CourseTalk Interview with StraighterLine CEO Burck Smith

Beth Dumbauld

Republished with permission from CourseTalk. View the original article.

By: Abbie Kouzmanoff

Despite the online education boom, many students still face high tuitions for accredited online university degrees as well as the inability to obtain college credit for most MOOCs and online courses.

Straighterline focuses on providing high-quality online college courses that will successfully transfer to an institution’s degree programs. Burck Smith, the CEO of StraighterLine, took the time to speak with CourseTalk about the rising cost of education for students, the difficulty of obtaining credit for many courses, and his vision for both StraighterLine and online education.


Q: Why did you originally decide to get involved with online learning and courses?

It really traces all the way back to the mid 90s. My background is in public policy, and I could see how courses were moving online, and it seemed like as that happened that it should really drive benefits to students. In every other industry when new technology is moving to the industry, ultimately prices go down for the consumers—and it seemed like something like that should happen in education over time.

The interesting thing—and why we started StraighterLine—is we didn’t see prices going down despite dramatic growth in online courses. So, it seemed like maybe there was an opportunity for someone to do that.

Q: StraighterLine is different from other course providers in that you focus on providing academic credit to students. Could you talk a little bit about the gap in the market you were you trying to fill with StraighterLine?

It’s no secret that the price of college continues to rise, and the sources of funding for students continues to fall. College affordability is a huge issue, and degrees are critical for individual and even national success. So MOOCs are terrific—there’s lots of content on the internet, whether it’s in MOOC format or a newsletter or a website or a portal or whatever it is. But if students want to be able to get credit and get noticed and get something that has value to external constituencies like employers or schools or elsewhere, they need to get credit for the work that they’ve done. So for us, it seems like that is the critical element if you actually want to make a difference in the educational system rather than just providing more content.

Q: Whether online courses and MOOCs should count for credit is a controversial topic. Should providers be working to help students get credit for their coursework?

First, I’m not sure credit for online courses is controversial. Probably 60-70% of the colleges offer online courses for credit. What is controversial is credit for unaccredited providers, MOOCs or not. There seems to be kind of an arbitrary distinction in the way we regulate higher ed.

I think what the MOOC providers have realized is that quick getting credit is hard. It’s not something that you can just snap your fingers at. Just having a great brand name behind your courses doesn’t mean you get credit for it or that institutions want to award credit for it. So I think what you’ve seen is many of the MOOC providers have turned away from getting academic credit and are focusing more on corporate training. And that’s possibly viable; it’s unknown whether it is, but it could be viable as a business model. But again, we are sticking with where we think the most value to our students is, which is the creation of a credit pathway for low cost courses.

Q: So, how difficult is accreditation? It seems like a rigorous process.

Well I want to be clear: all of our courses are reviewed and recommended by the American Council of Education (ACE) credit recommendation service. ACE, which is the largest trade association of colleges, has a program they’ve run since the ‘70s called ACE Credit. It’s a review process that reviews courses typically provided by employers and says whether they are college credit worthy or not and if so, how many college credits they think they should award. Now, that is not the same thing as accreditation. The Department of Education (DOE) does not validate that, it’s validated by the American Council of Education. There’s no financial aid that accrues with it, so it is not the same as accreditation.

Now there are several thousand colleges that will consider ACE credit recommendations and they are awarded credit, but they don’t have to and it is voluntary. So we have all our courses reviewed and recommended by the ACE credit review service—StraighterLine has been through that process 5 times since 2009. All 60-some courses have been reviewed, and then we create formal articulation agreements on top of that, so that we can guarantee credit transfer to the colleges with whom we have those agreements. So that whole process—going through the ACE credit recommendation process, creating formal articulation agreements on top of that—is a pretty time consuming and laborious process.

I would also note that for course transfer, accreditors don’t review courses. So any given college has not had its courses reviewed. It’s had its institution reviewed but not any individual course. Yet colleges use that institutional review when making course credit decisions in transfer. So in many ways the ACE credit review, which is a course-level review, is more rigorous, and more specific, and more valid than what institutions are already accepting. But that’s just not how institutions currently organize their policies.

