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COVID-19 Impact theme #2 – Education Thumbnail

COVID-19 Impact theme #2 – Education

The second edition of our COVID-19 impact theme series will focus on the education sector. It is a sector that has seen a great deal of shake up and has had a plethora of economic and societal implications from return to school plans, to online learning considerations, to outrage over tuition prices at top universities and colleges and economic concerns for college towns that rely on students for business. 

 Ontario Announcement 

When we initially started writing this we thought we were going to be talking about how different this school year would look for Ontario schools and thought we would be talking a lot about online learning because that is what we anticipated the case would be for all Ontario schools. 

This may not be news to many at this point, but on July 30th the Ontario government announced that Elementary students who attend-publicly funded schools in Ontario will be in class full-time come September, much to the surprise of most. Although they will be learning in a classroom rather than online, there will still be plenty of changes they need to adjust to as COVID-19 safety measures will make for a new kind of learning experience.

Students will be required to wear masks, signage will be used to limit crossflow of students, and students will remain a single cohort everyday for classes, recess and lunch. 

Secondary students in urban and suburban areas with relatively high student populations will attend school on alternating days in cohorts of about 15 while high schools with smaller student populations will be able to offer full-time in-class learning with measures in place like Elementary schools. 

Implications of Online Learning

While we are not experts in education and aren’t about to tell you what the best method of learning is for educators, children or those seeking higher education, we thought we would highlight some key considerations surrounding online learning in terms of societal impacts and delivery of material. The health impacts and implications of gatherings with other people has been widely discussed so we don’t feel it’s necessary to touch on it here. 

In terms of some societal considerations, traditionally, schools have provided structure, support, and a system of rewards and penalties to groom its children/students. Classroom education offers the benefit of face-to-face interactions with peers which are typically moderated by a teacher. It provides children, especially those in their early developmental years, with a stable environment for social interactions, helping them develop skills like boundary setting, empathy and cooperation. It also allows plenty of room for spontaneity, unlike a virtual learning setup.

This does not render true for just elementary, ‘developmental age’ students either as the societal interaction aspect of college/university is something post-secondary students value as well. The elimination of outside of classroom interaction with peers and professors with online learning limits the networking that's typically associated with the ‘college experience’. After all, companies like Facebook, Warby Parker, Snapchat and Google were all started by friends who met in college. This is also part of the reason university students are in such an uproar about their tuition prices not changing, which we will touch on later. 

On the contrary, there is the issue of self-discipline and time management. These organization skills are necessary to stay on top of your work, allot an appropriate amount of time to complete each task and balance your coursework against other priorities in your life, all of which are issues for many online learners. Typically, for those who struggle with procrastination, online education only increases the temptation to procrastinate. There are still deadlines in an online education course, but the difficulty to make those deadlines only increases as you need to rely on yourself and your own self-discipline to not only remember, but to complete the assignments. This is the case for older ‘self-sufficient’ learners, but for younger students in elementary school, much of these responsibilities fall on parents who, of course, have their own responsibilities to take care of.  

Any factor to consider is online learning that is outside of formal education – i.e. outside of schools/colleges/universities. As students’ progress to higher learning, they seek more autonomy and intellectual freedom. Online learning can help them pursue highly individualized learning programs, possibly even college level courses prior to enrolling. They can explore options by trying out introductory topics from different fields before committing to a specialization. Online learning platforms can help these students become more independent learners before they make their way into college and provides the opportunity for prospective college students and adult learners to learn about a broad array of topics without enrolling in formal education. 

Online education has gained immense popularity among working professionals and students pursuing higher education. These categories of online learners find immense benefit in the autonomy and flexibility that these courses offer. Online courses can be planned around their schedule which may include full-time employment, internships and caring for family. 

Impact on College Towns

One of, if not the most notable economic implications of the shift to online learning is around ‘college towns’ and areas that are heavily populated with students whose economics rely on students. 

