Mini Hu is weeks away from delivering a daughter. The new mother has a lot on her mind.
The 29-year-old lives in Beijing, where she leads a team at an education company that develops English curriculum for kindergartens and schools across China. Hu wonders: Will her upcoming maternity leave disrupt her career?
It’s been barely more than a year since Hu met the man who is now her husband. Will he continue to be as supportive of her as their family grows?
And in China’s pressure cooker capital city, can Hu be the kind of parent she aspires to be: One who does not succumb to social pressure to set expectations unreasonably high for her first child?
“On one hand, I really want to respect cognitive development, and on the other hand, I also dream to be a proud mom,” Hu says. “I think that will be a huge problem going forward.”
That tension between wellbeing and prestige may shape the future for Hu’s daughter in ways more powerful than Hu can foresee. Because as her due date approaches, her country is also feeling labor pains. Policies issued in July by China’s government restricting the country’s massive tutoring industry may aim to give birth to a new era of education in China, one that eases pressure on kids to excel at all costs and diminishes the power of edtech companies.
For some people, the policy shift had immediate consequences, as fortunes fell when stock prices for China’s giant edtech companies crashed. Joey Jiao, investment vice president of Blue Elephant Capital, has been sharing sweets with entrepreneurs and investors to calm their nerves.
“We do a lot of boba tea, stuff like that, to boost our emotions,” he says.
For others, the new restrictions have so far mostly raised questions. Kali Yan, a tutor who works independently, wonders whether the rules might even benefit small-scale operations like hers, by driving the tutoring market underground.
“You just do it secretly,” she says.
Yan, Jiao and Hu are Chinese young adults whom EdSurge interviewed in the week following the edtech crackdown. With their advanced degrees and English-language skills, they represent a selective set of perspectives. All three of them are 29 years old, on the cusp of a new decade of life—and at a stage when the government seems to hope they’ll start families.
They have differing theories about what the news might mean for China. But with their careers and personal lives intertwined with the education sector, each of them stands to benefit or lose from the changes sweeping their country.
As Jiao puts it: “The entire private sector of the China education industry has witnessed some sort of very destructive forces.”
The Rise of Private Tutoring
In China, millions of families participate in “shadow education,” or private tutoring that supplements the teaching students receive in schools. More than 75 percent of students, according to a Chinese study from 2016, spend their evenings or Saturdays with tutors, studying core subjects, or English, or learning sports, coding, or music, either in person or online, one-to-one or in groups. Some parents pay the equivalent of tens of thousands of U.S. dollars a year for this instruction.
The practice has grown popular for several reasons. One is cultural, says Yong Zhao, author of the book “Who’s Afraid of the Big Bad Dragon?: Why China Has the Best (and Worst) Education System in the World.”
“In China, you have a hierarchy where people are always trying to compete to be better than you,” says Zhao, a professor of education at the University of Kansas and the Melbourne Graduate School of Education. “This competition has existed for thousands of years.”
Another may be the way China’s past four decades of economic growth have lifted many families from poverty to comfort—and perhaps changed their aspirations and personal narratives.
“My generation’s parents, they didn’t have enough food when they grew up, all of them. And now they live a rather extravagant life, some of them,” Hu says. “Mostly it’s because China is a very fast train, and you are on it. You live a very good life, a much better life than yours used to be. Most of them, they didn’t think through that. They thought it was because they tried really hard, they worked really hard. They want that for their kids, too.”
The popularity of the private tutoring industry may also be a response to how educational—and therefore economic—opportunity is awarded in China. High-stakes entrance exams determine which students are admitted to the top high schools, then the top colleges, then the top jobs in cities that citizens view as “first-tier.”
Parents push for intense studying out of the belief that even a single point on these exams can make a difference in their child’s fortures, Hu says.
“One point,” she notes, “can probably cut 10,000 people behind you.”
Hu’s life has been shaped by this competition. Growing up, she participated in seven extracurricular programs each week, she estimates, “just to keep my leading positions in school.”
And Hu’s credentials influenced even more than her academic and professional trajectories. When, to her chagrin, her family and coworkers started nudging her about her “relationship status,” she signed up for an elite dating website, where the fact that she has a master’s degree from an Ivy League university made her a compelling suitor.
“Most of the candidates have very prestigious education backgrounds and are living and working in first-tier cities,” Hu says. “I found my husband there.”
