Shorelight – View From A Bridge – management, education and personal thoughts

Pathways Pivot for India?

E.M. Forster suggested we should “mistrust all enterprises that require new clothes”² but Shorelight has restyled its website and is offering aggregator type filters which reflect a change of direction. The filters help clear up what’s been going on with their portfolio and suggests that the pressures on their pathway offerings are causing them to pivot at pace. The site gives a clear sight into the dash for direct recruitment partners that looks to be the increasingly popular modus operandi for all pathway operators.

Searching suggests that a “groundbreaking new partnership”, signed with Mercer University in October 2018 who were described as “an exemplary partner for Shorelight” at the time, doesn’t even make the roster in 2022. The pathway program in the fifteen year contract with the University of Kansas signed in 2014 seems to have come to an end just eight years later. And the pathway with the University of Central Florida (UCF) heralded in 2013 as “another big win for the students of an institution that is clearly on the move” is also over.

Only nine university partners are shown offering the full service of undergraduate and postgraduate pathway option with direct recruitment in both. Leaving aside the three American Collegiate offerings there are a total of 14 undergraduate pathways and 12 postgraduate pathways. It’s a complex offering, including three which are postgraduate direct recruitment only and with some significant restrictions – the Johns Hopkins University choices appear to be for engineering programs only.

UG Direct Only	11
UG Direct and UG Pathway Option (no PG)	14
PG Direct Only	3
PG Direct and Pathway Option (no UG)	12
PG and UG Direct with Pathway Options in both	9
UG and PG Direct Only (no pathways)	12

For new readers, the American Collegiate offering is a “choice” program hosted by American University in Washington DC and with courses through UCLA Extension in Los Angeles. The goal is then to transfer to an institution that will accept the credits. American Collegiate Live offers online courses taught by UMass Boston and bearing academic credit with “full recognition” by 13 universities

The Past Is a Different Country¹

When Elizabeth Redden reviewed the US pathway scene for InsideHigher Ed in 2018 she commented, “With a few notable exceptions, both Shorelight and INTO tend to contract with large institutions, and their partnerships tend to be larger scale.” Those days seem long past with Shorelight’s burgeoning list including a long string of smaller, regional colleges. INTO’s closures at Washington State University and Colorado State University also suggest the game has changed irrevocably.

For completeness, the current state of relationships³ on major pathway operator websites shows:

	Current Total US Partners	Current US With Pathway*	Closed in US Since 2018**
Shorelight	42	18	3
INTO	11	9	3
Navitas	3	1	7
Study Group	9	5	8

*Excludes American Collegiate
**Pathway announced/operational but no longer shown

It is difficult at this point not to recall the ill-fated words of Karen Khemka, a partner with the Parthenon Group, who said in 2014, “The U.S. third-party/outsourced pathway market is less than half the size of the Australian market despite having a higher education system that is 10 times the size. We anticipate that growth will be constrained only by the pace at which private providers can develop the market.” It came towards the end of a period when private equity invested over a billion dollars in pathway operators but as I asked in a 2018 blog, “..has attention to the supply side of the equation ignored the challenges of changing patterns of demand around the world?”

Unless We Remember We Cannot Understand¹

Curiously, the pathway operators inverted the equation when they were promoting the growing supply of students to meet the demand of universities in the traditional recruiting countries of the US, UK and Australia. They quoted the dubious “8 million globally mobile students by 2025” mantra and largely ignored the potential growth of inter-country competition, relatively low cost of entry for new pathways, the rising cost of acquisition as agent and student choice grew, and the threat of substitute products through technology. Ignoring one of Porter’s Five Forces seems poor business sense but shunning all five seems less than sensible when you are investing significant amounts of money.

One talented US leader, running the American portfolio of a UK-based pathway operator, posed these fundamental questions shortly after INTO celebrated its £66m investment from Leeds Equity and Shorelight’s launch. The company carried on regardless, although US losses mounted, the quality of partners declined and the UK operation stopped adding new partners. As the Trojans found, it is unwise to ignore the insights and prophecies of a truth telling Cassandra.

Other observations that were rarely heard out or given sufficient attention included:

the home of the pathways in Australia and the UK were 13-year schooling systems where the Foundation year of a pathway completed a fundamental requirement. This gave an ideal opportunity for language tuition and academic skill development. US universities already took students after 12 years schooling and those with larger international cohorts often had well developed ELIs to accommodate language needs;
recognition that the bubble created by fast-growing demand from China, particularly at undergraduate level, was coming to an end as demographics changed;
understanding that the bounty of state-sponsored language students was fading fast and unlikely to be replaced;
for many US universities the attraction of students paying out of state fees was as attractive financially as international students and seemed more accessible as a market;
the best US universities could already recruit if they wanted to and so the opportunities to have great brand names on the website was always going to be minimal.

A Room With A View?¹

While new recruitment markets are emerging they are quite different in character and nature. The growth in students from India has led to a demand at post-graduate level, often without the need for significant English language or pathway academic skills. It seems likely that Shorelight’s willingness to take on direct recruitment for less well-known institutions reflects the reality that those students are less brand conscious, looking for lower fees and are more focused on a qualification that gives them post-study work options.

It may be a model that is less stable and less lucrative than the pathway model appeared to be in the early part of the 21^st Century but INTO and Shorelight have found the going very tough at many of their US pathways and need to do something. As INTO launches its new strategy there may even be a longer term appetite for uniting forces with Shorelight in the US to become a super-dominant player. Bringing the two groups together would offer a large direct recruitment portfolio, allow some selective reduction in competing or uncompetitive institutions, fill a gap in terms of online technology for INTO and should enable significant reductions in overheads.

All of these types of potential mergers are riddled with questions about existing financial arrangements, for example Huron Consulting has $40.9 million in convertible debt in Shorelight Holdings LLC maturing in January 2024, competing institutions and cultural fit. But when the CEO of INTO is talking explicitly about “lighter touch, lower investment” (The PIE live interview, 11 July 2022) ways of having discussions with universities, it seems reasonably clear that there is a shared interest in building non-pathway relationships. The real question will be whether the new era for organizations that cut their teeth on pathways can drive enough revenue and profitability to be worthwhile and whether consolidation offers added value.

Of course, it may also be that the days of the recruitment behemoths are over. Twenty years of pathways has created some highly skilled individuals with strong in-country contacts who could simply choose to go solo with a smaller portfolio of hand-selected university names. Faced with a choice between being one of eight names in a portfolio or being in the bag of a sales team with 37, 48 or even 100 different products to promote, a smart university might choose to be in a select pack rather than a faceless herd.

Notes

Shameless use of E.M. Forster book titles and quotes throughout the article.
Apparently, Forster adapted this quote from Henry David Thoreau
It is not always easy to interpret the websites of pathway operators and I am happy to accept authoritative and evidenced corrections and note amendments where appropriate

Image by yogesh more from Pixabay

CHINA CRISIS FOR US PATHWAYS?

My early January blog on the two big US pathway operators focused on specific examples of INTO University Partnership’s (INTO) pathway problems without similar insights into some of Shorelight’s major partners. There had been some insights into lacklustre performance at Louisiana State University, Auburn University and the University of Kansas back in October 2019 (Shine a Light on Shorelight) but an update is overdue. There is also some news from INTO as it confirms new faces in senior management* and some fundamental changes in its relationship with university partners.

