The coronavirus pandemic is poised to change the Australian education sector in 2020 and beyond. Online learning has replaced traditional teaching methods with schools and tertiary education providers moving their content online.
In addition to managing staff and student welfare, the pandemic has forced institutions to change their admissions, income sources and delivery methods.
Here are some winners and losers of the changing education sector.
Online education a winner
The coronavirus pandemic has all but made school and university classrooms redundant, with education content being moved to online platforms to ensure social distancing. Given the uncertainty of how long the pandemic will continue, learning institutions will be forced to adapt their traditional programs to at-home learning.
3PL Learning Limited (ASX: 3PL) is an online education platform that could stand to be a real winner in the changing education sector. 3PL provides resources designed for schools and families, covering subjects such as mathematics, spelling, literacy and science. The company's platforms are currently used by more than 5 million students in over 17,000 schools around the world.
Although 3PL's online learning platforms may not replace traditional teaching formats, they could become more popular as an auxiliary service. According to the company's management, 3P Learning has expanded its staff by 10% in the past month, released 10,000 new activities and is running webinars daily.
The 3P Learning share price has bounced more than 34% since mid-March. While it may not replace traditional teaching methods, the resources offered by 3P Learning could see extended demand in 2020 and beyond.
Tertiary education to struggle
Higher education is one of the largest sectors in the Australian economy and is heavily reliant on the revenue from international students. With many students unable to travel to Australia in the short term, universities and higher education providers could experience a significant hit. According to modelling from the Mitchell Institute, the university sector could see cumulative losses of up to $19 billion over the next 3 years due to lost revenue from international students.
IDP Education Limited (ASX: IEL) is a global leader in international education services, providing international students with language courses so that they can study in English-speaking countries. The company provides university preparation courses that are recognised in Australia, the US, UK, and Europe.
IDP recently completed a $225 million institutional placement to strengthen its balance sheet after acknowledging the impact the coronavirus pandemic has had on its operations. As a result, the company's share price has tanked more than 46% since mid-February.
Foolish takeaway
The outlook for the education sector poses an interesting conundrum for investors. Despite the severe headwinds some parts of the sector face, education remains an essential service and will provide investment opportunities.
I think a prudent strategy would be to keep education-related shares on a watchlist and wait for more clarity before making an investment decision.
