ACA Is Here To Stay (in substance, at least)
With the relentless drumbeat from President-Elect Trump to repeal the Affordable Care Act throughout our election season, and the newly-formed Republican-controlled Congress already putting in place a plan to repeal the ACA, it could seem a foregone conclusion that the ACA will be swiftly repealed as promised. But with 20 million Americans newly covered by insurance, it will be incredibly difficult to pull that coverage back, and Trump and Congress have not indicated any desire to do so. In addition, Trump has commented that he likes the “popular” pieces of the ACA – allowing dependents to stay on their parents plan to age 26, and covering pre-existing conditions. The problem is, once you offer blanket pre-existing condition coverage to everyone, the unpopular piece of the ACA – the individual mandate that requires everyone have coverage – becomes necessary from an insurance underwriting perspective. Insurance can’t work if people can just choose to buy coverage once they become sick or injured, you need to share that risk with healthy people as well.
There will be a loud “repeal” effort, and a quieter and much slower “replace” effort, and the ACA will go away in name. But the pain of actually taking coverage from people and the difficulty and cost of keeping pre-existing condition coverage without the individual mandate means that the healthcare landscape in the USA has changed forever. Some pieces will change as the new leadership tries to make it look different – but a whole lot of it will still look the same, a year from now.
For-Profit School’s Revenue and Enrollment Will Continue to Decline
Things are looking up for the embattled for-profit education sector. According to Senator John McCain: “Undoing the Obama Administration’s eight-year war on for profit colleges through onerous rule making and regulatory actions should be a priority for the next Administration and Congress.” So it is no coincidence that stock prices for the two largest for-profits, Apollo Education (up 14%) and Devry (up 33%) have gone up since November 8th. However, it will take a bit more before the sector starts to see the new administration’s policies having a positive effect on enrollments and revenue, and 2017 will not bring the major rebound investors are apparently anticipating. What factors will hold it back?
- Ongoing investigations and lawsuits – Laureate Education is under investigation for deceptive advertising practices in their home state of Minnesota, and they’re subject to a class action lawsuit filed in Ohio against them. Devry just settled a $100 million suit filed by the FTC. It is not clear if others will file suits or if other investigations will begin in 2017.
- Dismantling of the Accrediting Council for Independent Colleges and Schools – The leading accrediting agency for the for-profit sector was recently dismantled and lost an appeal in December. Schools now have 18 months to find a new accreditation. In the meantime, they must let all their students know about the loss of the accreditation. Most will find new accreditation, but some will not and will not survive. And telling students that their school has lost its accrediting body can’t help enrollment.
- Eliminating Mandatory Arbitration – In July 2017 the new arbitration rules go into effect, essentially removing the mandatory arbitration rules used by many for-profit schools. This will make it easier for students to sue their school if they feel mislead. Provided the new administration can’t or doesn’t undo this change, it could open the door for more suits against the sector.
- Reputation – The for-profit sector has taken a reputational blow because of the attention from the closings if ITT Tech and Corinthian as well as the smaller for-profits that have closed their doors due to the enhanced regulations. It will take some time for the industry to repair its reputation and for the industry to cleanse itself.
No Drastic Changes in Store for the J1 Visa Program
Rhetoric during the Presidential campaign certainly did not show much support for J1 programs, and in some cases even targeted them. While there is discontent and uneasiness from many corners of the cultural exchange world stemming from this attitude of the new Administration in the US, in the short to medium term there will be very little impact to the programs and how they are run. First, to make any widescale changes to the J1 visa programs would take time – potentially up to 1 or 2 years, maybe even 3, to push any changes through. Second, the appointment of Rex Tillerson as Secretary of State could bode well for how the programs will be viewed moving forward. While he was CEO of ExxonMobil, the company was an active supporter of international exchanges and is even a State Department designated sponsor, so he likely knows the value these programs bring. While this gives us some insight, we will know more as he makes appointments to key staff positions.
Canada Benefits at the Expense of the US
For economic and political reasons, Canada will continue to grow its international student population rapidly, while growth in the US will stagnate, as students from China, India and other countries choose Canada over the US.
- The latest Open Doors Report reflects the drying up of scholarship and state sponsorship, as the percentage of students in the US funding their own education jumped from 63% to 67%.
- The strengthening dollar has made it much more expensive to study in the US than it was one, two or five years ago. Although Canada’s currency has also strengthened against some currencies, it has not been to the same level as in the US, making it more affordable.
- The uncertain political climate and xenophobic messaging from President-Elect Trump will start to deter students from studying in the US, and more students will consider other destinations, with Canada looking as a natural alternative and comparatively much more welcoming.
