Chegg provides a suite of digital tools to help students learn and excel at school. Its services include on-demand help with course assignments along with exam preparation resources. For a relatively low monthly fee, students can get access whenever they need it to study aids that help them better understand their course material and more effectively and efficiently complete their assignments. The company also offers textbook rentals to help students better manage the costs of college as well as skilling and re-skilling services via Thinkful.
Chegg experienced a surge in subscribers during the early days of the pandemic. With schools shut down, the additional in-person support students could get in the past—like extra instruction from professors and study groups with classmates—became more difficult to arrange. Chegg helped filled the void, providing students with the resources and interactions with tutors that they needed and wanted.
Interest in Study Aids Persisted When Schools Reopened
The value of Chegg’s services became clear when schools began welcoming students back to their campuses. Chegg continued to gain subscribers. Whether or not the world is experiencing a pandemic, students need as much support as they can get, and Chegg delivers services that can help students meet their course requirements and better retain the information they are learning. We believe the pandemic strengthened several trends that are driving demand for digital academic support tools. Those trends included the shift to hybrid learning environments, along with a reduction in the student support resources provided by higher education institutions as financial pressures mounted.
The challenges students face on the road to graduation are evident in how long it takes the average student to earn a degree. According to the U.S. Department of Education, it takes first-time full-time students, on average, six years to earn a bachelor’s degree.1 Adult learners graduate sooner, requiring 4.5 years to complete their degree requirements.
There are more adult learners matriculating today. Chegg recognizes that the modern learner looks very different than they once did. They are older and often working full- or part-time. Many have children. They must juggle school with all their other responsibilities. Those extra demands make Chegg’s support more valuable.
Based on a 2019 survey of Chegg users attending college, Chegg’s learners are a diverse group in the U.S.:2
• 32 percent are minorities.
• 33 percent are first-generation college students.
• 34 percent have a family income of less than $25,000.
• 28 percent are more than 25 years old.
• 11 percent are working full-time.
• 33 percent work part-time.
The stereotype of a college student as someone from a middle-class family who can devote four or more years after high school to getting a degree often does not apply.
The high cost of college creates additional challenges for today’s students. More than half—54 percent—graduate with debt, and the average amount they owe for earning a bachelor’s degree is $37,584.3
On a Mission to Ease the Burden for College Students
Chegg’s stated mission is to “improve the overall return on an investment in education by helping people learn more in less time and at a lower cost.”
The firm appears to be committed to that goal. In one online survey, 745 Chegg users reported that the firm’s services enable them to work more efficiently and better retain what they are learning.4
• 92 percent said Chegg helps them learn their coursework.
• 94 percent reported that their grades improved once they started using Chegg.
• 95 percent said they work more efficiently when they use Chegg.
• 96 percent said Chegg helps them figure out material when they have a question outside of school instructors’ office hours.
• 96 percent believe Chegg helps them work through concepts when they get stuck.
A Learner-centric Approach
Chegg works to deliver a model for learning that is more on-demand, learner-centric, affordable, and better at leveraging technology than traditional brick and mortar schools.
It invests millions of dollars each year in building content, personalized learning experiences, and technology systems to support learning at scale.
Chegg’s content and services reach learners on different paths, including those attending online schools and community colleges. Chegg’s website, tools, and technology are designed so that diverse learners, including those with disabilities, can use them. It works to ensure its content and services conform to the International Edition of the Accessibility Conformance Report (VPAT) and the web accessibility standards.5
Supporting Learner Mental Health
The February 2021 Chegg Global Student Survey showed that over half (56 percent) of students across 21 countries said their mental health had suffered during the pandemic.6
Chegg’s services can directly support learners’ mental health because they make learning and studying less stressful. The firm also issues grants, through the Chegg.org Impact Fund, to organizations focused on supporting mental health. Chegg’s support systems can make a difference. A survey of 99 Chegg subscribers in October 2019 found that:7
• 89 percent of respondents said Chegg’s monthly subscription service, Chegg Study, helps them get their homework done with less stress.