In the US the most significant point is that INTO has become the sole owner of what was established as a joint-venture with St Louis University. This follows the closure of joint venture operations at Marshall, Washington State and Colorado state over the past two years. INTO’s annual report does not list any shareholding in the pathway at Hofstra University so it now has only seven joint-venture partnerships in the US.

The big question, given that all of the most recent US announcement from both INTO and Shorelight have been for direct entry partnerships, is whether the bubble has totally burst on pathways. Without a significant return of students from China it is difficult to see that predominantly graduate growth from India is going to sustain them. Looking at the way enrollments have panned out in Fall 2021 suggests this could be the direction of travel.

Shorelight Stumble at Auburn And American

American University is generally reputed to be one of the star performers in the Shorelight portfolio but the enrollments reflect the harsh realities of the pandemic. The numbers indicate that enrollments in Accelerator/Collegiate/PSE courses were already in decline before Fall 2019. Despite the limited bounceback in overall enrollments to the US reported by Open Doors in Fall 2021 there is no evidence the Shorelight pathways are seeing an upturn.

Source: American University Office of Institutional Research and Assessment

The story continues when American University’s total Fall enrollments are reviewed. Separate axis are used to reflect the significant difference in volume between Chinese an Indian students and the only upturn in Fall 2021 was in Indian graduate students (about 10 students more year on year). The decline in Chinese undergraduates begins the year after the fall in Accelerator/Collegiate decline and suggests the longer term vulnerability that American University has to declining Chinese numbers.

Source: American University Office of Institutional Research and Assessment

The combined enrollments in the first and second term Global Masters Accelerator at Auburn University shows similar characteristics but with even more significant declines in volume. Total enrollment has fallen from a peak of 87 in 2017 to just 11 in Fall 2021 with the decline in Chinese students driving the outcome. Attracting students from India to pathway programs seems unlikely to make up the shortfall.

Source: Auburn University Office of Institutional Research

Less Spirit at INTO Saint Louis University

Saint Louis University has seen a significant shift in direct enrollment graduate numbers in 2021 with Indian students outnumbering those from China. This does not, however, go far enough to counterbalance the decline in Chinese undergraduates over the past five enrollment years. Evidence from other INTO pathway operations has shown that this plays out even more dramatically at pathway level because Indian graduate students generally have less need of the services provided.

Source: Saint Louis University Office of Institutional Research

INTO St Louis (INTO SLU) was first established as a joint venture in September 2017, becoming, at the time, the seventh INTO partner in the US. Between the financial reporting in 2018 and 2020 the debt owed by the joint venture to INTO had grown from £1.8m to £3.5m and the current circumstances suggest there is little likelihood of it being repaid in the near future. If pathways are not enrolling sufficient students they quickly become unviable and need significant financial support from parent organizations.

INTO’s most recent Annual Report is coy on the matter and simply reports that “subsequent to the year end INTO’s shareholding in INTO SLU LLC increased to 100%”. Having lost three pathways in recent years there was probably little appetite for losing another partner. The upswing in interest from Indian students may have tipped the balance to continue a pathway while getting exclusive rights for direct enrollment of international students.

Overall, INTO’s US operations all appear to be increasingly indebted to them with even USF slipping from creditor to debtor in the most recent report and accounts. While it is reasonable to expect new businesses to take a while to get into profit INTO hasn’t opened a joint venture in the US since Illinois State University in 2018 since when the total level of indebtedness across all US operations has nearly doubled from £18m to £35m.

Source: INTO University Partnership Annual Reports***

The most recent accounts for INTO Illinois State University LLC (INTO ISU) make quite interesting reading with the financial deal including a Promissory Note with INTO North America which allows borrowing up to $6m in operating capital with an interest rate of 6%. Another number that catches the eye is that marketing expenses were an eye watering 77% of tuition revenue. The pandemic caused the LLC to cease operations for a period of up to 23 months, effective August 1, 2020 (the “Deferment Term”) and it will be interesting to see what happens next.

China Crisis for Pathways?

It is no secret that the early growth of pathways in the US owed an enormous amount to English Language scholarship students from Saudi Arabia and the acceleration of incoming students from China. As numbers of the former fell away pathways became increasingly reliant on the latter which made the COVID-19 situation particularly difficult. The $64 million dollar (sic) (and maybe more) question is whether the future will see a significant return to those pre-pandemic conditions.

Looking on the bright side might involve pointing to the growth in Chinese undergraduate applicants to the UK (up 12% year on year in January 2022) for entry later this year. A more negative view might be reflected in the range of reasons summed up in “How Washington’s hawkish China policy alienates young Chinese”. Optimists could point to the recent ending of the “crackdown on Chinese research ties” while pessimists would suggest that the countries are “locked in a stalemate”.

Back in 2014, Peggy Blumenthal, a 30-years at IIE and a senior counselor to its then president, Allan Goodman, discussed the underlying issues with Science magazine and its worth a look. China had devoted significant resources to build graduate capacity, more of the professors had been trained in the US and Europe, and even at that time “the added value of a U.S. graduate degree has shrunk in relation to a comparable Chinese degree…for the vast majority of Chinese students.” It’s arguable that the quality of Chinese universities has increased further and that there has been little to significantly increase the lure of a Western degree.

What is also clear is that, as discussed in a recent blog, 2022 is likely to be the first year that all four major recruiting companies are competing effectively at the same time and there have been a number of increasingly powerful entrants to add to the mix. There seems every likelihood of continuing international tensions and the potential for students to be “weaponized” by their home government as a form of economic and cultural sanction.

The most prestigious universities in traditional recruiting countries have little need to worry but the early signs from Fall 2021 are not particularly encouraging for universities or pathway operators that have relied on Chinese students paying high fees. While the growth of graduate students from India might provide some direct recruitment solace for universities this is not going to resolve the issues facing the pathway sector. Shorelight appears to have already set its sights on building a direct recruitment portfolio of institutions over and above any pathway interest but since the University of Arizona announcement in June 2020 INTO appears to have no obvious sense of direction to face the changing market dynamics.

Notes

*Tom Hands has recently joined as Chief Recruitment Officer. He has previously worked in recruitment positions for Study Group, Navitas and Kaplan. Namrata Sarmah joined at the end of 2021 as Chief Product Officer having previously been Senior Director of Product at ViacomCBS

**As ever, research is presented in good faith but with a recognition that classifications of courses can be complex. I am happy to receive any authoritative corrections (with explanations) and would record them as notes on this blog.

***A review on 1 September 2022 showed that the INTO University Partnerships Annual Reports for 2020 and 2021 carry different figures in reporting of debtor information for INTO Washington State University and INTO Illinois State University. In the Report to July 31 2020 the debtor levels are shown as £3.156m and £5.438m respectively while in the Report to July 31 2021 (which shows the prior year as a comparison alongside the current year) the debtor levels are shown as £1.873m and £3.365m respectively. The July 31 2021 Report appears to make this change due to a prior year restatement and the graph has been adjusted to reflect that. This does not alter the explanatory text in the paragraph immediately before the graph.

