Financing

Can your institution afford it? When will you break even and generate income to re-invest?

Launching an e-learning program requires significant resources in order to effectively market, recruit, train faculty, and create and manage the new learning environment. Most organizations significantly underestimate the amount of these resource needs, especially the marketing and recruiting.  Working capital requirements often exceed a half-million dollars before any tuition revenue is collected. Given today’s stressed higher education budgets, this level of investment by non-profit institutions is just not possible. As a result, most of their programs are significantly under-enrolled.

Compass’s partners are able to overcome this challenge because Compass assumes nearly all of the upfront costs, allowing the institution to enter the market much more quickly, deeply, and profitably than otherwise would be possible. Compass is not compensated until the student pays tuition.  The institution then pays Compass a portion of that tuition.  If the student pays for one semester and then leaves the program, then Compass recoups very little of our investment.  Compass is thus motivated to find students who will persist through to graduation.  This model is called “revenue share” and it has become a prevalent model in long-term partnerships in higher education.  It transfers nearly all financial risk from the academic institution to Compass.

Most Compass sponsored programs turn cash positive for universities in less than one year, and though the amount of cash needed by the institution in the first year varies, many times it is limited to the cost of the market and institutional readiness tests. In most cases, our partners enjoy seven-figure steady-state surpluses per program or program set.