A closer look at the online undergraduate market in UK higher education
Over recent years, I’ve highlighted the growing trend of UK universities developing their online education offer. The majority of this activity has been focussed on postgraduate taught online degrees, and there are good reasons for why they are pursuing opportunities in that market.
But what about online undergraduate education? What’s been happening in this part of the online education market, and what opportunities might it present to universities looking to grow and develop in this area?
How big is the online undergraduate market?
The first thing to say is that, despite the focus of many institutions in the online learning space being on postgraduate degrees, there are actually more online undergraduate students than postgraduate.
We currently only have official data from HESA up to the 2021/22 academic year, but there were approximately 240,000 online undergraduate students in that year. This figure includes students based in the UK and those studying online at a UK HEI but based elsewhere in the world. In contrast, there were approximately 170,000 online postgraduate taught (PGT) students in 2021/22.
The UK data on undergraduate students is slightly less clear cut than postgraduate taught, as it is split into two categories: “First Degree” and “Other Undergraduate” students.
First Degree essentially refers to bachelor’s degree students, whereas Other Undergraduate covers all undergraduate courses excluding bachelor’s degrees, including qualifications like HNDs and HNCs, et al.
That overall number of online undergraduate students I quoted earlier includes First Degree and Other Undergraduate, with the latter constituting about 16-18% of that overall number in recent years. However, my primary focus on looking at the online undergraduate space is going to be on bachelor’s degrees.
The two main markets for online undergraduate students are UK-based students and internationally based students. The largest number of online undergraduate students are UK-based, with a 77% to 23% split in favour of the UK, a percentage split that’s been consistently around this mark for a number of years.
Despite the higher number of online undergraduate students compared to online PGT students, there are a significantly smaller number of online undergraduate degrees and courses available.
Research I conducted earlier this year highlighted over 3,250 online postgraduate taught courses being offered by UK universities. This is in stark contrast to the 394 online undergraduate courses currently listed on the DiscoverUni website. This highlights one of the key differences between the two markets in terms of the level of supply of courses and opportunities to study online.
In terms of how online students fit into the overall undergraduate picture, they currently make up around 10% of all undergraduate students. So they’re a small but nevertheless significant proportion of the student population. One might even say that this population of undergraduate students is significant enough to warrant much greater attention and focus than they generally receive, but that’s another story.
Is the online undergraduate market growing?
The online undergraduate market has been growing over the last 4 years, but growth in this area and other areas is somewhat skewed by big jumps in numbers in 2020/21, largely due to the global pandemic.
There was a 17% increase in online undergraduate students studying on all types of courses in the UK and internationally in 2020/21. What followed was a modest 2% increase that was more reflective of previous years.
The compound annual growth rate of online undergraduate students since the 2014/15 academic year is just under 3%. This is essentially the mean annual growth rate of student numbers over that period and contrasts with a rate of just under 7% for online PGT students.
So whilst the number of online undergraduate students is growing, it is pretty small and modest at the moment. The growth is also almost exclusively concentrated amongst UK-based undergraduates, where there’s been an increase in student numbers from 143,310 (2014/15) to 184,405 (2021/22).
Whereas there’s barely been any increase in international online undergraduate student numbers over that same period. However, it’s worth noting that there have been very modest year-on-year increases in students from outside the EU, but EU student numbers have fluctuated and declined in 2021/22.
Who are the biggest players with the biggest share of the market?
The online undergraduate space is dominated by two universities: the Open University and the University of London. This should come as no surprise, as these are the two biggest and most historical universities in terms of online and distance learning in the UK.
Looking at undergraduate degrees specifically, these two universities dominate one of the two main markets. The Open University has over 120,000 UK-based online undergraduate students, a whopping 83% share of this market. Whereas, the University of London has over 27,000 international online UG students and has a 57% share of the international or transnational online market.
These proportions are in stark contrast to the online PGT market, in which no one institution has anything approaching these kinds of market shares.
However, it’s worth noting that the large market share that the Open University and the University of London have in respective UK and international markets has been eroding over time.
The Open University’s UK online undergraduate market share has gone from 93% (2014/15) to 83% (2021/22) and the University of London share of the international online undergraduate market has reduced from 71% (2014/15) to 57% (2021/22).
The other institution most worthy of note in this space is Arden University. It’s not at the level in terms of student numbers and market share as the aforementioned universities but has seen consistent year-on-year growth of online undergraduate student numbers, particularly in the UK. It is firmly in the bracket of one to watch and has some clout as part of the Global University System (GUS) group that now includes FutureLearn. Unsurprisingly, some of Arden University’s degrees now also feature on the FutureLearn platform.
It’s difficult to observe many other HEIs that are seriously and strategically invested in online undergraduate education. Both the University of Derby and University of Essex Online have total student numbers between 2,500 and 3,500 and have been seriously engaged in online education for many years now.
The University of Hertfordshire and University of Portsmouth have online course portfolios much more weighted towards postgraduate degrees offered in partnership with online education companies/OPMs. They do, however, also have a number of online undergraduate degrees and a modestly growing online UG student body of between 1,000 - 2,000 students.
Is there room to grow?
For the most commercially minded of universities and in the minds of many online education companies the online undergraduate market is a clear and distant second to the postgraduate space.
There has been growth in student numbers in the UK, suggesting a greater appetite and demand to study undergraduate degrees online. However, this growth does not match the rate of growth in online postgraduate students.
The online undergraduate degree market presents challenges that the postgraduate one doesn’t. There are different parameters around setting fees and greater challenges to support students throughout courses of longer durations, to name just two.
However, growth is still growth even if it’s modest, and it would be inaccurate to say that this space is stagnant and without any interesting developments.
The University of London’s online undergraduate degrees offered on Coursera with University of London federation members Goldsmiths and Royal Holloway are an interesting example of evolving approaches. These degrees are geo-priced and some have performance-based admission routes, which are approaches that I would expect to be more widely adopted over time.
It’s also been interesting to observe a small concentration of online undergraduate degrees being developed in disciplines aligned with the creative industries. The Arts University Bournemouth, Buckinghamshire New University, Falmouth University, London School of Design and Marketing (validated by the University of the Creative Arts) and Point Blank Music School all have online undergraduate degrees on offer in the creative industries subject category.
The other less commonly associated subject area for online education that is worth flagging is Sport, with Manchester Metropolitan University , University of South Wales, Staffordshire University offering UG online degrees in this subject area, along with interesting newer providers such as Ahead in Sport, who offer online football-focussed degrees.
One final development of note is the acquisition of London Institute of Banking (LIBF) and Finance by the German company IU Group who own the International University of Applied Sciences in Germany.
IU is a fast growing online learning focussed organisation that has developed their own AI personal tutor called Syntea. Their acquisition has led to new online programmes being offered by LIBF in the areas of data and computer science, AI and international business management, some of which are at undergraduate level.
What will be interesting to observe is how rapidly and significantly LIBF grows their online student numbers on the back of this development and renewed focus.
Although I’ve painted a modest picture in terms of the growth and scope of potential opportunities in the online undergraduate market, some of these developments show this isn’t a static area.
It’s a market to navigate carefully in terms of identifying and grasping opportunities. The US is an example of a country that has a much greater proportion of the undergraduate population studying online. In 2021, 28% of undergraduate students took distance education courses exclusively.
Obviously there are inherent difficulties in comparing geographies but this might suggest that there’s further that UK universities can go to offer greater choice to prospective undergraduate students.