SHORELIGHT REPORT AND STUDENT SAFETY – ILLUMINATION OR OBFUSCATION?

We are familiar with the notion that there are “lies, damned lies and statistics” so whenever an organisation throws up figures to paint a scenario that is in their interests it’s always worth taking a second look at the source data. Students, parents and agents should particularly beware claims made primarily for marketing purposes when safety issues are at stake. Caution is certainly a good approach to take with the recent collaboration between Shorelight and US News Global Education (USNGE) which includes a, so called, University Safety Index and league table of the safest States for international students.

There is no place in the world that is entirely free of potential trouble, and international students should be alert to both the joys and the potential troubles of studying overseas*. The widespread rise in hate crimes around the world and specific incidents of racism are as concerning for the UK, Australia and Canada as the USA. Reputable universities work hard to make their campuses as safe as possible but the advice to incoming international students should be pragmatic rather than marketing gloss.

There is no reason to believe that the numbers used are incorrect but the way the Index is constructed shows Washington D.C., Vermont and Massachusetts as the top three states of “the “extremely safe” category for international students.” In September 2021 these States were listed as the top three of the list for Hate Crimes per capita in a 24/7 Wall Street report using FBI Uniform Crime Data and the FBI data shows Washington D.C. as having the US’s most violent crime rate per 100,000 inhabitants in 2020. Further analysis suggests these anomalies reflect a selection and conflation of data that may mislead international students about the relative safety of their study destination.

Table Source: University Safety Index: State Safety by International Student Enrollment Percentage from How Safe Are U.S. Campuses?

Not All Crime on US Campuses is In Decline

While focusing on a comparison to criminal offenses two decades ago the Shorelight/USNGE’s own graph (below) shows that the “criminal offenses on campus” were comparatively higher in 2019 than five years before. Also, the long term decline is largely due to a fall in motor theft, robbery and burglary which masks other trends on offenses against the person. The U.S. Department of Education’s Campus Safety and Security Survey (CSS Survey), the source of the Shorelight/USNGE data on criminal offenses, shows that hate crimes, “sex-offences-forcible” and violence against women (VAWA) have increased in recent years.

Source: University Safety Index: State Safety by International Student Enrollment Percentage from How Safe Are U.S. Campuses? By Selene Angier

Since 2014 the number of cases historically recorded by the CSS Survey as “Sex Offenses – Forcible”, increased 65% from 7,955 to 13,121 by 2019. Since 2014 these offenses have been reported separately as “rape” or “fondling” with the former growing 33.5% and the latter by 124.2%. A National Center for Education Statistics summary reflects these figures and notes that “according to reports in a student survey administered at several dozen large universities, officially reported sexual assaults represented only a minority of sexual assaults that occurred.”

There has been excellent progress in reducing motor theft, burglary and robbery but the situation appears to have worsened in terms of sexually related offenses. Offenses recorded as “aggravated assault” also remain stubbornly around the 4,000 mark. Mixing and matching the categories of crimes against property and crimes against the person fails to offer clarity that might be helpful in assessing risk.

Source: U.S. Department of Education Campus Safety and Security Trend Data

The CSS Survey also shows, separately, a 47% growth in reported offenses of violence against women, from 12,232 in 2014 to 17,578 in 2018 (the most recent data). These have been registered since the Violence Against Women ReAuthorization Act 2013 (VAWA) brought changes to Clery Act reporting requirements. With estimates that over 40% of international students are women it would seem reasonable to reflect this information in an article on campus safety.

Source: U.S. Department of Education Campus Safety and Security Trend Data

International Student Safety Off-Campus Matters

The CSS Survey data only includes cases, “…on campus, on property controlled by the university or a student organization, or on public property immediately adjacent to campus.” By using this measure the Shorelight/USNGE Index removes any information about the towns and cities where international students will hope to be welcomed. This contributes to the leap of logic that establishes a league table of “the safest states to study in” which doesn’t include any city-wide or state-wide crime data.

The principle of aggregating data across a state is, itself, highly questionable when it comes to giving a student information on selecting a specific destination. The statistician joke, credited to C. Bruce Grossman, that with your head in the oven and your feet in the freezer you are comfortable on average, comes to mind. This consequences are evident as soon as you begin to consider more wide-ranging data about the crime rates in different cities.

In 2021 US News and World Report considered Massachusetts the 7^th safest state in the US (although only 24^th lowest for violent crime) but COVE Home Security in 2017 suggested the chances of being a victim of violent crime in Boston made “the city less safe than 83 percent of US cities”. Neighbourhod Scout indicates that UMass Amherst is in a town that has a crime rate of 5.99 per 1,000 residents while UMass Boston is in a city with a crime rate of 26.45 per 1,000 residents. Shorelight/USNGE use their Index to say both universities “…are located in the “extremely safe” category for international students” even though the numbers suggest the locations are quite different in terms of crime.

Washington DC, according to the Index is an ‘Extremely Safe’ State despite a 2019 crime rate which some sources indicate is 1.8 times higher than the US average and higher than in 95.5% of US cities. American University’s campus may be a haven of civility and courtesy but students would probably be wise to exercise appropriate caution when they move onto the surrounding streets. The university provides personal safety tips to international students which is both responsible and appropriate.

Hate Crime is Relevant to International Students

The report is heavy on presenting data to reassure international students, yet surprisingly silent on the incidence of Hate Crimes recorded by the CSS Survey. It was a 2008 amendment to the Clery Act which required post secondary institutions to report these incidents. In 2018 the National Center for Education Statistics indicated that 43% of reported Hate Crimes in 2018 were motivated by racial bias.

The data presents a grim picture with a spike over the most recent years which is of relevance to students travelling to the US from abroad. This may not fit the Shorelight/USNGE narrative but it is an important issue if students are to be given the most complete picture. The Australian response to international students who are victims of crime might also inspire positive initiatives to engage productively with the issue rather than ignore it.

Source: U.S. Department of Education Campus Safety and Security Trend Data

At a state level Shorelight/USNGE report considers Massachusetts “extremely safe” for international students but the state’s campuses rank behind only New York (250) and California (174) in terms of reported Hate Crimes in the Survey. The trend has been remorselessly upward for a decade. In the broader Massachusetts context even the Editorial Board of the Boston Globe has recently argued that the situation in the state is serious enough to warrant its legislature updating hate crime laws.

Source: U.S. Department of Education Campus Safety and Security Trend Data

Whose Facts for What Purpose?

It is not unusual for organizations to give the most positive presentation of their situation and the Index is positioned as a response to a situation where “news headlines and social media shares can unfairly grab attention and raise concerns”. But it seems specious to suggest that “U.S. News and Global Education (USNGE) and Shorelight — two leaders in U.S. higher education — have partnered to develop the University Safety Index” when one is owned by the other. It also seems misleading to present the item as news on a website where the branding gives the gloss and reflected credibility of US News and World Report’s league tables.

While the article is designated as “News” the authorship, data and presentation of universities looks like an inside marketing job. The writer was once on staff for Shorelight, has written regularly for the company’s website and describes herself as a “content manager specializing in e-commerce marketing, UX messaging and lifestyle brands.” The statistics were compiled by Shorelight’s vice president of data science and strategy.

