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Impact on Market of Online Education Collapse?

Was talking with one of the smartest people around the other day and he said to me, “Yeah, but what happens when the government stops subsidizing all of these online universities?”  And I said something to the effect of, “What?”

So then I did some research.  Lo and behold, he is right.  (No surprise there.)  The federal government is loaning 25% of for-profit students $30k each to attend school and then 40% default on their loans.  So it seems reasonable to imagine that the government will cut these guys off at some point.  And these guys are big spenders in online advertising.  A conversion is worth a ton to them.  They pay some of the highest CPAs in the industry.

Other is the online universities bucket in this table.  As you can see, they comprise approximately 10% of online advertising spend today and are expected to be (according to Forrester), one of the fastest growing segments of the market.

Is this sustainable?  As we have already demonstrated, there are people that know way more about this stuff than me.  Maybe Jay or someone can weigh in?

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