Monday, October 27, 2008

College for $99 a month?!?!

By Andrew Gillen

Straighterline, a new product from Burck Smith’s Smarthinking, is now offering a series of courses online. The courses, offered for $399 each, or $99 a month, package content from McGraw Hill, communications infrastructure from Blackboard, and one-on-one tutoring from Smarthinking.

Lots of schools and organizations offer classes online, so what makes Straighterline so special? Basically, that the product economizes on the most costly input into the system, labor. Note above that I said “economize,” not “eliminate.” From what I’ve seen in the past, previous online courses either eliminated the professor completely, or changed nothing about the course other than that they didn’t physically meet in room 205 at 1 o’clock on MWF. Straighterline breaks that mold, which excites me.

Smith notes that both content and communication costs for higher education, aided by technology, are tending toward zero. That essentially leaves the labor input, which Baumol argued would continually increase in cost. By specializing and rationing labor, employing it only when and where students really need it, Straighterline costs significantly less than just about anything else out there, giving students the opportunity to knock out a year (and maybe more in the future) of courses for $99 a month (transfer restrictions apply – though this will hopefully become less of an issue in the future).

Traditionally, pretty much everyone had to take the lecture based, labor intensive (and therefore expensive) course regardless of their need for the professors’ attention. This wastes huge amounts of resources because a fraction of the students don’t really need the professor at all. Enormous savings can be realized by moving away from the one size fits all model, and tailoring the amount of labor provided to the amount needed by students.

Consider a few examples from my past to illustrate. For some of the classes that I’ve taken, all I really needed was a textbook. I could read through and comprehend on my own, and found lectures and assignments distracting. Accounting 2 is a perfect example. I couldn’t even understand the lectures because the professor “spoke” English as a second language, but attendance was required, so I sat in the back and simply read the book while she lectured.

At the other end of the spectrum, there are classes where personalized attention from the teacher was necessary. A macroeconomics course in grad school comes to mind. The course used the book Recursive Methods in Economic Dynamics. While the book appears to be written in English, meaning I could understand the words individually, the words were arranged in patterns that I found incomprehensible. For this class, not only were the lectures and assignments useful, but they were crucial to my success in learning the material.

These experiences point to one of the keys to lowering costs in higher education, which is in distinguishing these two types of courses from each other for each student. I see Straighterline as the beginning of this process. While they are currently offering a mixed product, with traditional content bundled with a relatively unique tutoring service to replace the instructor, it is only a matter of time before they, or someone else, offers other, even more exciting variations. It shouldn’t be long until the option of taking the “cheap no frills” accounting class is offered along with the more expensive “walk me through it slowly while holding my hand” macroeconomics.

16 comments:

capeman said...

At $399/course, this is about the same as tuition at a typical public university. I couldn't find anything about exams, grades, etc. but perhaps I missed this. The provider of tutoring seems to charge about $35/hr. so I wonder how much tutoring actually goes on at the posted price per course. Don't know.

Bobby said...

It's my understanding that it can be $399 a course OR $99 a month. If you can devote more time to your studies $99 a month isn't bad at all.

Burck said...

For the $399 option, each course comes with up to 10 hours of instruction. With the $99 per month option, students take courses sequentially and get up to 10 hours in total. They can choose to purchase more time if they need it. Actually, $399 per course (not per credit) is much less than your typical 4 yr public university and only slightly higher than the average 2 yr. public college -- WITHOUT ANY STATE SUBSIDY. According to the College Board, 2007 average tuition and fees were $2,361 for 2 year colleges, $6,185 for 4 year colleges, $23,712 for private colleges and $12,089 for for-profit colleges. If you assume 9 courses per year(it could be as low as 8 or as high as 10), then the average per-course cost for a public four year college is $687. This does not include the tuition and fee increases for 2008 and the fact that most public institutions charge an extra distance education fee. Even for in-state tuition at 2 year colleges where the $399 option is higher than average, it is still lower than most 2 year tuition rates in the mid-Atlantic and Northeast. On top of all of this, the level of 1-1 instruction and the service levels (ie. wait times of less than 2 minutes as opposed to office hours days later) bundled with the course is greater than most online courses at public universities. Further, the ability to start immediately anytime of the year is more convenient than most public universities.

This model works with these entry level, general education courses because these are the courses where there are so many enrollments across schools that they can be aggregated and provided a basic level of quality and service for a more affordable price than can be offered by each school serving only its own students.

capeman said...

Burck, you sound like the proprietor of the product. It's impossible for me to form an opinion about it without knowing more. I have no idea whether you have grades or exams, or much of anything about the content of the courses, except what's in the syllabus. I can't tell whether these courses are equivalent to a quarter or a semester at a traditional college. Whether students really avail themselves of the tutoring, at what average price per hour, I have no way of knowing.

