A year ago, Peter Thiel called it a bubble. Whatever you call it, the cost of attaining a college degree has skyrocketed to the point of absurdity — to the point of one trillion red flags. Student debt in the U.S. recently pushed over $1 trillion, and the average debt per student now stands at more than $25K. (And 30 percent of students are more than 30 days overdue on payments.)
StraighterLine, a Baltimore-based startup, is one of many young companies trying to find a solution to these rising costs, through online education. Founded in 2010, StraigherLine offers a low-cost, subscription-based service that allows students to take a variety of accredited, general ed courses online. And, now, with the goal of bringing its service to a wider audience, the startup has announced that it has raised $10 million in series A funding.
The round of financing was led by New York venture firm FirstMark Capital, with contributions from City Light Capital and existing investor Chrysalis Ventures, among others. The company said that it will use its new capital to accelerate its outreach to colleges, employers, and students, and focus on building a viable, next-gen market for credit-bearing, web-based general ed courses.
With unemployment remaining fairly high and with non-traditional students (older people, single mothers, workers retraining) returning to academia, competition for already-scant resources is growing. Institutions are struggling to carry the load. Yale recently decided to add 250 students to its incoming class, which cost the university a quarter of a billion dollars.
Luckily, as online content distribution media have matured, the quality of online ed is fast-improving as a number of startups, like Khan Academy, 2tor, ShowMe, Udemy, Udacity, Grockit, Lynda.com, and the Minerva Project are all showing how video, mobile devices, games, and advanced web platforms can transform distance learning into low-cost, viable supplement (if not alternative) to on-campus learning.
StraighterLine, too, is focused on bringing price transparency to online education, offering general ed courses that students generally take (and are often required) during their freshman and sophomore years, like Algebra, Biology, Calculus, U.S. History, and English Composition, to name a few — on the Web. If we say the average price for a private institution is about $32K per year, StraigherLine’s pricing compares favorably, with the option to pay $100 a month, plus $39 for each course started, $399 per course, or a full freshman year education for $1K.
Included in this pricing is free live, on-demand instruction, although if students choose to buy a textbook, they have to do so separately. But the cool part is that the startup’s courses are ACE Credit recommended and can be transferred for credit to a number of degree granting institutions. Over 25 grant credit today, with more than 200 universities across the U.S. having accepted post-review.
There aren’t yet many “big name” institutions accepting StraigherLine credits, and obviously it will be important for the startup to expand its list of participating universities if it hopes to reach the tipping point. But the model is certainly an appealing one, as it means that students can participate in a flexible, low-cost education and transfer into institutions that accept its courses for credit, significantly reducing the cost of a four-year degree. A degree that they eventually receive from the universities themselves, not StraighterLine.
It’s also all about quality when it comes to online education, something 2tor has been religiously focused on and is raising big money to take the necessary steps to ensure. StraighterLine, on the other hand, doesn’t have to offer an Ivy League education like that which Minerva is setting out to build, as long as it offers those quality, prerequisite courses that students can knock out on their way to an on-campus degree. In this way, it can provide a great complement to community colleges and equivalent feeder programs into four-year institutions.
The company said that it is working towards building out its platform so that it can begin to offer the kind of robust online education (multimedia, interactive content, live, on-demand instruction, employment resources, etc.) that is now expected of distance learning. It also plans to boost its offerings around placement, career training, and is hustling to engage the employer community so that its educational platform maintains relevance to students’ futures, beyond just being an easy way to knock out first-year requirements.
The founder and CEO of StraighterLine, Burck Smith, has experience building online educational programs, having sold his online tutoring and support services company, SmartThinking to Pearson early last year.
For more on StraighterLine, check ’em out at home here.