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Or “Benevolent Collusion”. Another Presentation on Post-Secondary Disruption. Burck Smith, CEO, StraighterLine , October, 2011. Topics. Introduction The Big Question and Disruption Theory Higher Education Today Higher Education Tomorrow StraighterLine as Case Study
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Or “Benevolent Collusion” Another Presentation on Post-Secondary Disruption Burck Smith, CEO, StraighterLine, October, 2011
Topics • Introduction • The Big Question and Disruption Theory • Higher Education Today • Higher Education Tomorrow • StraighterLine as Case Study • Should government have a role in online education? • Policy Recommendations
About Me… • Background in non-profits and public policy. • Masters “thesis” helping a consortium of MA community colleges develop an online learning financial model. • Founded SMARTHINKING in 1999 • Founded StraighterLine in 2008 • Kept asking the question…
Despite massive investments in technology in post-secondary education and K-12, why have costs gone up and quality gone down?
Disruption Theory 101 • Existing providers compete on features • Some new technologies change entire industries • Disruptive technologies are attractive to markets ignored by existing providers • Eventually new technologies compete with existing providers. • New technologies require a new business model
Online Learning Business Models • For-Profit Accredited Colleges • Turn-Key Private Labeled Programs • In-House Online Offerings Subsidize Other Units • Everyone looking to starting online programs
Barriers are Eroding • Internet enables dramatically more competition at the course level. • Student debt load is becoming unsustainable. • Tuition growth is more rapid than ever. • Sources of student support are drying up • Online courses are cheaper to deliver and more scalable. Trends: Growth of dual enrollment, co-enrollment, AP, CLEP, StraighterLine, community college enrollment growth.
Credit Delivery • Partner College Network — Almost 20 regionally accredited partner colleges. • “Shadow Partners” – Over 180 non-partners have awarded credit for SL courses. • ACE —StraighterLine’s courses have been reviewed and recommended for credit by the American Council on Education’s (ACE) College Credit Recommendation Service. • Independent Survey Results – SL Courses as rigorous as other options, more convenient, more affordable, students persist at greater rates. • “Good Housekeeping Seals of Approval” – DETC, College Board • General Research – Students that start college with credit are more likely to complete.
Arguments Against • “Fine Wine” Fallacy • “Platonic Form” Fallacy • Institutional Control of Credit Acceptance • Competes With the Public Sector
What does this mean for colleges? • Erosion of most-profitable courses • Need to re-think pricing models • Need to re-think business models • New marketing and student recruitment opportunities • Controversy around new partnerships • 3 year Ivy’s?
Predictions • Selective, high-priced colleges will be unaffected. • Non-selective colleges will loosen transfer restrictions. • Course prices will be variable and will reflect the cost to deliver the course. Subscriptions may become more common that flat tuition. • Residential will cost a lot more than online courses. • Highly efficient specialty course providers will emerge. • College marketing strategies will begin to resemble retail marketing strategies. • The rising cost of college will become a non-issue.
Policy Suggestions • Create minimum outcomes where possible, let the market set the rest. • Create course-level accreditation. • Require any college accredited by a DoE recognized agency to accept any other similarly recognized college’s credits. • Create a more level economic playing field. • Let private sector fund online learning. • Let student loans be dischargeable at bankruptcy
Thought Exercise… Deregulate Online “Appropriate” Reasons for Market Intervention
More Reading… Public Policy Barriers to Post-Secondary Cost Control – Book chapter in Accountability in Higher Education published by Palgrave Macmillan. January, 2011. Price Competition and Course-Level Choice in K-12 Education: Lessons from Higher Ed – Book chapter in Customized Schooling published by Harvard Educational Press, January, 2011. College by Subscription -- AEI, September, 2009. Disrupting College, Lessons from iTunes – Pope Center for Public Policy, April 2011.
Contact Info Burck Smith bsmith@straighterline.com