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Competency-Based Online Education: The Rising Tide of College Affordability

         This article was originally posted at e-Literate

One of the interesting trends over the past year or two is the emergence of educational delivery models as a locus of innovation – with new business models, applications of technology, and tight integrations of educational content and delivery platforms. In part 1 of this series, I described a new landscape of educational delivery models. In part 2 I described the master course concept that is the basis for most scalable for-profit and not-for-profit online programs. In part 3 and part 4 I described the emergence of MOOCs as well as four barriers they must overcome to become self-sustaining. In this post, I’d like to focus on the less glamorous, but perhaps more significant, movement in self-paced and competency-based online education.

Consider that just two years ago Western Governors University stood almost alone as the competency-based model for higher education, but today we can add Southern New Hampshire University, the University of Wisconsin System, Northern Arizona University, StraighterLine and Excelsior College.

Let’s review some of the recent announcements of competency-based programs.


Western Governors University Celebrates 15th Anniversary

The most well-known example of competency-based education is Western Governors University (WGU), which celebrated its 15th anniversary this summer. WGU has formed partnerships with a statewide system to provide online education programs, and they have succeeded lately in becoming the partner to build or provide online programs for state systems in Indiana, Washington and Texas. The non-profit school now enrolls 33,000 students.

WGU received an special ruling from the Department of Education allowing for their courses to fit within the policies defining financial aid eligibility, but even then WGU chose not to use this new competency-based rule, as described at Inside Higher Ed.

While a 2005 law specifically designed for Western Governors created a way for it and other institutions to participate in federal financial aid programs by directly assessing how much students were learning, independent of how many course hours they took or how much time they spent in the classroom, few people in higher education seem to realize that WGU chose not to seek that authority (nor, seven years later, has any other college or university).

This is important to realize – competency models often operate in spite of accreditation and financial aid rules. Because of this allowance by exception, there are not clear definitions of what is and is not truly competency-based or competency-focused. I’ll use the terms competency-based and competency-focused interchangeably in this post, including self-paced programs whose intent is to move away from seat time towards demonstration of competencies.

Southern New Hampshire University 

Southern New Hampshire University has also been a leader in competency-based education, and their three-year bachelor’s program, which is significantly based on competency assessment, is fully accredited. An article last year in the Chronicle documented SNHU’s approach to online innovation.

Southern New Hampshire, which is showcased in Mr. Christensen’s new book, The Innovative University, offers a case study of what happens when a college leader adopts some of the Harvard Business School professor’s strategies for managing disruptive change. Southern New Hampshire’s deep dive into Web teaching raises many questions facing colleges migrating online: How big will e-learning get? What will that mean for campuses? How will it break apart the role of traditional professors?

“They’re one of the first private nonprofit institutions, with a traditional campus and traditional student body, that has really committed to scaling online,” says Richard Garrett, managing director at the consulting company Eduventures.

University of Wisconsin

In June, the state of Wisconsin announced a new initiative through the University of Wisconsin Extension.

The unique self-paced, competency-based model will allow students to start classes anytime and earn credit for what they already know. Students will be able to demonstrate college-level competencies based on material they already learned in school, on the job, or on their own, as soon as they can prove that they know it. By taking advantage of this high quality, flexibility model, and by utilizing a variety of resources to help pay for their education, students will have new tools to accelerate their careers. Working together, the UW System, the State of Wisconsin, and other partners can make a high-quality UW college degree significantly more affordable and accessible to substantially more people.

“This new model for delivering higher education will help us close the skills gap at an affordable price to get Wisconsin working again,” said Governor Walker. “As states across the country work to improve access and affordability in higher education, I am proud to support this exciting and innovative University of Wisconsin solution.”

The UW Extension has emphasized the homegrown nature of their program, contrasted with WGU partnerships, as described at Inside Higher Ed.

“The biggest difference is the name: ‘University of Wisconsin,’ ” said David Giroux, UW-system spokesman. About six or seven months ago, the system began discussing how to create a flexible degree program with Walker’s office. “He was very upbeat, very excited about the idea of a Wisconsin solution to a Wisconsin problem,” Giroux said. “This is a homegrown solution.”

Northern Arizona University

Meanwhile, Northern Arizona University is working with a different partner – Pearson – to develop a new competency-based program.

Northern Arizona University (NAU) and Pearson today announced a partnership to create the region’s first competency-based online learning degree programs, as part of NAU’s new Personalized Learning Division. Pearson will collaborate closely with NAU to design more than 90 completely online competency-based courses. The courses will be offered through the Pearson LearningStudio online learning platform. Course modules will include readiness assessment and remediation, and align with degree program competencies. The programs will be available in January 2013.

Personalized Learning at NAU allows students to jump-start certain bachelor’s degree programs by pre-testing to determine what they already know, allowing them to receive credits for prior learning and experience. The program then provides a variety of individualized academic resources to ensure steady progress, including extensive mentoring. Students work online at their own pace, receiving assistance based on frequent assessments of their needs and learning styles. Faculty will actively participate by advising and mentoring, using information gained from student tests and other inputs to offer customized strategies for success.


StraighterLine is a private startup that spun out from SmarterThinking in 2010, and this spring raised $10M in venture funding to expand their concept of affordable online education.

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.

Excelsior College

Excelsior College has been a leader in competency-based online programs.

Excelsior has grown to include a student population of more than 33,000 distance learners, approximately 15,000 of whom are members of the military and veterans. The college now has more than 140,000 alumni worldwide.

Excelsior has the largest school of nursing in the U.S. and is also home to the only college-based credit-by-examination program in the nation.

Saylor Foundation – Free, OER-based Courses for Credit

This week the Saylor Foundation announced a partnership with StraighterLine and Excelsior College to provide a pathway for credit based on Saylor’s free, OER-based courses. As described in Inside Higher Ed:

Students have already started taking the classes, and can earn non-credit bearing certificates. But thanks to newly-forged agreements with Excelsior and StraighterLine, the foundation now provides an indirect route to college credit.

Excelsior is a private, nonprofit college that offers relatively inexpensive, online degree programs. The regionally-accredited college is also one of the first to have competency-based programs, where students can take Excelsior-developed examinations in a fairly broad range of subjects – earning credits without having to take classes. The exams are worth three to six credits, and typically cost $95.[snip]

StraighterLine has a similar partnership in place with Saylor, and, as of this week, with Excelsior. As a result, the group has created what is perhaps the lowest-cost set of credit-bearing courses on the Internet.

Economics of Online Education

What does this mean? I suspect the biggest impact will be pricing pressure for all online programs. Competency-based and competency-focused education is a growing model that directly takes aim at affordable access to education, and the changes from this model will go far beyond the new institutions. I suspect that the default assumptions about online education pricing are changing rapidly.

As documented in this recent WCET survey, only ~7% of online programs at traditional institutions are priced below the tuition of face-to-face programs*. With the rising tide of college affordability enabled by competency-based education (and even MOOCs) – with all models targeting affordable access – it will be increasingly difficult for traditional institutions and even for-profit institutions to justify not having reduced tuition for online courses and programs. Even with no other change, there will be tremendous price pressure for online program costs to drop.

* 2/3 of institutions charge the same, and only 1/5 of the remaining 1/3 charge less for online courses or programs (0.2 * 0.33 = 0.066)

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