An even cheaper alternative would be to buy a textbook, learn by self-study, and hire a (face to face) tutor for whatever help is needed. I don't think this would work for most students. I'm not sure how much better is what is being offered here.

Perhaps this will work, perhaps it will catch on. I would have to be persuaded by evidence.

Burck said...

Yes, I am the CEO of StraighterLine and SMARTHINKING. Your questions boil down to whether this is a quality course. The course is a "real" course with real assessments, real content, and real grades. The partner colleges that will accept credit are all regionally accredited colleges who have all reviewed the courses and agree that they are as good or better than their own. Further, does a student at a more typical college know more about a course than what's in the syllabus? The syllabi for all of these courses are posted on the StraighterLine website. Lastly, while I would definitely support a student who would buy a textbook and hire a tutor, this model wouldn't give the student college credit. The data that you ask for -- what's the price per hour, how many students avail themselves of the tutoring, whether these courses are truly equivalent to a quarter or semester -- are all data standards that existing courses at more traditional colleges do not track much less publish! On all traditional measures of quality such as credentials of tutors/instructors, credentials of course designers, availability of support, quality of content, validity of syllabus etc... these courses meet or exceed the online offerings of most colleges.

capeman said...

OK, that is useful information. A few comments:

"Further, does a student at a more typical college know more about a course than what's in the syllabus?"

Depends. The student can certainly ask ahead of time, and find out more, though most don't. But, being a professor at a university, I do know more about the courses than what's in the syllabus, I mean, the courses locally. I also believe I have a pretty good sense of what the syllabus represents from other schools, many of them anyhow. It's really impossible for me to tell about your courses without more information.

"The syllabi for all of these courses are posted on the StraighterLine website."

See my comment above.


"Lastly, while I would definitely support a student who would buy a textbook and hire a tutor, this model wouldn't give the student college credit."

I wouldn't entirely agree. Where I teach, the student could take an exam to get out of any of those courses. A student who did reasonably well would be relieved of having to take that course, perhaps with credit. The cost would be much less than your program. My experience, however, is that few students would succeed that way, without the structure of a course. Perhaps that structure is provided in your program.


"The data that you ask for -- what's the price per hour, how many students avail themselves of the tutoring, whether these courses are truly equivalent to a quarter or semester -- are all data standards that existing courses at more traditional colleges do not track much less publish!"

Oh, I think you underestimate how much they track. Publish the data? For the most part, no. I can't tell much about your courses either.

"On all traditional measures of quality such as credentials of tutors/instructors, credentials of course designers, availability of support, quality of content, validity of syllabus etc... these courses meet or exceed the online offerings of most colleges."

I really doubt whether anybody has data to make such claims. Of course, I could be wrong, but that is my opinion.

Perhaps such offerings will catch on, and I certainly think they are worth a try.

I have run into few people, students, parents, or faculty, who think they will be the method of choice for those who have options. Not any time soon.

At the place where I work, we have a big surge in freshmen this year. Zillions of students taking college algebra, other stuff you plan like chemistry, calculus. They seem happy, or at least very willing, to part with their dough. It looks to me like there is plenty of business to go around, at least, if the online stuff is doing OK, it is not hurting us.

Burck said...

Capeman, here's an offer for you and your university. We will do a side-by-side comparison of StraighterLine's online courses with your university's online courses in the same subjects. If you and your university agree that these courses are equal or better than your own, then your university can be a partner school. This would benefit your students by giving them an affordable and flexible option to get their entry level credits. It's also free to be a partner school, so there's no risk involved. If you think these courses are not equal to your own online courses, I will post all of your criticisms publicly on this blog or in a forum of your choice. What do you say? To set this up, you can send an e-mail to bsmith@smarthinking.com.

capeman said...

burck, sorry, but I'm not involved in things like that, deciding correspondence of courses and credit. I believe it is called "articulation" or something like that. I know they do this systematically with the other public colleges in the state plus the community colleges. For colleges in other states, private colleges, online, etc. I don't know how the process is initiated. I imagine they handle it on a case-by-case basis as needed. Either a student asks how much credit can be gotten for work elsewhere, or perhaps a school comes and tries to reach an "articulation" understanding.

So, you'd have to contact the powers that be. That's not me. My only role so far has been to provide syllabi to provide for use by other schools.

Cowboy said...

Well, well, well cavewomen. Isn't that precious?

I think I'll just leave it at that - it's just too easy.

capeman said...

Yes, cowgirl, do us all a favor and leave it at that.

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Daniel Emery said...

For an example of how an individual subject is being taught online in an innovative way, check out ChinesePod.com, which is how I am currently studying Chinese. Could we see companies offering a service like this just for individual subject areas?

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