Economies of college towns follow the ebb and flow of students. When students leave their hometowns for school, they rent apartments, buy books, school supplies, eat at restaurants and drink at bars. Sporting events and social gatherings bring in enormous crowds and increase revenue for the local economy. With students not able or having the option to complete their coursework from home rather than on campus, college towns lose out on all of that.

One example of a college town hit by the loss of its student population is Ames Iowa which has about 67,000 residents in their community, of which about 37,700 are college students at Iowa State University. Gloria Betcher, Chair of the National League of Cities University Communities Council said that the pandemic has greatly impacted the Ames community, which saw a $9.1 million revenue shortfall already by the end of the fiscal year 2020 and expects to see even more losses in fiscal year 2021.

Another is Amherst Massachusetts where undergraduate students account for about 25,000 at the three schools in the town combined (Amherst College, Hampshire College, and the University of Massachusetts), and makes up nearly three-quarters of Amherst’s total population which largely left Amherst when the campuses closed.

University Tuition Implications 

With many students forced to stay off campuses and take courses online there has been quite the uproar, and even lawsuits, around tuition prices as nearly all college students think distance learning should cost less.  However, very few schools agree.

Roughly 93% of undergraduates in the U.S. and 88% in Canada said tuition should be lowered if classes continue remotely in the fall, according to a recent survey of more than 13,000 U.S.  students and 3,700 Canadian Students. While several colleges and universities have offered a break on room and board, nearly all of them have drawn the line at tuition.  


 In the United States tuition fees plus room and board for a four-year private college averaged $49,870 in 2019-20 and at four-year state public colleges, it was $21,950, according to the College Board.

Although students can read the same textbooks and lecture slides from home, most see the value of an education also being the on-campus experience and use of the institution’s facilities such as such as labs, libraries, tech equipment and/or research tools.

Rather than an outright reduction in tuition prices, another popular option among college students is that tuition should be an ‘à la carte solution’, rather than an ‘all-you-can-eat buffet’ where students don’t pay for facilities like the gyms, libraries equipment labs since they cannot access them.

Education/Online Education Investable Ideas 

As far as companies that are beneficiaries of online learning, there are many similarities to the work from home companies we mentioned in last week’s write-up as there are many similarities to setting up a home office for studying and a home office for work. 

 As for some specific names that are at play in online education theme, there are only a select few names to highlight, but the one we would like to spotlight is Docebo.

Docebo (TSX: DCBO) is a Canadian Learning Management System (LMS) vendor. A Learning Management System (LMS) is widely considered to be a software application for the administration, documentation, tracking, reporting and delivery of educational courses and training programs. Although Docebo has a strong business model, both short and long term, particularly under the current environment ss a platform for e-Learning.

Docebo primarily targets small and medium-sized businesses but scales to large enterprises. With more than eight million registered learners in over 1,600 enterprises across 68 countries, Docebo is available in more than 40 languages. In addition to providing a learning platform for employees, Docebo is also a prominent platform used for external enterprise training (think customers and partners) which accounts for 50% of its user base. We believe Docebo’s technical edge comes from its ability to offer features at the front end of innovation (AI, mobile, social learning). Beyond that, Docebo has one of the industry’s most efficient sales and marketing models. 

 Some other names that are players in this space: 


 It is evident that the stocks of a lot of these e-learning/learning companies have been beneficiaries of COVID-19 and the shift to online learning. 

Another interesting beneficiary of more people staying at home for work and school has been Uber’s ‘Uber Eats’ business. Uber’s CEO Dara Khosrowshahi said on an earnings call. “As some people stay closer to home, more people are ordering from Uber Eats than ever before." Uber Eats is now bigger than its original and core ride-hailing division, based on adjusted net revenue! 

As always, please reach out if you have any questions on any of these companies or on anything discussed in this newsletter! 

We will be taking a one-week break from our COVID-19 Impact Themes series, but will be back on August 21st with a piece on some widespread economic implications that have resulted from COVID-19 where we will touch on inflation, interest rates, unemployment and the likes.

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