As far as I know:
(1) They need continuing education (incorrect)
(2) They need to continue education. (correct)
need to+ bare infinitive can be used when "it's necessary for you to do something" (anglaisfacile)
need+ING can be used when "it needs to be done" (anglaisfacile), very often implies the idea of the passive voice.
ex: This plant hasn't be watered for a long time, it needs watering.
So I'd rather not use need+ING in the context of a human subject-speaker, which invalidates sentence 1.
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