So a directive from Beijing to decrease academic competition could change a lot about life in China. That’s the official rationale the government offered for its new policies, the latest in a series of efforts to rein in private tutoring. State-sponsored news sources say the new rules should “ease the burden of excessive homework and off-campus tutoring” by imposing time limits and curfews on tutoring sessions, prohibiting tutoring during certain times of the year and restricting extra paid instruction about core curricular topics.
Additional mandates call for schools to add after-hours, on-campus programs for families. Zhao sees these moves to shore up public institutions and check private providers as consumer protections, similar to efforts to regulate for-profit colleges in the U.S.
“These companies are running a business, they are not doing real education,” he says. “In many ways, they are distorting education.”
Other observers read between the lines and discern another motivation. Perhaps the government, worried about population trends, wants to make it more appealing for more people to have more kids.
“In Chinese culture, parents provide as best they can for their children,” says Nicolas Huang, co-founder of Lonely Reader, a digital platform that teaches liberal arts. “Young people think the burden is too heavy for them to have a child, so the birth rate is declining very, very fast.”
With a child on the way, Hu feels that squeeze. In China’s capital, she says, people regularly work 10- to 12-hour days. They pay large sums to live in housing zones that guarantee their kids entry into strong primary schools. They hope to replicate their successes through their children.
“Being able to provide for your own family and being able to have a child in a city like Beijing, I think takes a lot of courage,” Hu says. “Many people, they work their asses off to get into universities in Beijing.”
Hu and her husband agree: They won’t set standards too high for their daughter. They won’t treat her differently based on her performance.
Yet the pressure is already hard to resist.
“Recently, I noticed that I was very anxious when [seeing] my kid’s results: how big is her head, how much she weighs. I think that’s a natural peer pressure that really puts you in an anxious state,” Hu says. “You care about your kids, and as a result, you of course will want the best for them when they grow up.”
Learning is big business in China. The country’s tutoring companies are worth about $120 billion, according to analysis from Reuters. Several of them are “unicorns”—private companies with a valuation over $1 billion—per a HolonIQ report from July.
Jiao’s job helps fuel that fire. The company in Beijing where he works as a vice president has made early-stage investments in about 90 edtech startups over the last six years. Jiao’s experience and research have led him to believe that China is “probably the best market in the world for education.”
The largest Chinese tutoring companies are “household names to all Beijingers,” Jiao explains. “You can see the commercials everywhere. Subway stations, TV channels, talk shows—everywhere, you name it.”
So naturally, it seems like everyone Jiao encounters is talking about the new government rules, he says—“even the taxi drivers.”
This edtech omnipresence points to another possible reason why the government is targeting the sector as it scrutinizes internet companies more broadly. Officials may view private education companies as too influential, experts say, or worry that their instruction deviates from the government-approved public-school curriculum.
In tutoring classes, “lots of things being told are not controlled directly by the government, and it is a very dangerous trend,” Huang says.
Because the new guidelines ban overseas education courses and limit foreign investment in Chinese edtech, Zhao says nationalism may have motivated policymakers: “They are very concerned about the influence of foreign countries on education in China.”
Read more from EdSurge about Americans witnessing abuse online while tutoring Chinese students.
Watching industry giants fall has Jiao conflicted. He already suspected that the education market was “overheated,” he says. As a citizen, he sees the value in trying to diminish “unnecessary competition” in education. But as an investor, he wishes the policy didn’t punish entrepreneurs.
“I’m feeling bittersweet,” Jiao says. “We all have this memory of going to New Oriental classrooms, TAL classrooms, when we were a kid. It’s kind of sentimental,” he adds, naming two of the most popular tutoring companies.
But the news hasn’t dampened the entrepreneurial spirit entirely. Companies are already pivoting, by cutting off arms of their businesses that violate the new rules or by spinning up alternate services. So as Jiao comforts his spooked colleagues, he’s already thinking ahead.
“What we’re focusing on is soothing the emotions of the founders and our investors, by telling them what we see from the new policies and what we believe are the new directions—new opportunities,” Jiao says. “We’re trying to learn from the new policies. What are the implications?”
He predicts several ways for edtech companies to rebound. One is marketing technology directly to the country’s enormous public school market. Another is supporting vocational training, which the Chinese government wants to grow. A third is selling families instruction in extracurricular subjects like dance or art, which so far is still permitted.
“If students spend less time in tutoring, will they spend more time cultivating their interests?” Jiao asks. “I don’t know, but we will keep on looking for some evidence.”
On the second floor of her sister’s shop, Kali Yan coaches children in English grammar, writing and recitation. Their families pay her 200 RMB—about $30—an hour for one-on-one lessons, or less for group instruction.