The marketing dimension becomes even more clear when “Notable U.S. News Global Education Universities” are highlighted – they just happen to be Shorelight partners. There is, however, no mention that the lowest “Somewhat Safe” category of the Index features Florida and Illinois where Shorelight has partnerships with Florida International University, University of Central Florida and University of Illinois at Chicago as well as new partner Eureka College. The implication of the Index is that international students have more reason to be concerned about safety if they go to those institutions but that seems a less palatable marketing statement.

Summary

Several countries and many universities are in a headlong dash for more international students and most recently Colleges Ontario commented on the need to recruit them to fill funding gaps. CBC News recently reported on the problems for students from south Asia who had arrived to study in Calgary but couldn’t find jobs and were unprepared for the winter weather. It’s a toxic mix where students are not getting realistic information about the situations they will encounter and there is every chance it will end in tragedy for individuals as well as blemishes on institutional reputations.

Fall intakes have shown that international students are returning to the US in significant numbers after the pandemic but it is entirely possible that some will have lingering doubts about attitudes towards foreign visitors. It is, however, unhelpful to underestimate the importance of ensuring that young people are given balanced information and not lured into a false sense of security. International students are courageous, committed and deserve more respect than that.

The US should also be applauded for publishing campus crime data in a consistent manner and might consider positioning this as a competitive advantage over the UK where there is a growing clamour for better data on student-related crime. While the Complete University Guide is to be commended for giving comparative information on an issue where one in five students are likely to be a victim, action from HESA or the Office for Students would be welcome. For international students, agents and other decision makers the best advice is to demand information directly from your university of choice and avoid sales promotion gimmicks.

NOTES

* I am not aware of any comprehensive and credible research on which countries are safest for international students. Various guides exist but tend to base their outcomes on overall country statistics. The Founder and CEO of iSchool Connect based a recent table in The Tribune of India on indexes covering factors such as Global Peace, quality of life etc. It includes Singapore at number five – a country where the Prime Minister has recently acknowledged “resentment over foreigners”.

**US News Global Education was formed as a collaboration between US News and World Report (USNWR) and Shorelight but is a subsidiary of Shorelight. The University Safety Index is a reminder of the link to USNWR’s own league tables whose methodology ex-Editor Peter Bernstein, in a classic Freudian slip, called “this mythology.”

***This blog relies, in part, upon my understanding and interpretation of various data sources and media reports. While data is almost always partial in the way it is collected, categorized and presented I have considered a range of sources in an attempt to ensure the points made about specific locations are reasonable. I am happy to correct any material errors brought to my attention by an authoritative source.

Pathways to the Future for US Big Two?

Open Doors Fall 2021 snapshot offered some solace for international student recruiters in the US after the strong headwinds of recent years. It comes after nearly two years of pandemic that has seen a focus on technology enabled learning options, increased online language testing and a brutal culling of pathway relationships during 2019 and 2020. A deeper dive into the numbers suggests that fundamentals are changing in ways that will have a material impact on the future of the private pathway providers.

Global demographics indicate that future growth will be driven by India and south-east Asia with a Mitchell Institute report indicating that “India has now overtaken China as the largest source country of international students.” The majority of Open Doors respondents are now prioritizing recruitment in India – 56% in 2021 compared to 45% in 2019 – compared to China where the percentage is now 51% compared to 58% two years ago. However, an increasing numbers of international students seeking graduate level study and having reasonable proficiency in English will brings challenges for pathways in their existing format.

If Chinese students become less willing to travel due to caution over health, political factors and declining returns on investment in a western degree the problems will be compounded. INTO’s own research from November 2021 notes that agents from China, Hong Kong and Macau think that the US has handled the COVID-19 vaccine roll-out considerably worse than the UK or Australia. The rankings for the US being “welcoming and safe” are even less helpful.

Source: Agent Perspective on International Education in the Context of COVID-19, INTO University Partnerships, November 2021

The two established pathway operators with most at stake in the US are Shorelight and INTO but recent developments suggest differences in their willingness and ability to innovate, adjust strategy and move decisively. It has been eight years since Shorelight burst onto the scene with a model that looked like an enhanced version of INTO’s pathway operation but VP Imran Oomer’s early claim that “we wanted to come in without a formula” was an indication of being willing to adapt. Shorelight now has at least 17 pathway partnerships while INTO has lost Marshall University, Washington State University and Colorado State University in the past three years to reduce it to a portfolio of nine US partners.

Past success is not always an indicator of future prosperity but a brief review of the two companies suggests how they might fare under current circumstances. The context and references are in the public domain and offer some grounds for speculation about possible directions of travel.

Shorelight

Shorelight announced five new partners towards the end of 2021 – Eureka College (Illinois), Austin College (Texas), St Thomas Aquinas (New York), Southwestern College (Texas) and Wilson College (Pennsylvania). It seems a significant shift of emphasis for a business which had previously focused almost entirely on partnerships with US News and World Report nationally ranked institutions. The announcements say that they are “accepting international undergraduate student applications through Shorelight” which indicates these are not the full pathway model.

It’s always been difficult to see inside Shorelight’s finances and performance but there have been several indicators that enrollment aspirations for some partnerships have fallen short of expectations. Huron Consulting Group Inc’s third quarter filing in November 2021 show that the ‘fair value’ of the convertible debt investment in Shorelight was reduced from $64.4m (December 2020) to $61.5m. The total cost basis over three tranches (2014, 2015 and 2020) was $40.9m with a consolidated maturity date of January 2024.

In November 2021, CIBC Innovation Banking announced new debt financing for Shorelight although the amount was undisclosed. The announcement says that the money will be used to “invest in automated, self-service tools for students, counselors and universities engaged on its platform” which may be a glimpse of the future of the Shorelight business. This echoes the language of the recruitment aggregators who have been able to secure significant investor funding in recent years.

The latest surge in partners may be designed to impress potential new investors. US recruitment conditions have eased and a robust pitch highlighting online delivery, long-term contractual partnerships with well-known brands and a burgeoning new stream of direct recruitment partners could be attractive. Memories of the past few years of international enrollment declines are fading but with the mid-term elections in 2022 and a Presidential election now just three years away it could be a small window of opportunity.

More intriguingly, Shorelight may be in a position where a capacity for online delivery, the option of face-to-face study and a technology-led recruitment capability has made it into a credible prototype one-stop shop for student needs. A decent number of strong brand names, a deepening pool of price points and a widening range of institutional types makes the portfolio big enough to provide a credible breadth of choice. With reasonable post-study work options in the US, a more benign visa regime and evidence of demand from high-growth source countries there could be some attraction to playing the longer game.

INTO

INTO’s performance has been reasonably well recorded over the past few years and the new year sees the six-month anniversary of CEO Olivia Streatfield’s tenure. The recent departure of the company’s Chief Recruitment Officer offers scope for a revitalization of a top team that has been virtually unchanged for over five years. Cumulative losses of partners in both the US and UK may have undermined the company’s ability to capitalize on blossoming UK enrollment and the resurgence of the US.

