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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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When I spoke with Smith again in June, the whole experience had left him frustrated. “A couple of posts from grad students who’ve never even seen or taken one of the courses pop up on Facebook,” he said, “and North Central [the accreditor] launches an investigation. Meanwhile, there are horror stories about bad teaching at regular universities on”—a popular student feedback site—“and they don’t give it a second look.” Since traditional colleges provide virtually no public information about how much students learn in their introductory courses and won’t even agree on a common standard for how such results could be measured, there was no way for Smith to prove the quality of his courses in the face of accusations. And Smith’s Facebook critics weren’t looking all that closely at their own institution; even as they warned, “If we don’t fight against Straighter Line, it will be the death of the awesome, face-to-face education that FHSU has provided students for decades,” the university was itself teaching thousands of students online through the Fort Hays “Virtual College,” and using Smarthinking tutors to do it.

Meanwhile, Smarthinking’s executive management team (the company is privately held) began questioning why they were spending so much time and effort beating against the accreditation wall. StraighterLine enrolled a few hundred students in its first year of operation, accounting for only a marginal piece of Smarthinking revenues. The company’s core business was serving colleges and universities, they reasoned, not competing with them. By the end of July, Smith had stepped down as company president and was finalizing negotiations to take over StraighterLine as a separate business.

Smith’s struggle to establish StraighterLine suggests that higher education still has some time before the Internet bomb explodes in its basement. The fuse was only a couple of years long for the music and travel industries; for newspapers it was ten. Colleges may have another decade or two, particularly given their regulatory protections. Imagine if Honda, in order to compete in the American market, had been required by federal law to adopt the preestablished labor practices, management structure, dealer network, and vehicle portfolio of General Motors. Imagine further that Honda could only sell cars through GM dealers. Those are essentially the terms that accreditation forces on potential disruptive innovators in higher education today.

There’s a psychological barrier as well. Most people are so invested in the idea of education-by-institution that it’s hard to imagine another way. There’s also a sense that for-profit schools are a little sleazy (and some of them are). Because Web-based higher education is still relatively new, and the market lacks information that allows students to compare introductory courses at one institution to another, consumers tend to see all online courses in the same bad light. “The public isn’t good at discriminating,” says Larry Gould. “They read ‘online course’ and they think ‘low quality,’ even when it’s not true.”

But neither the regulatory nor the psychological obstacles match the evolving new reality. Consumers will become more sophisticated, not less. The accreditation wall will crumble, as most artificial barriers do. All it takes is for one generation of college students to see online courses as no more or less legitimate than any other—and a whole lot cheaper in the bargain—for the consensus of consumer taste to rapidly change. The odds of this happening quickly are greatly enhanced by the endless spiral of steep annual tuition hikes, which are forcing more students to go deep into debt to pay for college while driving low-income students out altogether. If Burck Smith doesn’t bring extremely cheap college courses to the masses, somebody else will.

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