The Online Education Game is Changing

The walled garden of higher education just took a volley from one dangerous cannon.  It’s a cannon that might not knock the wall down this time, but there will certainly be successors that could.  What I’m talking about is a place called  The short of it is that for $99 a month, you can take as many classes from them as you can handle, and they have guaranteed transfer credits with a number of universities.  They are moving ahead full steam into a market that traditional higher education is only barely touching, and touching in a far less cost effective manner.  They only offer a few courses, but plan to expand, and it’s likely a matter of time before they (or someone else) begin attacking more specialized areas instead of just the gen ed components.

I credit the Washington Monthly for the first article I’ve seen on the company (institute? school?  BTW, that article is long, but I recommend reading the whole thing.).  The idea of online schools and degrees is, of course, nothing new.  After all, Kaplan and the University of Phoenix have been parlaying the online degree game for years with success.  Others are entering the game every year, some more legitimate than others.  The goal is first, make money, and two, provide an alternative form of education that better fits the technology and tools we have available to us today (then three, make more money).  They focus on their goal from the ground up, as opposed to us, who play catch up from our brick and mortar offices.  Often times, in web offices we’re asked to help slap together a system a school buys, or provide support or integration.  Naturally, we have MOUNTAINS of resources to do this with (or not), so the ultimate effectiveness of online programs at traditional institutions can vary quite widely.  From the article:

“…[Burck] Smith envisions a world where [students] can seamlessly assemble credits and degrees from multiple online providers, each specializing in certain subjects and—most importantly—fiercely competing on price.”

I’ve been rather vocal in some circles that the traditional brick and mortar education system is in danger, not just from online schools, but trade schools, and industries where specialized certifications mean more than any degree we can offer (classic example is a BS in Computer Sciences vs. a CCIE for someone interested in networking).  Imagine being able to assemble your core classes (and someday beyond) from the institutes that can best serve you, right from your home and for the best cost available.  This new model is one of the bigger changes I’ve seen, and it’s the kind that really stopped me in my tracks and forced me to start doing more research on them.  It’s the exact kind of groundwork that is laying the path for others, and spells a major paradigm shift in what it means to have “higher education.”  The article aptly describes the fact that colleges are in as much financial trouble as many other industries, and it’s coupled with the problem that change within institutions occurs much more slowly than the technology that we need to use and teach about.  To make matters worse, a company like is stepping in offering cheap, cost effective classes, while the online course universities offer are typically the same cost as normal classes, and sometimes cost more with the added fees that may be associated.  Then add in annual tuition hikes that have no end in sight.  Simply put, higher ed is thinking backwards and not addressing the true problem - an antiquated business model.  They continue with a rather poignant line:

“Like Craigslist, StraighterLine threatens the most profitable piece of a conglomerate business: freshman lectures, higher education’s equivalent of the classified section. If enough students defect to companies like StraighterLine, the higher education industry faces the unbundling of the business model on which the current system is built. The consequences will be profound.”

The idea is that large lecture classes taught by a graduate assistant or adjunct professor are highly profitable for a school, and help to fund all the other less cost effective programs.  Newspapers made tons of money from advertising and classifieds, until it became easier, cheaper, and more broadly reaching to do it online.  Now, they’re feeling the impact in harsh ways.  Higher ed could be in the crosshairs for a similar reason.  Antiquated business models are pinching industries across the board, some are adapting, some aren’t.  Another good example is the service that is offering (for free no less) vs. the traditional cable subscription model.  Or not to mention the mess that is digital music distribution, or the open textbook movement, or e-book standards.  The business lesson of the day is “evolve or die.”

Now, there’s one big obstacle here - you can’t get a degree from them.  In reality, isn’t accredited at all.  But, that’s the genius of it.  They are working on the side with REAL colleges and universities to accept credits from them, making them into an actual commodity for the students that they can take elsewhere.  I personally thought this was genius, and was sitting here wondering what their market penetration was until I read their first case listing.  Fort Hays State University.  In Kansas.  It just so happens I work for Pittsburg State University.  In Kansas.  This drove the point home like a stake through the heart of a vampire.  This is a school in our state, right on our level that has got the jump on us at something that could be paving the way to a totally changed landscape, and it REALLY gets you thinking.  And what if, WHAT IF, someone like the University of Phoenix stepped up and offered a similar service?  The ARE accredited.  What if they decided to attack that base demographic aggressively offering a similar model.  Not only would they pick up students from your school, they set themselves up for keeping them in the long run and offering them the same commodity at a cheaper price.

