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The idea is to create an “alternative credentialing process that would provide students with credentials that are much shorter and cheaper than conventional degrees,”

As with a department store, Schejbal said, the University Learning Store is about offering students different products from different providers.

“Those distinctions start to fade” with microcredentials, Bushway said. “The degree is almost a distraction.”

Schejbal said the project’s pricing would be of the “freemium” model. That means some of the content would be free, but students would have to spend money when the universities do.

“Students really do need to come in and out of education across a lifetime,” said Schejbal, adding that the microcredential project is “looking at people who need them regardless of their degree level.”

Tutoring or other support services would also be fee based.

“Students will be able to buy these à la carte,” said Schejbal, “or in a package.”

The planned online store would not be designed to be federal aid eligible,

The quality of the microcredentials in many ways will hinge on the assessments students must successfully complete to earn them

The project’s leaders had been working with an outside provider to help build the platform. But Schejbal said the universities eventually had to change gears and begin an open-bid process. That sort of red tape, which affects public universities much more than ed-tech companies, is an example of the challenges the University Learning Store likely will face. (All but one of the group of seven universities are public.)

Assessments would come with a price, he said, in part because they would be graded by people rather than computers.

The plan is for some of the online content to feature modular instruction, said Schejbal, meaning instructors will interact with students as they progress through the material -- as with a conventional online course, but for a shorter duration.

Students will be able to use online content and assessments -- with pieces from different universities -- to prove what they know and can do.

“We’re imagining that this would be cheap enough for a student to afford without financial aid,”

among 27 potential factors, the U.S. News ranking came in at #20 in terms of importance in students' decision-making process. Twice as many students said that rankings were "not important at all" as those who said that they were "very important." So what do students care about? The top four factors were majors, cost, safety, and employment.3

We are beginning to see a similar shakeout in higher education. In a survey of 368 small private colleges and midsize state universities, 38 percent failed to meet their 2014–15 budget for both freshman enrollment and net tuition revenue.

If they can truly provide premium programs with a high return on investment, they will be able

to continue to charge high tuition. What they must not do—if they want to survive—is stand still.

Forced to demonstrate definitive value, midtier institutions will have to decide what they want to be when they grow up. If they're in the business of providing basic degree programs—where value to the student accrues primarily as a result of the credential itself—they will become a discount provider: delivering the program as inexpensively as possible.

"a full stack education company might not look like a school at all. It could look like an employer, a lender, a school, and/or a recruiter all rolled into one."6

The good news for students is that following this hollowing out, institutions will provide a higher return on investment.

premium providers will utilize technology for some delivery but will focus on immersive, intensive, employer-focused and -facing experiences for students

In fact, it's conceivable that the only remaining institutions with a return-on-investment profile characteristic of today's market will be the elite colleges and universities that have set the pace for higher education until now.

Full-stack providers that hope to achieve the higher education equivalent of Apple's or Uber's success will have to find a way to do three fundamental things: (1) develop and deliver specific high-quality educational experiences that produce graduates with capabilities that specific employers desperately want; (2) work with students to solve financing problems; and (3) connect students with employers during and following the educational experience and make sure students get a job.

In a decade, online education may be recognized not for making higher education accessible to anyone with a smartphone but, rather, for serving as the midwife who delivered competency-based learning into the world. Although competency-based learning is theoretically possible in a non-technology-enabled environment, it's not nearly as simple and appealing. In a competency-based environment, transfer credits become an anachronism and failure becomes a relic. In a competency-based world, the 41 percent of students who start but don't complete degree programs within six years will still receive value from the competencies they can show to prospective employers.15 Equally important, in our experience, competency-based learning reduces the cost of delivery by half over standard online delivery. Astute providers will pass the savings along to students and become leaders in the new discounter segment.

Some coding bootcamps even guarantee employment or tuition is refunded

the real higher education story of the decade is the crisis of affordability

The average bachelor's degree recipient who has taken out student loans carries $28,400 in debt, and 26 million consumers have two or more open student loans on their credit report.

Between 1999 and 2011, outstanding student loan debt grew by 511 percent; as of early 2014, it exceeded $1 trillion, more than credit card debt.10

In 1979, a typical student could pay his/her way through college working at the minimum wage for 182 hours, the equivalent of a part-time summer job. In 2013, the same student at the same college at the present-day minimum wage would have to work over 991 hours (a full-time job for half the year) just to cover tuition while still needing to find additional resources to pay for living expenses.11 In addition, the wealth gap between young and old has also never been wider. At the end of 2011, the typical U.S. household headed by a person age 65 or older had a net worth 47 times greater than a household headed by someone under 35, a number that more than doubled since 2005

in our current isomorphic system price continues to serve as a signal of quality

As a result, most institutions offering online programs have done so at the same price point as their on-ground programs; to do otherwise would send the wrong signal for a medium that is still young and thirsting for academic legitimacy.