Q: Do you see online course credentials as a career development tool? How can people in the workforce benefit from them?

Several things. First, the degree that a student earns from college is a corporate development tool. The students need degrees to get jobs. We work with over 30 Fortune 1000 companies and growing as part of their tuition reimbursement plans. Students can enroll in our courses and be reimbursed by their employers for taking them, and those courses can then transfer to colleges for students to ultimately get their degrees. So we’re already working with employers and adult learners using our courses as part of the overall degree plan.

Q: Would you ever consider moving toward offering a degree of your own at any point?

I don’t think so. The reason we cannot be accredited formally is we don’t offer degrees. We could build one to then be accredited formally, but I don’t think that’s where we want to be. General education courses, the ones that everybody takes in their freshman and sophomore years, are extensively transferred among colleges. Students move these credits and courses around extremely liberally. There’s not a lot of distinction from one course to another. So Accounting 101 doesn’t vary too much from one school to another. On top of that, this General Education core, about 40-60 course titles, represents a third of all course enrollments in higher ed. So that’s really where we want to focus. I don’t see ourselves getting into a formal degree.

Q: Will online courses carry more value currency with employers in the future? Will badges and certificates start mean more?

Online courses are already extensively recognized, but in the context of degrees. I think the question is really what credentials above and beyond the degree become valuable or whether some of these new credentials and badges become replacements for the degree. I do think over time you will see more and more reliance on these other sorts of credentials—it’s going to take a significant amount of time though.

Employers have HR systems and both processes and people and legacies that they’ve built up around evaluating prospective and current employees. It’s going to take a lot of time to change that—it will change, but it’s going to take a long time. I’d say in 10 years, maybe 15 years, check back and all of a sudden it will look a lot different than it does today, but it’s going to take a long time to get there.

Q: Some are staunch supporters of the 4-year institution. Based on the results of your courses, do you see any drawbacks to completing college courses online?

It’s a hard question because it really depends on the context in which these online courses are taken, and there’s many of them. There’s the context of no online courses, there’s the context of students on campuses taking online courses, there’s the context of students off campus taking online courses. And on top of all of that, colleges provide all of those opportunities under the same degree and brand name.

So I think really the question is: what do students what? What’s the value that they’re looking for in terms of both program and price. Online does lack the face-to-face nuances that you get. There’s a reason people actually go to meetings and conferences instead of only talking on the phone. There’s certainly some of that missing on online. I think it’s one of the reasons why we’re most interested in focusing on just those core courses because it then allows students to do other things that have educational value that may include face-to-face work or other kinds of networking in community settings beyond the courses that we deliver. It’s a hard question to say whether it’s good or bad.

Q: What do you see as the true denominator for success for online course providers?

StraighterLine’s focus is in degree pathways. Our metrics for success are ultimately students transferring into colleges and then persistence through to degrees. 65% of StraighterLine courses started are successfully completed. Of the students that complete courses, over 90% transfer to a college and of those, over 90% end up getting a degree. So we’re very happy with those metrics.

I think it is different if you are opening up your services to anyone and for free. You’re necessarily going to have lower completion rates because it doesn’t cost anything to enroll. What you define as success really has to be contextualized with your program. I do think that that the whole higher ed community would benefit from some clarity around transfer standards, particularly in the Gen Ed courses, so both us and others could identify who’s doing a decent job.

Q: How do you think online course providers can work to improve these metrics for success?

One of the great things about the internet is you can test everything and do it rapidly and make changes on the fly. We’re also very interested in how our students perceive our courses at our price points. You could always make a better course by hiring Nobel Prize winners to teach our calculus course, but that would drive the price up to a point where it didn’t make any sense anymore. So you have to balance your concept of success with the mission you have as a company.

Q: What have you found to be the optimal or most effective course format?