Interestingly, social media exposes the risks involved in such an endeavor.  Fort Hays is actually considering ending their agreement with them just because of the pushback they’ve seen around campus.  People who attend the brick and mortar institutes see it as a risk on the road to cheapening the quality of their education and the way they are viewed after they’ve graduated.  Ultimately, I see that as just a growing pain of such a system.  The Provost at Fort Hays ultimately had sound logic, that by accepting the transfer credits, it’s basically lead generation for out of state students that are worth substantially more to the school than in state students.  When you’re running the risk of losing money from both the state and to people like StraighterLine, and you’re beginning to have trouble funding teachers to teach some of your basic classes, why not team up in a way that can benefit everyone.  For Fort Hays, their anti-SL Facebook group only had 150 members, not all students.  And the pushback from the teachers is almost moot, because the teachers aren’t the commodity, the students are.  If only 150 out of 10,000 students complain about something, I might actually call that a big win.  Remember, you’re more likely to hear from the people against it than the people for it.

That’s the rub.  It’s about change.  The landscape is changing, and it’s happening more quickly, and with effects that are slowly becoming more obvious in their long term.  Schools need to be ready to address this, and need to understand that the demand for online courses is going up, not down.  What happens if someone develops a model that builds on something like the open coursework movements at MIT, Stanford, and Berkeley?  Eventually that wall holding back a company like StraighterLine is going to crumble.  They won’t be seen as cheapening education, they’ll be seen as valuing it exactly right in an environment where traditional schools just keep charging more for the same (inconvenient) service.  And then there’s the REAL worry: eventually, some day, a company that may be StraighterLine, or it may be someone else is going to GET accreditation.  That cannon volley is going to break the wall.  When that wall yields, the landscape is going to begin changing in ways that we aren’t even predicting yet.  It’s going to happen.  I’m not sure that this particular company will be the one to get it done, but they definitely exposed a chink in the enemy’s armor.

I want to end by sharing a SlideShare from one David Wiley Ph.D. of Brigham Young University talking about the evolution of higher ed, why we are in danger, and the future of opening ourselves up to new systems and ideas:

Openness and the Disaggregated Future of Higher Education
View more presentations from David Wiley.

18 Responses to “The Online Education Game is Changing”

  1. Says:

    Really interesting stuff Fienen. Really smart too. From my own college experience we pay for the premium of enjoying the “college experience” from your traditional brick and mortar institutes. People always say that college will be the greatest time of your life and that is what you really pay for, the time to build lasting friendships and simply have a ton of fun. Yes education is thrown in there but it’s not what drives the big costs that we see now. I think that positioning will still be around in some form, but I think models like this will become more and more popular.

    Just speaking as someone who knows this site better than anyone I find it interesting that really deep well thought posts like this get absolutely no comments. Either the people who read our blog don’t care or they don’t have the power to really have an opinion about things like this. Just saying…

  2. Says:

    Great article Michael. Most colleges and universities operate within a model that is completely unsustainable. Many educators do not see the Kaplans and U of Ps of the world as a legitimate threat. But inevitably there will come a tipping point when a student realizes that the overbearing costs of attending a traditional institution do not make sense. Companies such as StraighterLine will reap the benefits. As a parent, I can really warm to the idea of paying $900/year for an online education versus the projected $80,000/year of sending my kids to a private school.

  3. Says:

    The newspaper analogy is really what drove this home for me, Michael. I was reading along, thinking “Okay, that’s kind of cool, for a certain subset of people” until you made that point. Things are changing, and if institutions are going to keep charging what they charge, there needs to be justification for that.

    And I think Founderhits the nail on the head as to what that justification is right now. It’s the experience of college. Who is that experience marketed to? Kids right out of high school, who want more than just classes. If they wanted just classes, they can get that right now from places like the University of Phoenix. If they were that concerned about money, everyone would go to community college for 2 years before transferring to a state school.

    But as the culture shifts, this experience might be less and less important. Students can use things like social media to build their networks – they don’t need alumni networking. And as often as people today totally switch careers, versus just changing jobs, continuing education will have to be cheaper and easier to obtain.