Over a five-year period, where it has lost six face-to-face pathways while major competitors have been growing their portfolios, INTO’s competitive edge has looked increasingly blunted. Linking with Cialfo arguably handed ownership of a key recruitment channel to a third party after the 2020 annual report had trumpeted the acquisition of Schoolapply AG as “part of its strategy to continue develop (sic) its technology platform to maximise student recruitment…”. Schoolapply was closed down in February 2021, just nine months after the purchase.

There are few signs of INTO responding effectively to the opportunities arising from online learning. By contrast Study Group has Insendi, CEG Digital has seven online university partners, Shorelight has Shorelight Live and American Collegiate Live, and Kaplan is working with Purdue and has online UK partners. Even relative newcomer Oxford International Education Group, which is opening its first US operation in 2022, has established a “Digital Institute”.

INTO’s most recent partnership in the US is the direct recruitment relationship with University of Arizona (UoA) which reflects the recent direction of partnerships announced by Shorelight and Study Group. It is not a competitive differentiator but may be a wise first step away from the pathway model at a point when enrollments at Oregon State University offer an insight into the problems as international student mobility trends shift. Declining enrollments at the INTO OSU pathway operation are driven by a significant decline in students from China but there is no evidence that enrollments from India are increasing to pick up the slack.

Source: Oregon State University, Institutional Research Enrollment and Demographic Reports

The past year has also seen INTO announce its first partnership in Australia which provides an even more complex set of options for its sales team to manage. Diversity can be an attractive feature but often comes at the expense of spreading management talent too thinly and confusing the market. By contrast Shorelight has retained a laser focus on working with US institutions while diversifying the ways in which it can serve the needs of agents and students.

INTO’s UK and US portfolio could support a level of organic growth as student mobility increases but a trade purchaser looking to beef up existing operations in the UK, US and Australia may be better able to optimize the assets. With money still cheap and a lot of dry powder around it would not be too difficult to see one of the major global players, with relevant management chops and sales expertise, trying to find some synergies. It would also be interesting to see if the management team has enough confidence in its skill and ability to invest in itself, buy out the Leeds Equity stake and compete aggressively in the new world.

It is appropriate to reflect that demand for US higher education remains strong throughout south Asia and that record numbers of study visas were approved for students from India. For operators that can meet that demand with a mixed US portfolio offering realistic options while also catering to the students considering online options as part of their planning process the future could be bright. While reflections on the future of the current big two pathways operators are speculative there is no doubt it will need an agile, flexible and committed approach to make the most of the changed circumstances.

US Rebound, Pathway Woes and A World of Opportunity

Watching the gyrations of international recruitment as the pandemic, global tensions and the rise of online opportunities work their way through the sector is enough to make anyone slightly queasy. There is still plenty to play for and with Australia looking ready to re-enter the fray in 2022 it is going to be a fascinating ride. But for now it’s time to digest the latest Open Doors figures and have a small look under the hood to see what might be happening in the pathway sector.

The Open Doors press release trumpeted 914,095 international students for the 2020/21 academic year which was a 15% decline year on year. But the inclusion of OPT (203,885) and non-degree students (21,151) doesn’t make a reasonable comparison with some other countries and when you strip them out the UG and Graduate student number is 689,069 – a 13% decline on the previous year. The 45.6% year on year decline in new student enrollment becomes a slightly more palatable 39.9% with the removal of non-degree students.

But the real excitement was around the bounceback in the 860 university snapshot survey conducted by the Institute of International Education (IIE). This suggested that new international students enrollments grew by 68% year on year to Fall 2021. The obvious point to make is that if 2020/21 international student enrollment (including non-degree) was 145,528 then a 68% increase would take it to 244,487 which is still a lower new student intake than any year since 2011.

It’s good news that several US universities provide open and near contemporaneous access to detailed levels of information on international student recruitment which allows us to look under the hood and down to the pathway level. It’s a state of affairs that Canada, the UK and Australia (which goes some of the way) should think of emulating. Meanwhile, Fall 2021 updates from INTO University Partnerships (IUP) partners Oregon State University and George Mason University show how tough some are still finding things at direct and pathway levels.

Oregon State University (OSU)

IUP’s corporate website has an encouraging graph which shows the OSU international student growth story all the way up to 2019/20 so a visual moving the picture forward to Fall 2021 seems a helpful contribution. The deterioration in undergraduate numbers is particularly evident as the university’s total enrollment falls to near 2012 levels and 2021 shows a further decline of 10% from 2020. A wider consideration going forward may be that if there is a shift in major source countries the balance of UG to graduate enrollments may change for all universities with significant consequences for year on year stability.

Source: Oregon State University Institutional Research Office

The situation for the INTO pathway operation at OSU is even more stark. From a high point in 2014 the trend has been almost wholly downwards with a 78.7% decline in enrollments to 319 in 2021. While the early stages of decline were in Academic English the most recent shrinkage has been in the core undergraduate and postgraduate intakes.

Source: Oregon State University Institutional Research Office

INTO George Mason University (INTO GMU)

INTO GMU saw reasonable growth in its first two years and peaked at an enrollment of 387 in 2016. Five years of decline has seen the 2021 intake down to 96 – a 75.2% fall from the peak with graduate and undergraduate numbers following similar paths. INTO University Partnerships (IUP) July 2020 accounts show that INTO GMU’s level of debt to IUP had grown from £566k to £1.896m so it will be interesting to see how the 2021 annual report looks.

Source: GMU Office of Institutional Research and Reporting

To be fair and reasonable the announcement of the deal between IUP and GMU anticipated that the venture would add 1,000 international students to the university over five years. In Fall 2014 the university’s census recorded a headcount of 2,136 non-resident aliens on GMU’s US campuses and by Fall 2019 that had risen to 3,247 so the original mission was accomplished. The numbers for the pathway suggest that direct recruitment will have helped that along and tracking what happens next will be fascinating.

It’s difficult not to note that IUP, the pioneer of joint venture pathways, has had a bumpy few years with partnerships in the UK and US falling by the wayside. Executive chairman, John Latham left the business on 31 October after being at IUP since April 2016 and just a few months after new Chief Executive, Olivia Streatfeild, was appointed around June this year. INTO the Great Wide Open suggested some of the strategic issues the business faces with the suggestion that it “needs to establish some renewed momentum if it is to fulfil the promise of its early days of innovation, creativity and energy.”

Outside, the CEO and Chief Recruitment Officer, the IUP leadership team has been in place for five years or longer. It’s a period that has seen six joint ventures close, three in the US and three in the UK, with little to match the growth of Shorelight in the US, no new UK partners and the recent addition of University of Western Australia in beleaguered Australia. There are plenty of adjustments in the financial reporting but one measure of performance might be Total Comprehensive Income at Group level which looks to have moved from £8m to £12m over the period.

With the US and UK governments setting out to support ambitious growth targets and a reawakening of student mobility there should be good opportunities for nimble operations with a good foothold in key markets to move forward. New operators and established companies, particularly in the UK, are showing that universities are still looking for support and Shorelight’s recent announcement of partnership with Austin College suggests there are opportunities in the US. To borrow from Sherlock Holmes “the game’s afoot” but whether the answer is “elementary” remains to be seen.

Note: The data is gathered from public sources and referenced as necessary. In the event that there is a misinterpretation or error I am always happy to make amendments if approached with appropriate, verifiable information from an authoritative source.

