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Making it in America used to mean earning enough to send your kids to college. These days, it requires getting a degree yourself first--and then possibly upgrading your credentials and skills to qualify for a promotion or to switch fields. Education, as President Obama likes to say, isn't a luxury-good anymore; it's a necessity.
Online education institutions have long served students who want to get a higher degree on their own schedule, and who aren't looking for the dorm experience, student center, and extra costs that come along with a traditional residential campus. Online education has also long revolved around testing: students move forward based on what they know, not based on how many hours they've spent in class.
The next generation of innovators, such as StraighterLine and UniversityNow, are further redefining what constitutes a course credit and how learning can be priced. Pending legislation in California could scale up the shift, by requiring public universities to grant credit for faculty-approved online courses like those offered by StraighterLine.
StraighterLine isn't an accredited institution, because it doesn't award degrees. It allow students to take online courses, for credit, that they can then transfer to an institution. A monthly membership of $99 gets students access to as many $49 courses as they can handle. An entire freshman year costs just $1,299.
Most students use StraighterLine to complete introductory courses, such as Economics 101, and they range from young adults who need to fulfill prerequisites before starting a two- or four-year college to adults focused on improving their résumés. The material is the same as any institution would offer in an online course, including assessments, tutoring, and the option to take a customized course.
Because StraighterLine doesn't need to pay for a campus, doesn't offer related student services, and doesn't have to deal with the red tape of accreditation, it can offer an online course closer to the price of what it actually costs to provide one. The company doesn't receive any state subsidies, and doesn't offer financial aid, but then again, it doesn't need to.
"Colleges have, forever, thought of themselves as the single provider of the full suite of services — whether that's social services, or library services, or advising or tutoring," says Burck Smith, CEO and founder of StraighterLine. "That made sense when it was all in a physical location. It doesn't make as much sense on the Internet."
Nationwide, including in California, many public colleges and universities already offer full online degrees. But traditional institutions also tend to charge online tuition per semester, or per year, rather than per credit.
While elite institutions compete to see who can offer the most luxurious and comprehensive residential package, the new online innovators aim to provide a college education as cheaply as possible. That's important for aspiring college graduates at a time when college costs can saddle students with an onerous level of loan debt. Pacing students based on what they know, and using interactive online tools, can also help keep students engaged and up their chance of graduating on time. Just half of bachelor's degree candidates graduate in four years, and less than a third of associate's degree candidates graduate in three years, according to the National Center for Higher Education Management Systems.
One of the first institutions to think about how education could be different online was Western Governors University, the brainchild of 19 governors who wanted to increase the capacity of state higher-education systems without spending more state money. Established in 1997, WGU pioneered what's known as a competency-based model.
"We actually measure what students know and can do, not how long they've spent in a seat," says Robert Mendenhall, president of Western Governors University. Students move at their own pace, blasting through material they already know and slowing down to pore over the material they don't. The average time to graduation with a bachelor's degree is 35 months — two years faster than the national average--and retention is also higher than the national average for four-year universities.
To figure out what a "˜competency' is, WGU works with employers to determine what graduates in a particular field need to be able to do. WGU faculty then put together materials that teach to those competencies. Students enroll in a specific, career-focused track — either I.T., teacher education, business, or health care — and take only courses directly relevant to that path. Not everything stays online: Education students must complete a student-teaching unit, and nursing students do clinical rotations at partner hospitals.
Online institutions can also act as virtual laboratories. "After a while we learn that, oh, this piece of content, this video, really helps people with this profile," says Gene Wade, cofounder and CEO of UniversityNow, the parent company of two accredited colleges that operate on a competency-based model. Data on which concept students struggle to master, and which online tools work best, can be constantly recorded.
Advances in big-data analysis mean that the newest online institutions aren't just using data to finesse their courses. They're figuring out how students learn. All the data-tracking puts pressure on traditional institutions, many of which have never had to quantify whether their graduates are actually learning something.
The legitimacy of a new education model has to be based on measurement and transparency, not institutional brand. Online educators have to work to prove that what they're doing works. "Whereas the legitimacy of a course at Harvard is Harvard, the legitimacy of one of these courses is, did you learn anything?" says Anthony Carenvale, director of the Georgetown University Center on Education and the Workforce.
The cachet of the Ivy League won't vanish overnight. But less elite colleges will have to adapt if online competitors are offering students not just a cheaper, faster service, but a proven path to learning. Sleeping through a lecture may become a luxury only Harvard students can afford.
This article is from the archive of our partner National Journal and part of our Next Economy coverage.
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