No-frills university: cheap lessons for an age of austerity

US firm offers cut-price courses to appeal to cash-strapped students. Jon Marcus reports

July 15, 2010

A Harvard University-educated entrepreneur with doubts about the value of traditional high-cost higher education programmes has launched the "Ryanair" of university instruction.

Echoing the approach of successful budget airlines, StraighterLine offers no-frills courses designed by former professors at cut-rate prices. They are provided at students' convenience and can be transferred towards degrees at other institutions. Its mainstays are basic foundation courses required by most universities, including accounting, algebra, English composition, macroeconomics and statistics.

Each course costs only $39 (£26) plus $99 a month for the duration. They are delivered online and feature collaborative study groups and live tutorials, with advisers available via email.

At a time when students with diminishing financial and temporal resources increasingly assemble their education in fits and starts, the company's aim is to allow its customers to start, finish and work whenever and wherever they like.

The model is growing quickly: although StraighterLine would not disclose specific data, it said its enrolment equalled that of a small university less than six months after commencing full operations.

In its first step towards internationalisation, it has just announced a partnership with Thompson Rivers University in Canada.

"The same principle applies internationally, which is that universities aren't spending more than $100 a student to deliver these introductory courses, yet they are charging up to $2,500," said Burck Smith, StraighterLine's chief executive officer and founder. "We are providing the same or better courses: we are just pricing closer to the actual cost of delivery."

The model allows students to get to a level equivalent to that achieved after a full year of basic coursework at a traditional university, but much more quickly and at a lower cost, Mr Smith claimed.

He estimated the cost to be about $1,000 on average, compared with more than $50,000 at an elite private university in the US when living costs are taken into account.

Measures and countermeasures

Established universities, unsurprisingly, are not thrilled about the idea of a no-frills low-cost rival, and are in a position to thwart StraighterLine by refusing to accept its credits towards their degrees.

But Mr Smith has already partnered with 14 accredited bodies - including conventional private institutions such as Assumption College in Massachusetts, public universities such as Fort Hays State University in Kansas and online providers including Western Governors University - that have agreed to accept the company's credits.

Students can transfer to their campuses - the incentive for the universities to team up with the company in the first place - or, as one observer described it, "launder" their StraighterLine credits through the better-known institutions.

A team of academics assigned to review StraighterLine's programme by the American Council on Education, the US' largest higher education association, has also recommended that accreditation be given to its courses, although its decision is not binding.

"There are many ways schools erect barriers. It is like when you buy a mobile phone that has a particular charger that no one else has, and when you lose it you can buy it only from them," Mr Smith said.

"We are up against a lot of vested interests. No one is deliberately trying to provide a bad product at a high price, but what we have is a ... framework that does not fit the way the market is evolving."

The time is right

According to Anya Kamenetz, author of DIY U: Edupunks, Edupreneurs, and the Coming Transformation of Higher Education (2010), "the cultural appeal of the four-year degree and the grassy quadrangle is still very strong. It is presented as sort of a litmus test for middle-class students in high school."

But ideas such as Mr Smith's are becoming increasingly popular, Ms Kamenetz said, as university costs soar and the recession affects people's willingness and ability to pay.

The US for-profit higher education sector will see growth of 94 per cent by 2015, compared with just 5 per cent in the conventional academy, according to the higher education research and consulting firm Eduventures.

StraighterLine "is the most explicit articulation of that trend, which has been happening anyway - the disaggregation of the value chain", said Gerald DiGiusto, a senior analyst at the firm.

"Adult learners in particular have done this by default over the years. They picked up credits (from one source) and later down the road they decided to complete somewhere else. StraighterLine is pitching this towards a younger audience."

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