2012-07-09

Co.Exist

The Future Of Education: An Online University That Charges $199 Per Month For Unlimited Classes

New Charter University can be accessed for free online by anyone. Is its freemium model going to truly democratize higher education?

The higher education system in the U.S. is in trouble. Jobs for college graduates are in short supply, and student debt is becoming an ever-larger burden. There is at least one school that’s getting it right, though—it’s profitable, growing 30% to 40% each year, charging students less than $500 per month, and operating on a competency-based model that allows students to complete courses at their own pace.

That’s what’s happening at Western Governor’s University, a little-known online school. In almost any other industry, there would be 10 copycats right behind such a successful model, but there isn’t one here. Financial aid regulation in the for-profit education world (where credit has to be earned based on so-called "seat time") and resistance from traditional professors in the nonprofit world are powerful roadblocks.

Nonetheless, UniversityNow, a startup founded by education entrepreneur Gene Wade, is building on the Western Governor’s model with a competency-based higher education platform created from the ground up. It’s simple, really: by pricing a college education so cheaply that most people won’t need loans (the startup eschews federal financial aid) and populating a brand-new school with professors who are willing to work with a new model, the company doesn’t need to worry about traditional barriers.

The San Francisco-based startup, which recently raised $17.3 million, launched New Charter University—billed as "the world’s first accredited U.S. university that anyone can access immediately for free online—10 weeks ago. Without any real marketing push, a few hundred students ("at or trending towards 500," according to Wade) have enrolled.

The school’s "freemium" model allows anyone to access its curriculum without paying. Once they’re ready, students, who can sign up using their Facebook or Twitter accounts, pay just $199 per month for unlimited access to classes that ultimately culminate in a degree—associate’s, bachelor’s, or master’s. That unlimited access also includes e-textbooks, tests, course specialists who can help with individual subjects, and advisors that help navigate the larger university experience.

Students don’t have to deal with course material on topics that they are familiar with; an assessment at the beginning of each class makes sure that doesn’t happen. They can take as much or as little time as they need to complete each course.

There are limits to what New Charter—which is nationally accredited by the Distance Education and Training Council—offers. Right now it only has a College of Business and a College of Public Policy (the latter program will begin enrolling students soon). In the future, Wade hopes to expand further into technology, healthcare, and education. UniversityNow is also planning to open other schools in the future—schools tailored to individual countries, for example. In the meantime, UniversityNow has partner schools, including a public community college in Washington and a school in the Bay Area, that are using its online platform.

Wade knows that New Charter probably won’t appeal to kids eager for the traditional college experience. "For 18 to 22 year olds, college is a place to meet people. For a 35 year old, you don’t need a frisbee," he says. "This isn’t for everybody, but for the folks that it’s for, it’s almost like a hand in glove fit. There aren’t a lot of flexible high-quality alternatives for folks." And in fact, New Charter’s average student is a working adult over age 35.

As Wade explains, California community colleges had to turn away a hundred thousand students this year "who showed up to door with financial aid and there were no classes for them." If they can’t get into community college, they probably aren’t getting into the Cal state system, and they may not be able to afford private school or even the pricier online schools (a bachelor’s degree from the University of Phoenix can cost $74,000 in total).

That brings us to the respectability problem that besets online degree programs like the University of Phoenix. It’s something that can only be solved with time and proven quality. "If someone you know and trust says this is a great school, if employers are saying I’ve hired people out of this place and I’d send my workers there, that says a lot," says Wade.

There is a movement afoot in Silicon Valley, led by billionaire entrepreneur Peter Thiel, to get young people to drop out of college. Thiel’s plan is to pay promising students $100,000 to drop out and go after their dreams. Student loans are at a staggering $1 trillion, after all, and just half of recent graduates even have full-time jobs.

But the debate over whether college is worthwhile can only reasonably be had at the upper echelons of society, argues Wade: "Down in the world of 'everyday people’, it doesn’t make sense. I don’t think anybody where most of America lives feels that way."

If you’ve already gotten into Yale there can be a legitimate debate over whether it makes sense for you to go. After all, you’ve already proven that you’re successful—you got into one of the most elite colleges in the country. Maybe you can make it on your own and ditch crushing student debt along the way. But most people need higher education to get a decent job. "I don’t think Peter Thiel is running down to the 7/11 grabbing these kids [who didn’t go to college]," says Wade.

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2 Comments

  • Gopal Gartaula

    I too have just read about the University and am interested to pursue Online MBA program in the near future. 

  • Ron_IL

    I'm an adult student at New Charter University, having earned my associate degree from a traditional, public school years ago.  I love NCU, and the staff works very hard to provide cutting-edge instruction and support.  They do a very fine job indeed.