Study finds increased university spending toward education technology

A report published by education technology company Rootstrap found that online learning companies’ revenue from universities increased by 559% on average from March through July this year compared to the same time frame in 2019.

Roostrap conducted a cross-industry study of online education companies and ultimately found that customer spending has increased on average by 335%, with universities making up the largest portion of customers, according to the study. Patrick Ward, Rootstrap director of marketing, said this study is a “wake-up call” for universities because charging students the same tuition while spending more for online services will cause many universities to struggle.

He hopes the trends highlighted by the study lead to the democratization of education by providing courses virtually that are affordable and of high quality.

“The two big components of the value proposition that a university provides, namely the social network and the physical experience, now no longer can be delivered,” Ward said. “And so with that reduction, they need to find new ways.”

According to campus spokesperson Janet Gilmore, UC Berkeley has spent about $10 million on implementing and upgrading the technology needed to support online learning. Of that amount, $4 million was spent to provide technology to lower-income students, while the rest was for online services such as Zoom licensing and virtual advising support.

The estimated overall fiscal impact of the COVID-19 pandemic from March 2020 to June 2021 is about $340 million, according to Gilmore. Of that loss, $200 million is from decreased campus income from sources like athletics, housing and dining, and $65 million was put toward COVID-19 efforts including cleaning, testing and remote learning transition resources.

According to Aaron Rasmussen, founder and CEO of, a technology company offering online courses that was involved in the study, spending more on education technology will improve online learning effectiveness, making students more attracted to it.

Ward recommends colleges listen to their students and integrate online courses into their curriculum beyond the pandemic.

“Without the limit of physical campus boundaries, and with a plethora of offerings at their fingertips, students can sample a variety of experiences in their online education,” Rasmussen said in an email. “It’s no longer about who has a planetarium on campus or the nicest library; the emphasis is on the content and instruction.”

Universities including UC Berkeley have delved into this integration of online courses through services such as Emeritus that provide the technological infrastructure to deliver courses to a broader audience outside of campus students, according to Ward.

Ward said small- and medium-sized universities are gravely at risk from increased spending for online services during the pandemic because they are “smaller brands,” possess “smaller footprints” and have “smaller endowments.”

“There is undoubtedly a forced push for technological innovation in higher education for the time being, but the lasting effects are yet to be seen,” Rasmussen said in an email.

Dina Katgara is the lead business and economy reporter. Contact her at [email protected] and follow her on Twitter at @dinakatgara.

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