US Pathway and University Enrollments Looking Grim

Early signs are showing the scale of decline in Fall 2020 international enrollments in the US and how pathway enrollments may be even more disappointing. Everyone has been expecting a deterioration in numbers and it comes after several bruising years where many pathway providers have closed operations. INTO University Partnerships and Shorelight are the dominant players in a troubled market and their partners at Colorado State University and Auburn University make it possible to drill down to pathway level.

It’s an early snapshot of what is likely to be happening around the US in Fall 2020 and also an indicator of what the pathway pipeline of international students looks like. It makes for sombre reading if you are a big player in the US pathway business and represents a financial blow on two fronts. Low enrollments make it difficult to run the pathway profitably or get any contribution to overhead. It also means several years of lower income the operator gets from its percentage of tuition fee per student in the university in succeeding years.

INTO CSU and Colorado State University
At Colorado State University (CSU) the overall international numbers have been dropping slowly for a couple of years. But Fall 2020 total enrollments dropped 22% year on year. Longer term pain may be signalled by the declining pipeline from its pathway partner.

Source: Colorado State University Institutional Research Planning and Effectiveness

Since Fall 2017 the number of undergraduate and graduate enrollments in the INTO pathway at CSU has declined by 54%, but in absolute numbers the drop in enrollments of 42 students (35%) from Fall 2019 to Fall 2020 has been the largest ever. Graduate enrollment declines are outpacing those of undergraduate students but both are falling sharply.

Source: Colorado State University Institutional Research Planning and Effectiveness

It’s worth remembering that INTO closed its pathway business with Marshall University earlier this year. This was covered in a blog back in March 2020, with the growing levels of inter-company debt between INTO University Partnerships and several of its US pathways explored in a May 2020 blog. Colorado State University was near the same inter-company debt level as Marshall, and it seems unlikely to get any better after this year.

Shorelight and Auburn University
Auburn had been showing healthy growth and outperforming most US universities for several years. But total 2020 Fall enrollments are down by 18% on 2019. Underpinning this is a 21% drop in Chinese students whose numbers have fallen from 1881 to 1489 year on year.

Auburn University Enrollments by Country – all colleges/schools, departments and primary majors

While an 18% drop in total enrollments might not be too bad a result in the current year it does not look as if Auburn will be able to rely on Auburn Global, the partnership between Auburn and Shorelight, for stability or future growth. There has been a 69% drop year on year (384 to 119) in enrollments on four key Auburn Global programs. Perhaps more troubling is that this number is driven by a 66% decline in the number of Chinese students enrolled in the programs (325 to 109).

Auburn University Enrollments by Country – Auburn Global – Academic, Extended, and Masters Accelerator Programs (First and Second term)

It’s reasonable to add that Auburn and Shorelight are working hard to promote an online option starting in October. This is positioned as offering “the perfect solution for international students who would like to earn academic credits virtually this fall”. Students can earn 9-12 credits on the Academic Accelerator Program and 7-8 credits on the Extended Accelerator Program. They will work through Zoom and pay the same price as on campus students.

Long term observers of the global recruitment business know that there is an ebb and flow to country performance but it cannot be easy for private pathway operators trying to satisfy private equity holders when a market looks to be in free fall. Huron appears to have backed its investment in Shorelight with a further infusion of $13m in the first quarter of 2020 but that was pre-pandemic. There seems to be a lot riding on the possibility of online delivery being attractive to students but that remains an unknown quantity.

By way of a contrast the UCAS data on UK university international undergraduate acceptances suggests students are already voting with their feet. International students placed in September 2020 were up 10% (4030) to 44300 with students from China up 27% to 12980. There’s still plenty of uncertainty around and the growing number of coronavirus cases on university campuses may bring the party to a grinding halt. But, for now, many universities are chartering planes to fly students into the country to bolster their chances of turning enrollments into attendance.

Image by Gerd Altmann from Pixabay

US PATHWAY SECTOR FACES DOUBLE WHAMMY UNDER ENROLLMENT PRESSURE

It appears that the cull of pathway operations in the US has further to go. The Navitas website suggests that Global Student Success Programs at UMass Lowell, UMass Dartmouth and Florida Atlantic University have been discontinued. All of them throw up the message, “The Global Student Success Program is no longer accepting new applications..” * It’s the same story for Virginia Commonwealth University and the University of Idaho links.

Looking more deeply, the figures from UMass Lowell show a precipitous drop in Navitas enrollments from 187 in Fall 2016 to just 81 in Fall 2018. The numbers for 2019 aren’t available on the university site but a further dip seems likely. If these are permanent closures it brings Navitas down to three pathways in US from eight at its peak. Overall, the number of on-campus pathways in the US may have fallen to around 40 and its little wonder some are making a “pandemic sales pitch” that they are really masters of online technology.

With the pressure on US international enrollments growing year by year it’s difficult to see that there is a lot of good news to come. Rumours abound and are difficult to verify but in recent weeks I’ve been told of a pathway run by one of the big two operators at a top 200 east coast university that is looking at a 70% decline in enrollments year on year. It’s a very long way from the suggestion made in 2014 by Parthenon Group partner Karan Khemka, that “We anticipate that growth will be constrained only by the pace at which private providers can develop the market.”

We are seeing a wholesale realignment of the pathway sector but alongside that there may also be a double whammy as universities seek to renegotiate commercial terms in the light of changing market conditions. For example, the University of South Carolina Board of Trustee minutes from April 2019 make for interesting reading as they reflect on the changing nature of the university’s deal with Shorelight. The initial deal had been signed for seven years in 2015 and the proposal was to re-sign for another seven but with “better financial terms for the University”.

One big shift indicated was that USC would be allowed to keep 90% of the tuition paid by students in years following the pathway and pay Shorelight 10% of the tuition. Under the initial agreement the split was 83% to USC and 17% to Shorelight, so on an out of state, undergraduate student fee of $16,700 that’s a cut of just over $1,100 a year per student. It’s worth remembering that Shorelight noted early in their history that, “not only does the university not contribute anything upfront to get the program off the ground…but Shorelight reimburses the university for any expenses as it’s getting off the ground.”

The obvious question for traditional pathways is how they remain sustainable when the university is bearing none of the start up costs, and if the provider’s revenue share from students going into the university is being reduced. In a recent blog I looked at the growing inter-company debt between INTO University Partnerships and its US pathways where, the collective debt owed by five joint ventures open for at least five years, had from under $5m to nearly $15m. The closure of the pathway at INTO’s partner Marshall University came as enrollments fell and inter-company debt rose sharply.

While $1100 a student doesn’t sound very much the real point is that this becomes a loss of $110,000 a year if you have 100 students progressing and $330,000 over the lifetime of the cohort. Add to that the increasing cost of acquisition of each student as global competition increases and the basic economics of a pathway come under serious pressure.

It also raises the question as to how sustainable are the remaining pathway operations as the US faces another bleak year for international enrollment. A recent Open Doors survey reported 52% of US universities indicating a decline in enrollments for 2020. Navitas research with agents recently suggested that declining student mobility and growing unpopularity could see the US lose between 160,000 and 350,000 international students.

