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.