Yan says she started her one-woman tutoring business in Guangdong in the south of China more than six months ago. It’s part-time work, but she says it pays better than some full-time jobs. She’s noticed that demand for tutoring seems higher than it did a decade ago, when she worked in the industry part-time while attending college.
“The parents have more and more—they’ve become richer,” Yan says. “They are willing to invest more in the education of their children.”
Taking stock of the government’s new stance on tutoring, she draws a distinction between what it could mean for large operations and small providers. She thinks it is “a disaster” for giant edtech companies, noting that “the restriction is very harsh.”
Yet for independent tutors such as herself, she adds, “This is a thriving chance for them.”
That’s because Yan thinks many tutors will simply get creative about how they do business. For example, she imagines a scheme at a theoretical bookstore that starts selling textbooks for noticeably higher prices.
“Why is it so expensive? Oh, when you buy the book, one of our services is to help you read the book,” she says with a laugh.
Investors, too, will adapt, Jiao believes. If they can’t offer tutoring, they’ll sell education in other ways.
“Will there be hardware, new e-books and other e-learning materials?” Jiao asks. “We are definitely hoping to see more ventures.”
The trouble with shadows is they’re hard to catch. And China’s new rules might drive shadow education deeper into the dark.
It may all come down to parents like Hu, torn between competing visions about what’s best for their children.
“Sometimes I fear I may rob my girl of the opportunities to have developed capabilities,” Hu says. “Even though I don’t push her, I still don’t want to miss any possible potentials.”
The two behemoths in what one might call the online degree and training platform space, Coursera and 2U, took different paths to their respective perches. 2U began by promising to help prestigious colleges take their academic programs online in a big way; in recent years it has swallowed companies that also allowed it to offer short training courses, bootcamps and — assuming its stunning proposal to purchase the nonprofit edX goes through — non-degree courses and programs and low-cost degrees.
Coursera took the opposite route: It started nearly a decade ago promising to help universities market free, open online courses to the world, expanded into career training, and a few years ago began working with its higher education partners to build and market low-cost degree programs to its tens of millions of learners.
Now the two publicly traded companies, both valued in the billions, describe themselves as “lifelong learning platforms” that provide the full gamut of offerings that learners might want to advance in their careers or stay vital after high school and well into their lives. Both of them are aggressively expanding their client bases and offerings, competing against each other and putting distance between themselves and the rest of the market — and the main question seems to be which gets a bigger share.
Not if John Katzman has anything to do with it. The serial education technology entrepreneur has a history of trying to upend the status quo in postsecondary education, from founding The Princeton Review to challenge the standardized testing industry to creating his current company, Noodle, because he thought 2U and other online program management companies charged colleges too much money to help them launch virtual academic programs. (The fact that he started 2U in between, and then aggressively challenged it, remains a story for another day.)
Having “utterly disrupted the degree space,” as Katzman declares with his usual immodesty, he and Noodle aim to do the same in the marketplace for helping colleges and universities earn their rightful place as providers of non-degree courses and credentials for a lifetime of learning. The University of Michigan, Case Western Reserve University and Columbia University, all of which also work with some combination of Coursera, edX and 2U, are the first three institutions to sign on to work with Noodle on promoting non-degree courses and programs.
Katzman argues that colleges and universities themselves already have the most necessary elements to successfully become providers of lifelong learning: the intellectual content and large audiences of potential learners (their alumni). Yet by depending so heavily on external partners, he says, institutions are “giving them your brand, your content, and what are they doing with it? Taking between 50 and 65 percent of tuition revenue?” He describes that decision as “selling rope to the guy who’s going to hang you.”
(The institutions that work with Coursera and 2U praise their relationships with the companies and believe their partnerships to be valuable and productive. The companies themselves did not have a chance to comment on Noodle’s announcement, which was embargoed until today.)
Noodle will differentiate itself from Coursera and 2U (before and after its purchase of edX) in two main ways, Katzman says.
First, Noodle says it can give its existing university partners (and others it thinks it can woo) a better platform for distributing online courses, certificates and other credentials to their alumni and other learners looking for the best option to help them reach their goals, professionally or personally. Noodle will use D2L’s Brightspace learning management system to deliver its partners’ non-degree offerings, supplemented by a network of teaching assistants and technology designed to create sections of students to create a more social and active learning environment than that found in many MOOC-based courses.