Alongside the well-known and longer-term internal issues facing students who might previously have seen the US as their preferred option there is little doubt that competition is playing an increasingly important role. The UK has made good headway and become a more popular destination this year which has led to an increase in undergraduate enrollment from China of 14% this year. Canada continues to provide an attractive option with clear routes to citizenship that have been particularly successful in attracting Indian students in recent years.

Supply and demand are powerful and remorseless market disciplinarians. The dash for growth in the US pathways came supported by over $1bn of private money flowing into the sector, but the economics of creating more and more supply at a point when demand was slowing have become evident. With global competition for students increasing, student mobility threatened and universities finding alternative means of reaching the market – particularly online – it’s probably a hard road ahead.

*As always I am happy to have authoritative corrections or clarifications and will record them.

Image by Gerd Altmann from Pixabay

No Easy Pathways – Even Before the Pandemic

As a relief from the global pandemic, it was interesting to take some time to look a little harder at recent developments from the Study Group, Shorelight and INTO camps. It’s a further reminder of how the US pathway sector was climbing a mountain even before the pandemic brought new challenges to international student enrollments.

Study Group

Study Group looks to be adding to last year’s closures in North America with pathways at both Royal Roads in Canada and the University of Vermont shutting down. Both institutions are still featured on the Study Group website but there is hard evidence in once case and strong rumour in the other. As ever, I’m happy to accept an authoritative response and correction if this is incorrect.

Minutes from Royal Roads Board of Governors meeting dated March 31, 2020 state: “The Study Group partnership was entered in 2011 to deliver preparatory pathway programs and expand international student recruitment into university programs. Following a formal review, a decision was taken to not renew the contract when it expires August 2020…….. A team will be struck in early 2020 to manage the transition to wind down the partnership by August 31.”

The change comes as Royal Roads posts some interesting statistics about its international student enrollment expectations. From 577 international student FTEs in onshore credit programs in 2018/19 they are forecasting 1,012 in 2020/21 – an eye-watering 75% growth. The expectation is spelt out very clearly “…with revenue increasing by $4.5M (35%) from $13.0M in 2019/20 to $17.5M in 2020/21.”

While there’s no institutional announcement, strong feedback from the market suggests that the Study Group relationship with the University of Vermont will come to an end later this year. The partnership started in early 2014 with the stated aim to ‘recruit approximately 140 international students per year with a two-term pathway sequence’.

The University doesn’t give exact details on the Study Group contribution but over the five years total Fall international enrollments rose to a peak in 2017 and fell back below 2015 levels in 2019. Non-degree international enrollments peaked at 171 in Fall 2015 and have declined since to 88 in 2019. It’s a story that’s been hear all around the US but it’s worth remembering as a sign of the times that this is a University ranked 121 by US News in 2020.

This follows Study Group’s announcement of three pathway partnerships closing in 2019 at the universities of Roosevelt, Widener and Merrimack and the closure of the Oglethorpe University pathway earlier in 2020. For those trying to keep up here’s the list (with closures highlighted in red) which includes DePaul and Hartford taken over from EC Higher Education in 2019.

Shorelight

Shorelight’s website suggests that since its first partnerships in the US in 2014, it has grown to 19 partners. The relationship with UMass Boston does not appear to be a traditional pathway (which seems to rest with Navitas). The American Collegiate (DC and LA versions) do not appear on the list of traditional, full-service partners and appear to be short summer programs along with a year-long undergraduate level course through UCLA extension.

Huron Consulting Group Inc. is a long-term investor in Shorelight Holdings LLC (the parent of Shorelight Education) with an initial investment of $27.9m in 2014 and 2015. Huron’s recent Form 10-K filing showed that in the first quarter of 2020 it invested a further $13m. The initial investments were zero coupon convertible debt instruments maturing on July 1, 2020 but that maturation date has been extended to 17 January 2024 which matches the date the new investment matures.

The pathway sector has seen a significant amount of investment in the potential of a strong US portfolio but the growing tensions are stark. In a recent Boston Globe article, Ben Waxman, chief executive officer of International Education Advantage, argued “International enrollment is going to plummet like a rock” due to the pandemic. In the same article Shorelight’s cofounder, Tom Dretler, said the company is still seeing increased interest from foreign students in enrolling in US colleges for summer and fall programs. He noted that universities will have to offer these students a more engaging online experience. Time will tell.

INTO University Partnerships (INTO)

Growing global and in-country competition were probably factors undermining the growth of early INTO success stories like Marshall University. The pathway at Marshall closed earlier this year and leaves INTO with 11 partners in the US. As noted in a previous blog, enrollment to both the pathway and directly to Marshall had been falling for several years.

A look at INTO’s most recent published accounts for the year to 31 July 2019 show that there may be more dark clouds on the horizon. Taking US pathways that have been open five years or more (including Marshall) it is noticeable that the level of debt owed by the joint ventures to INTO has grown from under £5m to nearly £15m. Colorado State University (CSU) and Drew are at or above the same levels as Marshall.

It’s probably a bit early to see the direction of travel for new joint ventures Hofstra, Suffolk or Illinois State. But St Louis University’s level of indebtedness has remained at around the same level for four years, and the University of Birmingham Alabama has moved from owing £895k in its first reported year to £4.96m in 2019. Washington State University has seesawed with a first-year indebtedness of £1.74m followed by a recovery but then a rise back to £1.34m in the latest accounts.

None of this has stopped company founder Andrew Colin from moving up 133 places year on year in the Sunday Times Rich List published this month. What’s interesting is that the Sunday Times valued the business (based on 2017/18 information) at £200m which would suggest that Leeds Equity’s 25% stake was worth £50m. That’s after a £66m investment made in 2013.

Of course, all of this is before the coronavirus and a global pandemic that has created havoc with traditional student choices and may alter global mobility forever. The US was in decline as a destination of first choice for several years before the virus, and there is little to suggest it has risen to the competitive threat. A recent IDP survey showed the US lagging behind on key measures as students are making their decisions.

There is already evidence that Canada and Australia are responding more aggressively to support international student recruitment after the peak coronavirus period. Even the UK had done more to revive its flagging fortunes and was looking towards a bumper intake in 2020. It leaves pathway operators and universities in the US in a very tough place.

Image by Arek Socha from Pixabay

MORE US PATHWAY RUMORS AS THE MARKET TIGHTENS

Things seem to be moving fast as the big pathway players realise that winter is coming, both physically and metaphorically, to their US operations. Hot on the heels of the recent Study Group closures there are strong rumors of Navitas reviewing its US partnerships and cutting staff. Shorelight has also taken action through changes to its senior management team and staff lay-offs in the past month.

The Navitas partner changes are still at the point of speculation and no brand names have been removed from the list of partners as of today. But the ‘Search Navitas programs’ area of the website turns up no results for Virginia Commonwealth University, Richard Bland College or University of Idaho. Searches for University of New Hampshire courses lead to a broken ‘this page isn’t working’ link.* By contrast the Florida Atlantic University pages, UMass and Queen’s College pages seem fine, as do the Canadian university partner links.

Dr Brian Stevenson took up the reins as CEO and President of Navitas’ University Partnerships North America division at the start of this year. With his strong links to Canada it’s possible that there is a major shift of emphasis that would reflect the continuing popularity of Canada as a student destination. There certainly seems little prospect of any but the best or most market-oriented US universities being a profitable proposition in the near future.

