Econ 101, Free Trade and Higher Ed · 6/24/2013 12 the shortest distance between you and your degree More Students After StraighterLine a student will need to complete the majority

Burck Smith

Econ 101, Free Trade and Higher Ed

6/24/2013 www.straighterline.com 2

the shortest distance between you and your degree

About Me…

• Background in non-profits and public policy.

• Former education journalist

• Founded SMARTHINKING in 1999

• Founded StraighterLine in 2008



Despite massive investments in technology in post‐secondary education and K‐12, why have costs gone up and quality gone

down?



1/3 of all students transfer.

1/3 of all students took at least one online course.

2/3 of colleges offered online courses.

93% of colleges charge the same or more for online.

Elements of Online Course Market

Credit is fungible.

Many providers

High profit margins

Credit for online is widespread



Online courses should be much cheaper than f2f courses

You no longer need to be a college to offer a college course

MOOC = MCPM



(in $b) Direct Indirect

Student $52 $35

College $73 $20+

$200 BillionAnnual Higher Education Subsidies



Subsidy

• State allocation• Federal student grants/subsidized loans• Non-profit tax status• Tax preferred plans• Competitive advantages

Accredited Colleges

• Only degrees can be accredited, not courses• Accreditation measures inputs, not outcomes• Colleges set own, subjective articulation policies• Accrediting agencies are staffed and financed by colleges

Competitive Barriers

• Colleges cannot easily be “disaggregated”• Colleges must look similar to each other• Standards set and enforced by those that would be undermined by changes

Accreditation Keeps Competition Out



Barrier Example Higher EdPublic Subsidization US & Sugar

EU & AirbusState support, tax preferences, grants and loans.

Standard Setting Raw milk cheese, Apple/Microsoft

Articulation policies.

Tariffs Vary by country and by product

Fees. Degree Requirements.

Dumping ASTAC Shrimp, Electronics

Free MOOCs

“Trade” Barriers and Higher Ed

Tuition

Student Funding Sources

Can I repay the debt?

Can I get a job?

Students are Shoppers!

VastlyMore Choices



Provider Higher Ed PartnerType

Value

Coursera/Udacity Elite Colleges Brand extension.Credit export w/o import.

“MOOC2Degree” from Academic Partnerships

Regional, 4 year public, online.

Lead generation

Gen Ed courses from StraighterLine

Any regionallyaccredited college

Marketing channelfor partners

MCPMs and College Marketing



• Provides affordable, well-supported, flexible online general education college courses.

• $99 per month + $49 per course started. Almost 90% sign up for the subscription.

• Will serve 12,000 students next fiscal year this year.

• At WGU, 90% of SL students are still enrolled after twelve months.

Partner college awards credits for the coursework

Student Advisor forwards student records to partner college

Students choose and are admitted to partner college or use ACE Credit

Student successfully completes a series of rigorous assessments and receives a final grade

Student enrolls

StraighterLine



More StudentsMore

Students

After StraighterLine a student will need to complete the majority of his or

her degree.

More Valuable Students

More Valuable Students

These students are very likely to

persist

They will likely be out‐of‐state and using distance education

Referral PartnerReferral Partner

Colleges refer students that they cannot serve to StraighterLine

Students can receive discount. Co‐market with

college.

Value to a Partner College

13



More than 400 Colleges…



Closing Thoughts• Disruption is coming, just slower.• Non‐traditional students will have vast choices on price and credential.

• Colleges are competing with vastly larger group of competitors and collaborators.

• Political pressure from policymakers and market pressure from students will grow.

• Cross‐subsidies from online are not sustainable.• MCPM’s are best used as marketing vehicles.



Burck [email protected]

Twitter: @burckBlog: http://www.straighterline.com/ceo-corner

Questions?

Documents

Econ 101, Free Trade and Higher Ed · 6/24/2013 12 the shortest distance between you and your degree More Students After StraighterLine a student will need to complete the majority