    • Says:

      You say it right when you mention a “culture shift.” Current academia business models rely heavily on the attitude that kids WANT to come to campus and WANT to be socialized into the school from the outset. What people want constantly changes over time and from generation to generation. There’s no guarantee that that will continue to be the case into the future. One can assume fairly safely that at some point they’ll still go to the college of their choice, but it might just be later in their education cycle, and they’ll be bypassing the classes that are the bread and butter for the university’s wallet. That’s where the damage it’s done. It’s not that kids will never attend the school, it’s that they’ll come later in the education cycle.

  4. Says:

    Glad to see this thought-provoking post with its links to some good resources. I would add this report (exec summary, actually) from Chronicle Research Services about the college of(PDF). I posted a summary of the summary a few months ago, and the quote that struck home with me then was this one:

    The challenge [to traditional bricks-and-mortar colleges and universities] will be to provide all those different learning methods simultaneously and be flexible enough to change the methods as the market changes.

  5. Says:

    I think most of us in the education business know the game is changing. Some just ignore it and others just stick their heads in the sand. Institutions willing to adapt to the change will survive while others will slowly dwindle away into insignificance.

    However, major institutions still hold the majority of our intellectual talent. I believe the major shift will begin when that talent chooses to take advantage of a more open distribution of their lectures, presentations and knowledge. When instructors no longer feel compelled to bind themselves to a single educational institution, the traditional brick and mortar institutions will have to evolve very quickly. Most of the big named institutions will survive, but this shift will be their catalyst to change their approach to education.

  6. Says:

    This is a really interesting topic. Our program at the University of Colorado at Boulder offers the degree in an online format, but I don’t see companies like as threat for us as much, mainly because our engineering management program is a graduate degree.

    • Says:

      Yeah, I wouldn’t see anyone getting in to the specialized stuff right away at all. And you can also consider that fields like chemistry, biology, medicine, etc require expensive equipment and supplies that simply aren’t available any other way than at a university. But that’s the rub: how do you fund the expensive stuff if others cut in to the areas where you make the most money? Even if we only talk 10-20% of students opting for cheap online gen ed, that works out to a big punch in the tuition dollar gut for schools. The threat isn’t just the idea of taking the place of normal online degree programs.

  7. Says:

    Online courses have got some more advantages over the regular classes. Here, you have a flexibility of time which you can utilize according to your convenience. The cost of study is also very less than the regular one.

  8. Says:

    Wow, you really got me thinking about where this is going to go! Personally, I graduated with an online degree from Independence about two years back. Even as little as two years ago, distance learning had not been as widely accepted as it is now. Today, it seems that you can’t look anywhere without being hit with an advert for online education. And with the tightening of the accreditation rules, it is getting easier to know which college to choose. Employers now acknowledge an online distance learning degree and getting a job is no longer an issue. Now along comes a company like StraighterLine and the boundaries of what is an acceptable education get pushed even further? You really wonder where this will end.

  9. Says:

    Yeah, it’s kind of crazy to watch an industry growing through its early stages. It’s weird how different online education is from traditional methods but how similar we really thought they would be. No matter what, online education will have a very strong following.

  10. Says:

    nice article. thank you

  11. Says:

    Yeah, it’s kind of crazy to watch an industry growing through its early stages. It’s weird how different online education is from traditional methods but how similar we really thought they would be. No matter what, online education will have a very strong following.

  12. Says:

    It is really hard job to decide to what online college you will go. I`m still searching for good one.

    If someone can recommend me please reply here I will watch this blog for replies.

    Thanks in advance

  13. Says:

    Hi I think the information posted on your web blog is superb, I have book-marked you =D

  14. Says:

    Seeing that everyone learns differently I am sure some would really benefit from online education but many do not. I like online courses but I prefer to learn one on one coaching. But then I guess everyone would.

  15. Says:

    This reminds me of the Matrix. Honest. If we mammals all can just download skills and knowledge into our heads, the cost of creating a genius will go to zero.

    What will happen then is that imagination and creativity will become the most valued resource on the planet since the cost of creating an intelligent, logical human being will be nil.

    You cannot really cut a mold on creativity, imagination, passion, inclination. Maybe in the future we can do it. The world will become closer to utopia than before. And what this tells me is that we still need to strike our own impact onto the world and leave our own unique mark.

    Irwin K Chua

  16. Says:

    Great article, I this this move forward is a great thing. Some people are just too busy to be able to enrol in a course, but If they can do it online, its more possible. However I dont think this should replace normal schooling just yet.