Back in 1999, Burck Smith wrote a magazine article describing what education would look like in 2015. Time flies and it’s only four years away. His predictions are coming true, and for good reason: the best way to predict the future is to invent it, and he’s been busy doing just that with his company, StraighterLine. “It’s been a twinkle in my eye since graduate school in the late 1990s,” says Burck. To get there, Burck says that he first needed to start another company, Smarthinking. Along that path since 1999 and after, he’s wondered why, despite massive investments in technology, the price of college education has continued to rise—yet the quality has seemed to decline. “In every other industry, technology is a productivity tool,” says Burck. “That hasn’t happened in education. In other industries, to generate productivity improvements, a new technology must be accompanied by a new business model. In education, it’s the new business model that’s lacking. It’s lacking because of a regulatory structure that was not constructed to accommodate new models,” he says. So a few years back, Burck created Smarthinking (an innovative online tutoring company) and now there’s StraighterLine. Here, Burck explains why.
Victor: What does the name mean?
Victor: What is it? Who created it?
Burck: We provide ultra-affordable, online, general education courses directly to students. We have relationships with over 20 colleges that will award credit for our courses. There are at least 150 more colleges that have awarded credit for our courses with whom we do not have formal relationships. It started as a division of Smarthinking in 2008. It became its own company in the summer of 2009.
Victor: What does it do? What are the benefits?
Burck: StraighterLine provides online general education courses that are usually equal or better than online courses offered by traditional colleges. However, we price close to the cost of delivery rather than try to price online courses as if they were face-to-face courses. Also, the courses are self-paced and tutor supported as opposed to cohort-based and instructor-led. By using on-demand tutoring services, students get better service levels, and can move at their own pace. Once allowed to move at their own pace, we can charge on monthly basis, rather than on a flat fee. By charging on a monthly basis, the financial risk of starting college is reduced as well because subscription pricing gives students incentives to complete—successfully or unsuccessfully—quickly. So, in short, StraighterLine is:
- Much cheaper
- Requires less financial risk
- More convenient
- Providers better academic service levels
- Doesn’t use any taxpayer dollars.
Victor: How is it unique from other similar products/services? What companies do you see as in the same market?
Burck: Since we do not offer degrees, only courses, we’re not allowed to be accredited. Therefore, students must pay out-of-pocket. Right now, there aren’t other companies in the same market, but I expect there will be. Also, there’s no reason a college couldn’t do what we do, but they do not want to charge $150 for a course that they are receiving $1000 or more for.
Victor: Now that’s very interesting. Briefly, when was it developed? What is something interesting or relevant about its development history?
Victor: Where did it originate? Where can you get it now?
Burck: Online. Just pay with PayPal or a credit card.
Victor: Exactly how much does it cost and what are some of the options?
Victor: What are some examples of it in action?
Victor: Who is it particularly tailored for? Who is it not for?
Burck: Students looking to get a leg up on college. Students who want to start, but are unsure if they are cut out for it. It isn’t for students who want the full freshman, immersive experience.
Victor: What are your thoughts on education these days?
Burck: The economics of higher education are massively dysfunctional.
Victor: In your estimation, what are some of the most pressing issues and challenges in higher education and technology today?
Burck: Every technology that we need to radically change the price and nature of education has been available for five years. We have very entrenched bureaucracies – institutional and political – at every level that have strong stakes in keeping the regulatory structure the way it has always been. The issues confronting education are political, not technological. They revolve around assessment, articulation and standardization, accreditation and financial aid. See the link above. Here’s an example: We price on a subscription basis. This creates a strong incentive for a student to complete—successfully or unsuccessfully—quickly. This dramatically reduces the financial risk for students and taxpayers to go to college. By simply changing the pricing mechanism, much of the cost of failure can be avoided. However, the financial aid regulatory structure is not built to accommodate subscription pricing. Further, with nearly half of students not completing college nationwide—and much higher numbers at many schools—what would happen to their business models if they didn’t receive full tuition for students who didn’t succeed? So, a pricing model that is superior for some students and courses cannot be accommodated by the regulatory and financial structure that we’ve constructed.
Victor: What sort of formative experiences in your own education helped to inform your approach to creating StraighterLine?
Burck: Solid grounding in economics and public policy. Clayton Christensen’s theories of disruption. Self-taught, just-enough-to-be-dangerous, programming ability. Background in non-profits and public policy.
Victor: How does StraighterLine address some of your concerns about education?
Burck: By pricing closer to marginal cost for a vast chunk of higher education, the rest of higher education must examine the value that it provides. If colleges stop getting $1K – $2K for an Intro. Psych course that costs $100 to deliver, then all of the overhead supported by this profit margin can no longer be supported. All of the internal subsidies that comprise a college’s budget start to untangle. Suddenly, what was a black box cost structure becomes much more transparent. Those elements and business models that provide value (a product of quality and cost) will survive. Those that don’t, won’t. Now, you can have a realistic discussion about price and quality of higher education.
Victor: What is your outlook on the future of education?
Burck: First, let’s define the goals. I want to see education “valued” appropriately. By that, I mean that students/taxpayers feel like they are getting the right benefit for the right price. At all levels of education, we’re not really sure what benefit we’re getting and it’s very hard to tie cost to any particular element of it. While by no means perfect, the best way to start to create a better correlation between price and outcome is to create better markets. These are political and regulatory questions, rather than technological. The political environment for creating more effective markets is far better in higher education than in K-12.
I’m very optimistic about higher education. Not so much about K-12. Despite massive economic dysfunction in higher education, it has the redeeming feature of having a consumer choice element. So, when the inefficiencies get so dramatic (as they are now), students can start “voting with their wallets.” This causes change. K-12 doesn’t really have that luxury. Here are two book chapters that I’ve written: one discusses a way that K-12 could embed that dynamic within a single school’s management structure. The other deals with higher education. But it’s very difficult to do it industry-wide or at scale.
Victor: What else can you tell educators and other leaders in and around education about the value of StraighterLine?
Burck: Online education is forcing the unit of commerce to move from the institution to the course. Students are amassing courses and credits from multiple sources and then bundling them together in a degree. This is because online learning has created a market of thousands of course providers rather than just a handful.
Except for the most selective colleges, the colleges that try to limit the credits that a student can bring to a college out of competitive fear are more likely to lose enrollment in the long-term. The colleges that embrace a fiercely competitive world and focus on the one or two things that they do best are most likely to succeed in the long run.
For StraighterLine, we provide comparable courses at vastly lower prices and with a more convenient and less risky pricing structure. None of what we do is particularly difficult to duplicate, so more are likely to enter the market as well. Course level price competition is coming. Prices cannot continue to rise while the cost of delivery continues to fall forever.
Victor Rivero tells the story of 21st-century education transformation. He is the editor-in-chief of EdTech Digest, a magazine about education transformed through technology. He has written white papers, articles and features for schools, nonprofits and companies in the education marketplace. Write to: [email protected]