitudes. On the other end of the spectrum, there's much more of a view of, hey, AI is going to affect everything, so we need to adopt it. We need to put it into every course. This is the way of the future, and it's sort of a tech utopianism view or an inevitability. Where I think a lot more of the investment needs to be is back on the academic side. So if assessment of learning has changed this much, it's not a new issue. We've known for years that there's a lot of multiple-choice questions that are pretty shallow and don't effectively assess students and what they're learning. And there's been movements like authentic assessment. You know, how do you actually not just do a quiz and a gotcha type of mentality? We need to rethink assessment to truly measure what students are learning holistically and can they apply it in a real-world situation? So we've known this for years, well before generative AI. Generative AI suddenly breaks down so many of the assumptions that have been holding us back from making changes and causing us to go too slow. So, in this area, where should institutions be investing? They should be investing in the question of, ok, we need to rethink assessment and make it much more effective on evaluating students and helping them learn and signaling to the market what they know. How do we aggressively improve our assessment strategy and not just talk about it and hope that a few individual faculty or a few departments do it. We need an aggressive push. So within that area, invest in rethinking assessment and put in place big programs to incentivize vendors, faculty, whatever, to help push forward with much more authentic assessment moving forward. So, now there are other areas you could apply this to, but I guess what I'm arguing is invest in making the academic changes, most of which we already knew before generative AI, but now we need to make the change now. That's where you invest the money, and it's not just put AI everywhere, nor is it the opposite, which is let's avoid putting AI anywhere. It's… let's rethink assessment in this case.

36:40.06

David Brunner

Awesome. So, if you are used to listening to this podcast, you know that the next part up is a lightning round. And I ask question after question, and we see how many we can get in within a certain amount of time. And this is great because these are kind of gut reactions to questions, and you get real honest answers out of this usually. So we appreciate Phil that you're able to do this. Starting it off, one LMS trend that is getting more attention than it deserves.

37:14.93

Phil Hill

The AI ethics question. I think that LMS is sort of the point of the issue, but there are broader systems. And that gets into, oh, we need to be human-centered. So there was too much reaction of, we're going to have AI principles, and humans are at the center. And too much of this let's feel good type of discussion around how you're going to use AI within the LMS system. That's one that's been way too much attention, and we need to move past it.

37:47.26

David Brunner

Okay, one shift in the higher education EdTech market that institutions are underestimating.

37:56.86

Phil Hill

Well, it's the one that we talked about. It's the financial health of the EdTech industry, the private equity ownership, the debt levels of companies or companies that don't have a lot of debt. And, what that means that they're likely to do. So they're underestimating how important it is to understand basic finances of the market that they're working with and think through what does that mean for us, the institution in the future.

38:26.97

David Brunner

Okay. The institution-vendor relationship, is it getting better or worse? And most importantly, why?

38:37.79

Phil Hill

Well, let me take a step back and take more of like a 20-year perspective to answer this question. It's getting better. And the reason is 20 years ago, I would work with schools, and they would say things; if you're evaluating an EdTech platform, you were not allowed to think about pedagogical design. That's our job, academically. And the technology ended up just being which buttons to push. I think that's improved dramatically in the past 20 years. Now, when I work with schools, the majority of them truly are saying, huh, we've got to think about these issues together. How are we designing courses for this department? And how does the technology fit within that with that situation? And because of that, I think there's a lot more realistic discussions between institutions and vendors. So I think it's gotten better significantly over the past 20 years. Why is that? I would argue that a big part of it goes back to the things that we used to just assume for-profit institutions, the other guys dealt with online learning, et cetera. That's broken down. And now, every university or almost every university says technology is pervasive. It's affecting all of us. So we need to get over ourselves and have a better discussion. So it's sort of just time and adoption, but I think it's improved dramatically over 20 years.

40:10.14

David Brunner

Okay. In one capability every institution needs to build right now that most have not prioritized.

40:19.64

Phil Hill

This might seem a little bit out of left field, but we've done a lot of coverage of the regulatory environment and the whole move towards institutional accountability and program-level evaluation is not being prioritized nearly to the level that universities need to do. 

41:14.58

David Brunner

Okay, Phil, the last two questions I have for you today, which I really appreciate your time and your insight. My first one is for higher ed and EdTech leaders that listening to this, if they could take one actionable thing away from this conversation, what would you want it to be? And my second question is, where can listeners find your work and stay connected with what you are doing and how things are being tracked?

41:46.81

Phil Hill

Well, first of all, I appreciate the time to talk and to connect with you guys again. If there's one actionable thing I would take, I hope university leaders would take away from this. It's the whole shift from backwards view and historical decision making and take every EdTech-related decision and first look at two things. What are today's students and what are their needs? And that's the center of the evaluation. And number two is really look at the future performance of a company as they're trying to work, figure out which partners to work with. Now, as far as where to track me, it's the On EdTech newsletter. If you just search that, On EdTech, you'll find my newsletter. We have a free version. We have a premium version. That's the best way to keep track with me. So again, thank you for inviting me and I've enjoyed the conversation.