We do a number of things. We start out with a baseline of self-paced, tutor-supported courses at extremely affordable prices. And then equally important, maybe even more important, we price that on a subscription basis. By pricing on a subscription that does a few things. One, it is extremely affordable for students. But then second, it allows students to move at their own pace. If they are an extremely motivated student, they can move quickly and keep their overall cost low. If they want to take more time, they can, but it does give them an incentive to finish when they are ready. Lastly, charging on a subscription is very low risk for students.

In a typical college enrollment, the student enrolls in college, they take out loans, and pay their bills and then, as you know, half or more don’t finish. They end up with no degree and significant debt, which is the worst possible outcome. Not finishing could be a product of academics, but it could also be a problem of their life. That health care or work or family got in the way, and it just wasn’t the right time for them. With our model, if that’s what they realize and after the first month, say they stop, they’re out $148 dollars. It’s a much lower risk way to get started in college for students.

Q: StraighterLine has a foot in both the K-12 and higher ed market. A lot has been said about the online education market for higher ed— how can innovation in the higher ed sector inform K-12 online learning?

I do think you’re going to see business models that are being adopted in higher ed trickle down to K-12. So folks like us, we’re now doing more K-12 than we were. I think other course providers like us are going to do the same. We haven’t really focused much on K-12 so far, and the reason is purely a business one.

I’ve learned from my first company—we sold online tutoring services to colleges—it takes a long time for colleges to buy academic offerings like that. The only thing harder than that is getting K-12 districts to buy academic offerings. When you’re doing things like dual enrollment, you have to get the higher ed and the K-12 together, so it’s a very, very hard sales and marketing process. So we haven’t really focused on that at all so far. However, we have had about 3 or 4 high schools who have come to us and want to use our courses for dual enrollment purposes, so we are doing that in about 4 different high schools around the country.

I do think very low cost online courses are going to be a big driver in dual enrollment programs because high schools are very price sensitive. You can have multiple articulation agreements like StraighterLine does with one set of courses as opposed to having negotiate articulation agreements with every high school. I do expect that we’ll see the dual enrollment market grow dramatically for online courses in the next few years.

Q: What’s your vision for online learning? Where would you like to see it go in the next 10 years?

That’s hard. I’m most interested in making sure that students are getting a good value. One of the things that drove me to build StraighterLine are what I think are startling statistics in higher ed. The biggest is that 93% of colleges charge the same or more for online courses as for face-to-face courses.

Online courses are much less expensive to deliver because there’s none of the physical overhead that face-to-face campuses have. So what I think you’re seeing now with us and the MOOCs that have emerged is new course providers outside of traditional education offering the same product, but just at a much lower price. It’s hard to say how that will evolve over time. I think what you’ll see is lots of hybrid-style programs evolving, but more than just hybrid in just some online, some face-to-face, but programs that are 3 years residential, 1 year somewhere else. Why a 2-year MBA program, not just one? So lots of different formats of courses or programs and a wide variety of price points that are heavy reliant on online learning.

I also think that eventually there will be de facto—if not formal—standards that are created around different types of programs that employers will adhere to or will look at when making employment decisions. Again, that will evolve as opposed to being mandated, but it will evolve within the next decade or so.

Q: Similarly, what’s your vision for StraighterLine?

I think we are in a great position. What’s happened over the last year and a half is student awareness and acceptance of the viability of non-traditional pathways to get college credit has grown. College recognition that these pathways exist and are only going to get bigger has grown.

So we’re in a great spot now where we can work with colleges to bring new students to them that are looking for lower cost pathways and that students are much more accepting of this as legitimate than they used to be. As we do that, we’ll continue to reach out to employers, creating value for both our students and the colleges to whom we send students.

Q: What will be the biggest challenges to achieving this?

There’s a lot of consternation around the regulatory environment and the student payment model for college. I don’t think those are going to be easily resolved. In many ways these new providers threaten the profit margins and revenue structures in the business stream and cross-subsidy streams of existing colleges. That’s not going to go away but at the same time there aren’t any easy answers.

I personally believe that because of that, you’re not going to see a whole lot of change. You’ll see a lot of discussion and a lot of talk but not a lot of change in our regulatory structure over the next decade. We’ll see how that pans out—that could make a difference in how the competitive landscape evolves.

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