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College for $99 a Month

The next generation of online education could be great for students -- and catastrophic for universities.

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The biggest obstacle Smith faced in launching StraighterLine was a process called accreditation. Over time, colleges and universities have built sturdy walls and deep moats around their academic city-states. Students will only pay for courses that lead to college credits and universally recognized degrees. Credits and degrees can only be granted by—and students paying for college with federal grants and loans can only attend—institutions that are officially recognized by federally approved accreditors. And the most prestigious accreditors will only recognize institutions: organizations with academic departments, highly credentialed faculty, bureaucrats, libraries, and all the other pricey accoutrements of the modern university. These things make higher education more expensive, and they’re not necessary if all you want to do is offer standard introductory courses online. To compete, Smith needed StraighterLine courses to be as inexpensive as they could be.

So he devised a clever way under the accreditation wall, brokering deals whereby a handful of accredited traditional and for-profit institutions agreed to become “partner colleges” that would allow students to transfer in StraighterLine courses for credit. After the credits were accepted—laundered, a cynic might say—students could theoretically transfer them anywhere else in the higher education system. The partner colleges stood to benefit from the deal as well. They all had their own online endeavors, but those required hefty marketing investments to keep new students enrolling. The schools reasoned that the StraighterLine relationship would introduce them to potential new students, with some StraighterLine customers sticking around to take their more advanced (and expensive) courses.

One of StraighterLine’s original partner colleges was Fort Hays State University, just off I-70 in Hays, Kansas. Smith had met the school’s provost, Larry Gould, at a higher education technology conference back in 2001. Soon after, Fort Hays became one of the first clients for Smarthinking’s tutoring services. When Smith approached Gould in late 2007 with the StraighterLine concept, the provost paid four faculty members to review StraighterLine’s curricula and course materials—a level of scrutiny, he notes, that far exceeds that given to most credits students transfer in. “Right now students can bring in up to sixty credits from community colleges,” Gould told me, “even though we often don’t know who taught those courses or even what the syllabi look like. The StraighterLine people we know, and the course materials are there to see.”

But as word of the StraighterLine deal spread around the Fort Hays campus, professors and students began to protest. By early 2009 a Facebook group called “FHSU students against Straighter Line” had sprung up, attracting more than 150 members. “Larry Gould,” they charged, “has taken steps that will inevitably cheapen the quality and value of a degree from Fort Hays State University by placing our university in bed with a private corporation… . [T]he end result of this move is that FHSU would have a viable reason to eliminate faculty positions in favor of utilizing services like Straighter Line.” The English Department announced its displeasure while a well-known academics’ blog warned of the encroaching “media-software–publishing–E-learning-complex.” Gould was denounced in the Fort Hays student newspaper.

Soon the story was picked up by the national higher education trade publication Inside Higher Ed , which caught the attention of the accreditor that oversees Fort Hays. The accreditor began asking questions, not just of Fort Hays but also of some of the other partner colleges, including for-profit Grand Canyon University and Ellis University. This prompted more news coverage and Internet chatter; one blog led with the headline, “Something Crooked About StraighterLine?”

Within months, Grand Canyon and Ellis had ended their involvement with the company. The controversy eventually took a toll on Fort Hays as well; in June the university informed StraighterLine that it was considering bringing the relationship to an end. Smith had to recruit several new partner colleges to stay afloat.

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