• 77 percent said that Chegg Study builds their confidence before an exam.
An Ever-Expanding Portfolio of Services
Chegg is always looking to expand its capabilities. In 2020, it acquired Mathway, a mobile education app that offers instruction on math disciplines, such as calculus and algebra, as well as many other educational topics. The instruction is offered in multiple languages for students around the world. Half of Mathway’s users are high school students.
Helping Students Find Jobs Post-Graduation
About 41 percent of recent college graduates are “underemployed.”8 That means they do not have jobs that one would need a college degree to do. The problem may be the disconnect between what higher education is training students for and what the job market needs.
To help address that problem, Chegg in 2019 acquired Thinkful, a firm that delivers bootcamps on coding along with mentoring from experienced professionals. Students do not have to pay Thinkful’s tuition until they land a job that demands tech skills. With the success of the coding bootcamps, Chegg is now looking to offer similar training programs for other fields, such as nursing.
Providing Every Useful Resource It Can
To help students learn and study better, Chegg also offers articles and advice on topics like how to do better on multiple-choice question tests, whether study groups can help or not, how to stay awake while studying, and how to improve memory. Additionally, as a free service, Chegg provides articles and advice from financial experts on topics such as how to save more, how to improve one’s credit score, and how to manage and refinance student debt.
Chegg is determined to do all it can to make college less challenging so more students can graduate and move on to good jobs. It is a support system that many students welcome.
Sustainable Development Goals
The Sands Capital six investment criteria tend to lead us to businesses that are innovators or vital facilitators of change in industries undergoing significant transformation. Chegg is one of many portfolio businesses that create impact by addressing at least one major social or environmental challenge identified by the United Nations’ Sustainable Development Goals (SDGs). The company’s focus on positive learner outcomes specifically supports SDG 4, Quality Education, and SDG 10, Reduced Inequalities.
1 “Earning My College Degree: How Can I Figure Out How Long It Will Take?” franklin.edu
2 Hall & Partners Annual Tracker, Oct 2019, based on a survey of 1,137 College Chegg platform users
3 The Fed – Report on the Economic Well-Being of U.S. Households in 2020 – May 2021 – Student Loans (federalreserve.gov).
4 Results reflect a Chegg online survey among a random sample of U.S. Chegg and Chegg Study Pack consumers who used Chegg Study Pack in Q4 2020 and Q1 2021. Respondent base was 745 students among approximately 144,000 invitees. Sample size represents this population of customers within a margin of error of 3.6 percent at 95 percent confidence. Surveys were fielded between April 23 – April 25, 2021.
5 Chegg complies with accessibility standards as specified in (1) WCAG 2.1 Level AA, Section 508, EN 301 (EU) standards.
7 H&P Blind Customer Survey, October 2019, of 99 Chegg Study subscribers in college self-reporting purchase and use of Chegg Study for at least 2 months in 2018-2019
8 “The Labor Market for Recent College Graduates,” Federal Reserve Bank of New York, 5/21/21
The business profiled was selected based on its reported alignment with one or more U.N. Sustainable Development Goals. The views expressed are the opinion of Sands Capital Management and are not intended as a forecast, a guarantee of future results, investment recommendations, or an offer to buy or sell any securities. The views expressed were current as of the date indicated and are subject to change. This material may contain forward-looking statements, which are subject to uncertainty and contingencies outside Sands Capital’s control. Readers should not place undue reliance upon these forward-looking statements. All investments are subject to market risk, including the possible loss of principal. There is no guarantee that Sands Capital will meet its stated goals. Past performance is not indicative of future results. A company’s fundamentals or earnings growth is no guarantee that its share price will increase. The specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients. There is no assurance that any security will continue to be owned by Sands Capital Management. You should not assume that any investment is or will be profitable. GIPS® Reports and additional disclosures for the related composites may be found in the Sands Capital GIPS Report. PT# 20210247