Here is an interview conducted by Keith Hampson that gives a nice overview of how Straighterline reduces the cost of college education. It is reprinted below:
Burck Smith is CEO of Straighterline. Full bio.
Q: Burck, can we begin with a high-level description of Straighterline?
Straighterline provides very affordable, very flexible, very well supported online general education courses for college students. These courses have been reviewed and approved by the American Council of Education's (ACE) Credit Review Service, by the Distance Education and Training Council (DETC), and by numerous regionally accredited colleges. Students can get real college credit at any college that will award credit for ACE recognized courses or from one of Straighterline's partner colleges. Straighterline does not offer financial aid, but the prices are so affordable we don't think we need to. We charge $399 per course or $99 per month + $39 per course.
Q: In 1995, Eli Noam, a Columbia University professor, wrote an essay entitled Electronics and the Dim Future of the University. Noam suggested that the Internet (remember 28.8 modems?) would enable major sources of instructional content, particularly textbook publishers, to emerge as serious competitors to traditional universities. He noted that textbook publishers had the experience, content, and infrastructure to produce online education that was far superior to, and less expensive than, what was possible from traditional universities. Is Straighterline evidence that Noam had it right?
The modern University is too complex an entity to simply be replaced by content providers. Where Noam had it right is that, where the university experience is primarily about instructional content, then publishers and companies like Straighterline can complement and compete with them. So, students working at a distance, as commuters, in extension programs, and in courses that do not build strong communities (like most general education courses) will benefit from offerings like Straighterline. Straighterline providers greater differentiation in the educational experience for students/consumers.
Q: For a relatively new company, Straighterline has generated a great deal of attention. Kevin Carey's article in Washington Monthly defined SL as a sign of innovation in an otherwise, staid sector. Others, though, have been less kind - particularly faculty. Concerning the latter, what I find particularly interesting is that the criticisms rarely, if ever, focus on whether the courses in question offer better educational value (i.e. learning outcomes). Instead, the criticisms concern matters such as the threat to employment of academics, accreditation policies, protection of university brands, and the involvement of "corporate plunderers" in the (apparently) "pure" space of higher education. How do we get the discussion to focus on educational value? Is the growth of new, innovative models in higher education dependent on evidence of educational value?
In most industries, new technologies increase value to the end-user - improved quality, reduced cost, or both. However, education has focused only on expanding access. Costs to the end-user have actually increased. I find it impossible to have a discussion about quality without also including cost. For instance, a $1000 course with a 90% pass rate has a cost-per-pass of a little over $1100. A $500 course with 75% has $666 cost-per-pass. Which is the better course? In other industries, the dynamics of a free-market typically incorporate the value benefits of new technologies. However, education's price points have been protected by artificial regulatory barriers created by accreditation, a byzantine articulation system, and significant subsidies in the form of state budget allocations, federal financial aid and grants, and non-profit status. Without a more rigorous discussion about cost and a better definition of what the product is, innovation will remain difficult.
Q: There are a number of companies now offering what we could term "full service" for online higher education. Organizations like Embanet, Colloquy, and Compass Knowledge provide schools with marketing, program development, enrolment management, technology, and even instructor recruitment to clients wishing to jump start their growth in online ed. Why did you choose another approach?
First, start with the assumption that online education is much, much cheaper to deliver than face-to-face education. Now, add the fact that colleges have almost no incentive to lower their tuition levels. Suddenly, there is a very large difference between the cost to provide a course and the price paid for the course. Third parties can now provide services to colleges, make a profit, and the college will retain at least its original profit level. Because of the profit, this has become a pretty crowded space. Straighterline's approach is to make the price of course delivery resemble more closely the cost of course delivery - thereby delivering the cost benefits of online education to students rather than being taken by colleges and third party distance education providers. Ultimately, this is where a more rational market would evolve to.