Econ 101, Free Trade and Higher Ed Burck Smith
About Me Background in non-profits and public policy. Former education journalist Founded SMARTHINKING in 1999 Founded StraighterLine in 2008 6/24/2013 www.straighterline.com 2
Despite massive investments in technology in post secondary education and K 12, why have costs gone up and quality gone down? 6/24/2013 www.straighterline.com 3
Elements of Online Course Market 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. Credit is fungible. Credit for online is widespread Many providers High profit margins 6/24/2013 www.straighterline.com 4
Online courses should be much cheaper than f2f courses You no longer need to be a college to offer a college course MOOC = MCPM 6/24/2013 www.straighterline.com 5
Annual Higher Education Subsidies $200 Billion (in $b) Direct Indirect Student $52 $35 College $73 $20+ 6/24/2013 www.straighterline.com 6
Accreditation Keeps Competition Out 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 6/24/2013 www.straighterline.com 7
Trade Barriers and Higher Ed Barrier Example Higher Ed Public Subsidization US & Sugar EU & Airbus State support, tax preferences, grants and loans. Standard Setting Raw milk cheese, Apple/Microsoft Articulation policies. Tariffs Dumping Vary by country and by product ASTAC Shrimp, Electronics Fees. Degree Requirements. Free MOOCs 6/24/2013 www.straighterline.com 8
Can I repay the debt? Tuition Can I get a job? Student Funding Sources Vastly More Choices Students are Shoppers!
MCPMs and College Marketing Provider Higher Ed Partner Value Type Coursera/Udacity Elite Colleges Brand extension. Credit export w/o import. MOOC2Degree from Academic Partnerships Gen Ed courses from StraighterLine Regional, 4 year public, online. Any regionally accredited college Lead generation Marketing channel for partners 6/24/2013 www.straighterline.com 10
StraighterLine 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. Student enrolls Student successfully completes a series of rigorous assessments and receives a final grade Students choose and are admitted to partner college or use ACE Credit Student Advisor forwards student records to partner college Partner college awards credits for the coursework 6/24/2013 www.straighterline.com 11
Value to a Partner College More Students After StraighterLine a student will need to complete the majority of his or her degree. More Valuable Students These students are very likely to persist They will likely be out of state and using distance education Referral Partner Colleges refer students that they cannot serve to StraighterLine Students can receive discount. Co market with college. 6/24/2013 www.straighterline.com 12
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More than 400 Colleges 6/24/2013 www.straighterline.com 14
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. 6/24/2013 www.straighterline.com 16
Questions? Burck Smith bsmith@straighterline.com Twitter: @burck Blog: http://www.straighterline.com/ceo-corner 6/24/2013 www.straighterline.com 17