"Technology will bring education prices down, as it has in so many other sectors"

If investment in technology reduces costs in every sector, why are prices rising in the field of education? This is the question that Burck Smith, CEO and founder of StraighterLine, a company providing online university courses in the United States, asked over a decade ago. Convinced that the right use of technology should improve people's lives, both qualitatively and economically, he first founded Smarthinking and then StraighterLine, two Internet-based teaching companies. His aim was to show that, in effect, technological innovation can also be of benefit to education, in every sense of the word. He has been in Barcelona as a guest of the UNESCO Chair in Education and Technology for Social Change and we spoke to him about the StraighterLine strategy, technology, the future of education and how the Internet can also bring prices down in education.

If investment in technology reduces costs in every sector, why are prices rising in the field of education? This is the question that Burck Smith, CEO and founder of StraighterLine, a company providing online university courses in the United States, asked over a decade ago. Convinced that the right use of technology should improve people's lives, both qualitatively and economically, he first founded Smarthinking and then StraighterLine, two Internet-based teaching companies. His aim was to show that, in effect, technological innovation can also be of benefit to education, in every sense of the word. He has been in Barcelona as a guest of the UNESCO Chair in Education and Technology for Social Change and we spoke to him about the StraighterLine strategy, technology, the future of education and how the Internet can also bring prices down in education.

StraighterLine is nothing more than an alternative to the conventional option for starting a university course in an affordable way, without abusive enrolment fees, and with a very low risk. We offer 60 subjects over the Internet, which start with a free trial period. Afterwards, each subject costs $99 a month, and if the complete course it taken, $49 a month. Enrolment on each of these subjects can cost over $5,000 at a North American university. The difference is very big and we want to help change the recent trend and bring down the prices of university education in the United States through the profitable use of technology.

No, in reality we are a private university course provider. And we don't offer any full degrees. But we have agreements with universities, and the subjects studied with us have the same validity and can be validated completely. If a student takes a Psychology or Economics subject with us, they can validate it directly with the subject on their degree course at the university where they're enrolled. We have agreements with over a hundred universities in the United States and we offer 60 subjects, which are usually common to all degree courses and are part of the initial academic years. This year we have 20,000 students, who can study part of their degree course over the Internet at a very affordable price.

My background is in public policy and I'm interested in both education and technology. I asked myself the following question: why does the cost of university education rise and not drop if there is increasingly more technology? In other words, despite the growth in technology and how it's used in education, university prices continue to rise, whereas in any other industry, the more we use technology, the more prices drop. Why is it different for education? It's because there's a problem here, I told myself. The conclusion I came to is that education does not function like other markets do. In other markets, the appearance of competition would make prices drop, but in the university market it's very difficult to become a new competitor: you need special accreditation and to offer complete degree courses. So it's impossible to break into the university market as a new competitor.

To a certain extent. I mean, once you understand that the market is different, you have two options. First: online courses are economical, they don't cost as much as on-site courses. The only costs are the lecturers' time, the quality of the content and the software needed to distribute the content. All in all, much more economical than an on-site classroom at a university. What we decided to do at StraighterLine was to offer online courses at fair and reasonable prices. So we decided that instead of being a university, we would establish relationships with universities and guarantee the transfer of credits. We started thinking about it in 2008 and haven't stopped growing since 2010.

Yes, it was difficult to start with. They asked us two questions. First: why are you so economical? The same subject can cost $5,000 at a university but between $150 and $200 with us, while the credits are the same and have the same validity. The universities said to us: there's got to be a catch, it can't be so economical. And we said: we don't do anything different, we just set prices according to the margins. The second question they asked was: what interest should we as universities have in working with you? The answer was simple: universities spend a lot of money attracting students, on marketing. An agreement with us could be an added value, a way of attracting more students. We offer a limited number of subjects, so if a student chooses a specific university because they know that they can start studying two or three subjects with us and the rest on-site, university works out financially for them.

Yes, that's right. We've gone from being a threat to being an added value for universities, without having changed any part of how we work. It was difficult to convince them that StraighterLine could be a marketing tool for competition between universities. In fact, it has happened, because establishing an agreement with us is free for universities and to procure potential students they can tell them that they have the option of studying some subjects online at a much lower price. In 2010, we had four associate universities, now we have a hundred. It's the universities who have gradually come to us and they have even sent us students who are having difficulty paying their enrolment fees. Both the universities and the students have come to realize that our model is top-quality, that it works - it's flexible and affordable. And, the bottom line is, we do one thing that's even better: we're pushing to lower prices overall.

If it hasn't happened yet in education, it's because there are barriers here that do not exist in other markets. In fact, technology will bring education prices down, as it has in so many other sectors. Look at the travel industry: there were thousands of travel agencies selling plane tickets and hotel stays; now there are just a few left and almost no-one uses them because you can do everything online more economically. The intermediaries have disappeared. Now consumers go directly to the source. This has happened with travel, finance, accommodation, taxis, etc. But in university education the intermediaries are the traditional universities who continue to control the market in a highly complex regulatory system. University education is a heavily subsidised and regulated market, which is why this technology-driven change that has to lead to lower prices is late in coming.

It's a question of time. And, just look, we've already seen the successful emergence of MOOCs, of subject providers like us, iTunes U, etc. It will happen and that will also force a change in regulations. Notice that the more successful business models in the services sector have been developed in markets that have fought for better public policy regulation: Uber in taxis, Airbnb in hotels, etc. It may be that these businesses have elements that are not always positive, but they force a change in regulations and a lowering of prices. And that's interesting. I believe they're changes that are inevitable and what we need to do is be creative in how we regulate them. In any case, prohibiting them is not the answer.

We divide the role of the university lecturer into three levels. By this I mean that each subject is designed and prepared by a specialist lecturer. The course is monitored on a daily basis by a different person, a counsellor. There is a third person who advises the student at all times. This system works really well and students really value it.

Yes, that's right. The UOC system is in fact truly innovative and we have followed it since the beginning. It's a proven system that is used in other universities throughout Europe and the United States. Our aim was to go one step further and, despite not being a university, offer university courses with their approval. Shortly after, MOOCs began to appear and online education really took off. And all this in a context where the distinction between universities and subjects offered by providers like us is being diluted in the United States.

I hope to, but it really depends on what the university market in each country is like. How it's regulated, subsidised, etc. And in a country with a fully subsidised state-run university system, our business model may seem inoperable, but what is true is that budgets change and public money earmarked for the university system has been reduced in general. This is what has happened in the United Kingdom, where enrolments have doubled or tripled. I understand that in Spain the same has occurred but to a lesser extent, both in state-run and private universities. If prices rise, our organization or those like ours may have a role to play.

I don't have the answer, but what I can tell you is that my middle son plays rock songs virtually on the guitar just with the help of YouTube tutorials. I believe that people learn when they are motivated. That's why we need to work on motivation. If a student is more interested in Facebook at school than what the teacher is saying, it could be a sign that there's something we haven't got completely right. Perhaps the teacher has to change the way they teach and perhaps even use technology to teach in a more motivating and, consequently, more effective way.

There is currently an interesting debate about educational models that advocate a system where students study the theory, master classes, at home via videos or reading, while in the classroom they do their homework and exercises. In this case, the role of the teacher would change: they would become a coach. This makes a lot of sense to me. There may be a need to emphasise social interaction and practical work in the classroom rather than academic work. In the classroom, students can hold group discussions, work in groups, exercise critical thought, etc.; things that at home it's not so essential everyone does. And at home, study from a theoretical perspective taking advantage of technology. I believe it's an interesting debate and I'm sure I'll want to talk about it over the coming years.