- The overwhelming top sending countries to the US are also the primary sending countries to Canada, and with a more welcoming atmosphere cheaper currency, and a cohesive national strategy to grow enrollment, Canada will see large gains this year in their international enrollments, including many students that also considered (and rejected) the US.
- Canada has been relaxing it’s work and citizenship restrictions for international students, now making it a more favorable choice when comparing it to the US. Not only can international student student work off-campus immediately without a work permit, but new legislation has been introduced that would make it easier for international students to gain citizenship upon completing their degrees. With the option to work and possibility of gaining citizenship upon completing their degree, Canada is going to be a no-brainer for many international students who are looking beyond their degrees.
- Finally, US students are applying to Canadian schools in droves, which will help drive up Canada’s numbers. For instance, according to recent news reports, the University of Calgary has received 130 percent more US applicants than last year, and University of Toronto 70 percent more.
Facebook Live Will Gain Popularity Among Educational Institutions and Businesses
We all know that video marketing is huge. However, we also know there’s a lot of work around creating a video and making sure it gets out into the world for people to see. Facebook Live allows you to incorporate videos into your marketing plan without having to allot time for editing (take or leave this as a positive) and allows them to be seen by an audience immediately. Additionally, Facebook Live lets you see how many viewers are watching, along with the names of the viewers and their comments. With all of the recent advertisement around Facebook Live it’s easy to see that there’s a large plan in place for this new media and it’s hard to ignore. Do we think all the extra marketing dollars behind Facebook Live will pay off? Yes.
ESL Programs Increase Marketing and Recruiting Dramatically
2016 was not kind to the English as a second language market in the US. In a fall 2016 flash survey conducted by EnglishUSA, approximately 75% of those surveyed saw a decrease in fall enrollments, 8% remained flat and 15% saw an increase. This is up significantly from 2015 when 45% saw a decrease.
In another survey on the use of agents, 74% of those that responded use agents to help them recruit. The majority of those reported less than 10% of students were the result of using agents.
With the significant decline in enrollments and much uncertainty in the industry, those that want to reverse the trend will rely more heavily on non-traditional and traditional recruiting methods like agents, online marketing as well as recruiting fairs. To survive and grow, ESL programs will have to work hard to reach new students. Making the case: two of the respondents in the EnglishUSA survey whose Fall enrollments had grown were asked how they had grown their business; the first credited the increase to “improved web site and new agents” and the second to “aggressive promotions & marketing campaigns.”
Despite Efforts, Fake News Will Still be Widespread on Facebook
Coming across spam and clickbait articles disguised as news on Facebook has become a normal occurrence for users. However, since sixty-six percent of Facebook users get news on site, this normality has recently become a pressing issue. In November, Mark Zuckerberg made a statement that Facebook takes this issue seriously and they’ve been working to resolve it. However, he also stated that “We’ve made significant progress, but there is more work to be done.” This statement along with the complexity involved in screening content lead us to believe that although strides will be made in 2017, clickbait, spam and scams on Facebook are not yet a thing of the past.
Study Abroad Growth Continues to Slow, More Students Studying In Latin America and Asia
Study abroad grew only 2.9% last year, and we think that growth will be even slower this year and that the destination make up will change. With terrorist attacks in Europe and the Middle East, Brexit in the UK, Western Europe elections shifting away from open borders, and a strong dollar, we think that there will be a shift where more students will consider Asia and Latin America as prime destinations, and we’ll see declines in students choosing Europe.
With a third of all US study abroad students studying in the UK, France and Spain, a large dip in travel to Europe will certainly impact the growth overall. And the question is, will this deter students to study abroad, or will they choose a different destination? In our estimation, we think that while this will deter some families, a strong dollar might help to counteract this and continue to entice others – but to new corners of the world that they may never have considered before.
The Rise of Software Containers
Containerization software has been around for some time, but 2017 will be the year it becomes a standard tool in a software developer’s toolbox. With containerization, the idea is to virtualize and distribute applications, running multiple isolated systems know as containers, on a single host – making it much easier to develop, maintain and scale software applications.
In the world of containerization software, Docker has become a household name. Docker is an open source project that uses containers to wrap a piece of software in a completely isolated environment. This guarantees that the software will always run the same and you can dynamically change your application, regardless of its host environment. Build, ship, run.
Internet of Things (IoT) Will Become Mainstream
2017 will mark the real start of the Internet of Things (IoT) revolution. From something as simple as turning your living room lights on and off to controlling the traffic patterns of an entire city, the age of connected devices is here. Chances are in 2017 that you’ll be using a thermostat, a security camera or some other IoT device that you control with a phone or tablet. Gartner puts the current number of IoT devices at around 6 billion, but predicts that by 2020, we could have up to 20 billion devices connected to the internet in one way or another.