In October InsideHigherEd noted the decline in Chinese student enrollments and its potential impact on US universities but the next news might be about the changing preferences of students from India. 2019 saw the UK have a 42% year on year increase in visas issued to Indian students and there is every sign that the coming year will see similar growth. With changes in post-study work visas coming into effect for 2020 enrollments universities and pathways are already reporting substantial interest.

Back in 2014 Karan Khemka, then a partner with the Parthenon Group, said: “The U.S. third-party/outsourced pathway market is less than half the size of the Australian market despite having a higher education system that is 10 times the size. We anticipate that growth will be constrained only by the pace at which private providers can develop the market.” That was one of the drivers for over $1bn of private investment being made in pathways.

The reality is that, with CEG and EC leaving the market, Study Group cutting back and Navitas now looking hard at its options, the past 18 months has seen a decrease of well over 10% in the number of US pathways. By contrast the UK and European pathway market continues to grow and Australia has just loosened its post-study visa regime a little further. It seems likely that this is the prevailing direction of travel for the foreseeable future.

*Searches undertaken on 30 October 2019. As with all commentary in this blog any authoritative comments or corrections are welcome and will be recorded.

Image by PublicDomainPictures from Pixabay

Shine a Light on Shorelight

Getting contemporaneous data and sales targets from privately held pathway providers is unusual. But in a July 2019 podcast interview, Sean Grant, Chief Recruitment Officer of Shorelight Education, tells us that Shorelight recruited 3,000 students “last year” (presumably 2018/19) and are forecasting to recruit ”4,000 students plus this year.” Grant notes that the 3,000 student figure for 2018/19 represented year-over-year growth of 35%, which suggests Shorelight recruited approximately 2,200 students in 2017/18.

It was equally enlightening to hear that the company continues to invest heavily in building its sales function. Grant noted that Shorelight’s US-based onshore recruitment team grew from five people to 28 in “about six weeks” last year. While staff growth of this magnitude and pace is prodigious by most measures, it may be the norm for a company that considers itself “the Amazon or the Google of the…international education sector.”

Because Shorelight is a private company based in the US, it has largely been able to maintain confidentiality around its economic performance (unlike UK-based competitors, who are required to publicly disclose annual financials). The Shorelight website shows 17 current university partners, and a press release announced their partnership with Cleveland State for fall 2019 recruitment, bringing the total to 18. Grant referenced 19 partners in his interview, so it’s just possible we may have had early notice of a new partner joining the portfolio.

Shorelight is now in its seventh year of operation since its mid-2013 inception. With the disclosure of recruitment numbers and the indication that the business continues to invest heavily in sales staffing, it’s worth drilling down to look at how the six public universities that signed early on with Shorelight are doing*.

Louisiana State University

Shorelight began recruiting for LSU in 2015 and since then the university’s total enrollment of non-resident aliens have fallen from 1704 in fall 2015 to 1599 in fall 2019 according to the Geographical Origin of Students spreadsheet.

Table 1 – Total Fall Enrollment of Non-Resident Aliens at Louisiana State University

Souce: LSU Fall Facts and Interactive Dashboard

In the form contract between LSU and Shorelight, publicly disclosed by the State of Louisiana, the articulated enrollment goal for the International Accelerator Program, i.e., the pathway, is 850 students in the ’fifth Academic Year of the IAP” (2020/21). Inside Higher Ed reported that in spring 2018 “there were just 136 students enrolled,” and market rumors suggest that recruitment remains a long way short of target. The absence of overall international enrollment growth at LSU suggests that neither pathway or direct recruitment are going to plan.

University of Kansas

There is a similar story at the University of Kansas where the fifteen-year contract with Shorelight came under fire from academics at the time it was signed in 2014. Sarah Rosen, then Vice Provost for Academic Affairs at KU (who has since moved to Georgia State), was reported to have articulated enrollment aspirations of about 600 in two or three years. As Shorelight sought and won an injunction preventing the release of the contract, no further insight into the parties’ ambitions are available. As KU’s total fall enrollment of non-resident aliens (termed international in the Factbook) has decreased during the relevant period, it seems likely that this aspiration was not met.

Table 2 – Fall Enrollment of Internationals at University of Kansas

Source: University of Kansas Interactive Factbook

Auburn University

Auburn signed with Shorelight in 2015. The university’s online, interactive Factbook offers the option to filter enrollments by on-campus, “Primary Major” which includes the various “Auburn Global” programs offered in partnership with Shorelight. Enrollments rose substantially between 2015 and 2016 but have been in steady decline since. Overall, enrollments are largely undergraduate and Chinese.

Table 3 – Fall Enrolment to Auburn Global Courses at Auburn University

Source: Auburn University Factbook

Table 4 – China/Non-China Fall Enrolment to Auburn Global Courses at Auburn University

Source: Auburn University Factbook

At the university level, the impact of the trends within Auburn Global are clear: total international student enrollment has grown from 1639 in 2015 to 3034 in 2019, with the percentage of Chinese students going from 46% to 62% during this same time. Obviously, the financial impact of 1400 additional students is material; however, the risk associated with such a large proportion of students from a single source country, especially in the current political climate, is palpable.

University of South Carolina

The Fall 2018 International Student Enrollment Report from USC captures the five-year picture on the university’s international recruitment. The International Accelerator Program (IAP) has helped push undergraduate numbers forward but its growth appears to have stalled. Of the total international enrollment for the university 40% of students are from China.

Table 5 – International Student Fall Enrollment – University of South Carolina

Source: USC Fall 2018 International Student Enrollment Report

Florida International University and University of Central Florida

Both of Shorelight’s Florida partners have seen strong growth in overall international enrollments. As a comparator, the University of South Florida, an INTO partner, saw total international enrollments grow by around 1500 between 2015 and 2018. This may reflect both the popularity of Florida as a destination for international students and that the three universities have lower fees than the others reviewed.

Table 6 – International Fall Enrollments at UCF and FIU

Source: Factbooks of Florida International University and Central Florida University

Summary

Some crude metrics emerge from the forecasted recruitment outcomes mentioned in the podcast. If Shorelight indeed recruits 4,000 students this year, the average number of students recruited by each member of the 145-person sales team this year will be 28, and the average number of recruited students per partner (assuming 18 partners) will be 222. Seasoned recruitment professionals will have views on how that ratio stacks up in terms of performance.

There will also be opinion on what the drive for 35% growth might mean in terms of cost of acquisition for US-bound students. As Inside Higher Ed reported in June 2018, promotional bonuses were already pushing agent compensation ”well north of the 15 percent threshold,” and it seems unlikely that this cost will have fallen. With the UK resurgent after reintroducing two year post-study work visas competition just got even tougher.

The closure of partnerships by Study Group, CEG and EC has provided insights into how difficult the US pathway business has become. The experience of the partners reviewed here suggest that, regardless of ranking, success can be elusive and only time will tell whether Shorelight’s strategy is a winner. Investment and targets are one thing, but brute market realities are quite another.

*University reporting formats are not wholly consistent. Extensive efforts have been made to verify data used and sources are given for reference. Authoritative comments or corrections are welcome.

Image by mollyroselee from Pixabay