The Rise of “Alt Credit”
Why, Who & What’s Next
Burck Smith
CEO and Founder, StraighterLine
Sections
SERIES C September 20142
I. Why? Economic Drivers of Alt Credit
II. Categories and Examples
III. An Example: StraighterLine
IV. Regulatory Landscape
Tuition
Student
Funding
Sources
Can I repay the debt?
Can I get a job?
• Exponentially more choices
• Many price points
• Focus on credit transferability
What am I learning?
Students are
Shoppers!
Ways to Increase Value of Credential
SERIES C September 20144
I. Lower total cost of degree
II. Reduce time needed to earn credential
III. Greater assurances of employability
IV. Greater expected value of post-credential employment
$$
$914
$646
20151999
$300
$150
Govt. Support
List Price
Cost of Delivery
Online Course Profit Margins at Accredited Colleges
Subsidy
• State allocation
• Federal student grants/subsidized loans
• Non-profit tax status
• Tax preferred plans
• Branding advantages
Accreditation
• Only institutions can be accredited, not courses
• Accreditation measures inputs, not outcomes
• Colleges set own, subjective articulation policies
• Accrediting agencies are staffed and financed by colleges
Competitive Barriers
• Colleges cannot easily be “disaggregated”
• Colleges must look similar to each other
• Standards set and enforced by those that would be undermined by changes
Subsidy + Accreditation Keeps Competition Out
7
Rise of Alternative Providers
ACCREDITED COLLEGES
Academic CreditNo Credit/Certificates
ACCREDITED COLLEGES
8
Types of Alternative Providers
Certificate
ACCREDITED
COLLEGESDegree
Face To FaceOnline
• Offers nearly 60 well-supported, self-paced, competency based online general education courses to about 20K adult students.
• Free trial. $99 /mo. membership + about $49 per course started.
• Psychometrically valid and reliable end-of-course assessments. Anti-plagiarism and on-line exam proctoring
• Continuous improvement methodology using A/B testing on completion rates and NPS scores.
• ACE Credit recommended, DEAC AQC approved, College Board approved, over 100 articulating partner colleges.
StraighterLine
Helps Students Reduce Risk of Starting College
Low Price ✓ Low Risk ✓ Not on Record ✓
• $99 per month +
about $49 per
course
• College can give
discount codes to
students
• Free Trial
• Subscription pricing.
Cancel anytime
• Incomplete or
failed courses not
on transcript
• Does not count
against Title IV
caps
SERIES C September 201411Confidential and Proprietary
Attract and Retain Students
Credit Equivalency Agreement (Free)
• Students taking SL courses know that credit is guaranteed to transfer.
• College is part of selection set from which students choose
• Nearly 100 partners including best known public, private and for-profit online programs.
• Students starting with StraighterLine are more likely to persist than those that don’t.
Scholarship Program (Optional)
• Willing colleges provide a tuition discount to SL
students that complete four or more courses.
• College is given “Scholarship” status on website.
Greater marketing power to attract the students most
likely to persist.
• Over 20 scholarship partners
Refer and Re-Enroll Students
SERIES C September 201412Confidential and Proprietary
Co-branded, Closed Loop MarketingReferral
College
SERIES C September 2014
“The university admits 94 percent of
students who have completed at
least two StraighterLine courses.
And year-to-year retention rates for
StraighterLine course completers at
WGU top 90 percent…”
“We can hand those
students off,” said
WGU’s VP for enrollment,
“to help them gain those
skills at a much lower
cost than we can
provide.”
Referral Impact
SERIES C September 201414Confidential and Proprietary
Reducing Student Risk = Greater Persistence
SERIES C September 2014
MOTIVATION
ABILITY
Low
Low
High
High
DROP-OUT/NO
DEBT
TRANSFER/SAVE MONEY
EITHER:TRANSFER & SAVE;
ORDROP-OUT & NO
DEBT
EITHER:TRANSFER & SAVE;
ORDROP-OUT & NO
DEBT
16
College Tuition & Fees
Medical Care
Customer Price Index
In FY2016, if SL students enrolled elsewhere, students and taxpayers would have spent an additional:
$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
Private 4-year Public 4-year Private For Profit Public 2-year
Taxpayers
Students
Certificates
SERIES C September 201417
Types Prices Notes
Coursera
Specializations
82 across wide
range of topics
4-6 courses at
$50 - $75 each
Raised $60
million in Fall
2015
Udacity
Nanodegrees
12 focused on
tech.
$200 per month.
Students spend
$700 on average.
Raised $105
million in
November
EdX X-Series19 across wide
range of topics
3-6 courses at
$50 - $75 each
* Lynda.com bought by LinkedIn for $1.5 billion; Udemy raises $61.5 million; Pluralsight filing to go pubilc
Bootcamps
SERIES C September 201418
*
• Estimate 16K grads in 2016
• 10-12 week sessions; average $1,000 per week as high as $1700 per week.
• Advertise 90%+ placement rates, but no standards for measurement
Internships/Corporate
SERIES C September 201419
EQUIP Ex Site (and Other Efforts)
SERIES C September 201420
• Tension Between Good Policy and Good Politics
• Title IV Access Through College & “QAE” + Accreditor Approval
• 50% - 100% of Program Must Be Outsourced
• About 10 Programs To Be Selected
• Participants Can Be Any “Non-College”