School Days Are The Best Days Of Your Life
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Today’s college students are under more pressure than ever before. 40% of them have jobs while they study, the average student graduates with $30,000 in student loan debt, and once they do graduate, 40% are considered underemployed, ie, they are working low-paying or low-skilled jobs. And it is not just financial pressure students find themselves under.
We all remember the college tuition scandal that resulted in everyone’s least favorite ‘Desperate Housewife’, Felicity Huffman, finding herself behind bars for two weeks. One would have to imagine that paying $15,000 to falsify her daughter’s SAT scores was preceded by less extreme measures. While certainly sensationalist, this fiasco is indicative of a wider problem of students facing extreme pressure from parents and family. From an early age, children, and I want to reiterate the fact that these are children, are prepped, coached, and trained to get into and then perform in elite universities.
Unsurprisingly, this pressure has proved to be too much for many, with a 37% dropout rate amongst those in public institutions. This is a major issue as this unfortunate minority is stuck with crippling debt and nothing to show for it. Herein lies the benefit Chegg offers to its members.
While it by no means solves the wider problems that revolve around student debt, the price of tuition, and the barriers to admission that plague universities in the U.S., it very notably makes college life easier, alleviating some of the strain for its millions of members. 92% of students said Chegg helped them understand the concepts they are studying, 94% said they got better grades, and 95% said they worked more efficiently when using Chegg.
The company has expanded so much beyond its original premise of renting out expensive textbooks, to now becoming a one-stop-shop educational platform that helps students across the globe excel. In fact, it is this international opportunity that could be the company’s most exciting growth driver in the coming years, as it has highlighted a target market of over 100 million students.
As always, there are risks to any investment and Chegg is no different. Its member base is incredibly cyclical, with numbers dropping in the summer months. There is also the perennial issue of a short customer lifetime, with its product retaining relevancy only while someone is in college. However, these are not new issues and the company has been able to continuously execute and deliver strong results in spite of them. With its leaner business model, strong brand recognition, and most importantly, consistent positive outcomes for students, Chegg has all the building blocks of a long-term winner.