Second, Noodle vows that it will take a smaller share of the tuition revenue (a maximum of 35 percent) than the half to two-thirds that Coursera and 2U keep for themselves in non-degree programs. Noodle plans to charge institutions 15 percent of tuition revenue for use of its platform to stage the courses, and 20 percent more if the university chooses to have Noodle market the programs, too. (Universities will keep the 20 percent for themselves if they bring in students on their own.)
Noodle is betting that by giving colleges and universities a better platform and allowing them to keep more of the revenue from the courses and programs they produce, institutions can tap into their already large alumni bases to continue to be their educator of choice. All things being equal, alumni would rather take courses from their alma maters than from another college or provider.
Noodle’s partner universities already have “four times as many visitors to their websites as Coursera does and 10 times as many as edX,” Katzman says. “If universities overall engage their alumni, we collectively are wildly larger and better branded [than those companies], and on a platform that pulls students together and gives them the tools to work together,” he says.
Since its founding in 2013, after Katzman left 2U, Noodle has evolved fairly constantly and taken a while to find traction. But it has hit a stride in the last two years in signing universities to contracts to build and market degree programs, launching more than half of the new programs that selective colleges have begun with outside providers this year. Institutions have been drawn by the fact that Noodle doesn’t lock them in to long contracts and helps them lower their marketing spends.
Degree programs remain in demand, but more and more learners (and employers) are beginning to favor shorter-term certificates and credentials that cost less and are more targeted to their workforce goals. So it’s not surprising that Noodle itself wants to enter that space in addition to the degree-granting market.
But there are many legitimate questions surrounding Noodle’s likelihood of success in that market.
Coursera and 2U (especially with the pending addition of edX) would appear to have massive headstarts and advantages over Noodle as major players in the online education and training space: they work with many more colleges and universities, have a huge advantage in financial resources (both valued at multiple billions of dollars), and enormous audiences of learners (Coursera nearly 90 million, 2U with more than half that including edX’s audience. Noodle, by contrast, has about 600,000 visitors to its course search website each month.
But several things about the current moment make it a potentially unpredictable time. Online education was ascending before COVID-19 hit, and the pandemic has almost certainly accelerated the interest of both colleges and learners to engage in it, or at least try it. College leaders are increasingly questioning the value they get from their relationships with outside providers, putting pressure on the system of revenue sharing and long-term contracts that traditional online enablers have favored. (Those partnerships have drawn growing scrutiny from policy makers, too, and could be a target of a Biden administration, especially given how influenced it is by the regulatory ideology of Sen. Elizabeth Warren.)
Recent developments could also reshape the market. Documents related to Coursera’s massive initial public offering revealed just how much its valuation was being driven by the favorable nature of its arrangements with universities, causing heartburn among some of its clients. And 2U’s planned purchase of edX has shaken some of the latter’s longtime educational partners, some of whom chose to work with it because it was a nonprofit and a collaborative effort from within higher education.
Some observers in the education technology space roll their eyes when Katzman and Noodle seek to portray themselves as a “white knight” alternative to major corporate players such as 2U and Coursera, noting that Noodle is no less for-profit than they are.
Katzman doesn’t contest that. He focuses instead on the company’s transparency on its pricing, in sharing data on learners and how and where it spends its marketing dollars, and the “high integrity” of its relationships with institutions. “We do what we say we’re going to do, and there’s nothing up our sleeve,” he says.
The University of Michigan already works with both Coursera and edX (but not 2U) on an array of online academic offerings, and it offers online M.B.A. and master’s in nursing degrees in conjunction with Noodle.
“With the launch of the new [Noodle] platform, we are excited to be able to engage around U-M’s more comprehensive approach to integrated online education, which includes open learning initiatives, perpetual learning models for alumni engagement, and an evolving approach to stackable learning that supports greater access and more flexibility in tune with the future of learning and work,” James DeVaney, associate vice provost for academic innovation and founding executive director of the Center for Academic Innovation at Michigan, said via email.
Pierre Yared, vice dean for executive education at Columbia Business School, said via email that the graduate school saw working through Noodle’s new platform “as an opportunity to tap into a broader audience while also doing it with a partner with whom we are already collaborating closely on long-form high-touch programming.” Money was key, too: “The economics are also more advantageous relative to other MOOC providers.”
How many more institutions join Michigan and Columbia will ultimately depend on whether Noodle and Katzman can deliver on their promises.
Katzman himself, of course, has no doubt. “Given our track record, there’s no reason to believe we can’t find our place.”