If any product or service should be designed so that a stoned freshman can figure it out, it should be higher education.

Despite this, higher education may be the most complex product or service purportedly designed for mass consumption. This is not a comment on the difficulty of the subject matter being taught in the classroom; rather, it is a comment on the opaque and complex process of enrolling, financing, and ultimately assembling a degree. Focus groups conducted at Macomb Community College in Michigan, offering 200 degree and certificate programs to 48,000 students, revealed that very few students were able to navigate the complexities of enrollment, financial aid, transcript requests, prior credit recognition, program selection, and course selection/scheduling.

Because of the flawed transfer-credit system, students have difficulty identifying pathways toward a degree if they're changing institutions—something that a large percentage of them will do over the course of their studies.

To be successful in improving outcomes, higher education must turn the current process of program design on its head. Traditional program design is based on a system of credit hour inputs rather than outcomes. This has resulted from a culture of faculty-focused curricular development, which moves from an established curriculum to assessment and then to learning outcomes. A simpler, better system would be reverse-engineered by starting with student outcomes, then moving to the assessments that prove that the outcomes have been achieved, and only then turning to the question of what curricula best prepare students for the assessments. Fortunately, technology allows higher education to make this shift.

Even more shocking, approximately half of institutions that claimed to hit budget were reporting against downward-revised budget numbers.5

Technology's efficacy goal for online learning should be to move "focus by choice" as far as possible in the direction of "controlled focus." Two sets of technologies will accomplish this.

Combining adaptive learning with competency-based learning is the "killer app" of online education. Students will progress at their own pace. When they excel on formative assessments integrated into the curricula, they are served up more-challenging learning objects. And when students struggle, adaptive systems throttle back until the student is ready for more.

The second technology is gamification

believing that the solution to the smartphone challenge is simply allowing mobile access to the same online course is tantamount to believing that an institution's online strategy is effectively addressed by putting lectures on YouTube or iTunes.

In other industries, unbundling has driven fundamental change. Over the past decade, sales of recorded music are down 50 percent and continue to fall each year.

Where does this leave the higher education bundle? At present, degrees remain the currency of the labor market. But as currency, they're about as portable as the giant stone coins used on the island of Yap. What if technology could produce a finer currency that would be accepted by consumers and employers alike?

neither dot-com entrepreneurs nor MOOCs have produced courseware that is truly disruptive to higher education.

What if that is because the software that will disrupt higher education isn't courseware at all? What if the software is, instead, an online marketplace? Uber (market cap $40 billion) owns no vehicles. Airbnb (market cap $10 billion) owns no hotel rooms. What they do have are marketplaces with consumer-friendly interfaces. By positioning their interfaces between millions of consumers and sophisticated supply systems, Uber and Airbnb have significantly changed consumer behavior and disrupted these supply systems. Is there a similar marketplace in the higher education arena? There is, and it has 40 million college students and recent graduates on its platform. It is called LinkedIn.

LinkedIn CEO Jeff Weiner has been very clear about his ambition, stating in November 2014: We want to have a profile for every member of the global work force, all 3 billion-plus people. We want to have a profile for every company in the world—that's north of 70 million companies—and digital representation of every job in the world. We also want digital representation of every skill required to obtain those jobs, a digital presence for every university in the world, and we want to make it easy for every individual company and university to share their professionally relevant knowledge. In doing all of this, we hope to allow all forms of capital to flow to where it can best be leveraged to lift and transform the global economy.2

Competency marketplaces will profile the competencies (or capabilities) of students and job seekers, allow them to identify the requirements of employers, evaluate the gap, and follow the educational path that gets them to their destination quickly and cost-effectively.

It could be the "software" that Andreessen foretold and that colleges and universities have long feared.

As competency marketplaces and their associated algorithms become increasingly sophisticated, employers and students will begin to value the signals from these tools more than the signals from nonelite universities' bundled degrees. (The signals from elite universities' bundled degrees will remain strong, largely due to the high caliber of the inputs.) As employees who are matched on the basis of competencies (and then hired through standard interviewing techniques for behavioral and cultural fit) excel in the workplace, this trend will only be reinforced. Employers will adjust job descriptions to reflect the incoming competencies of high-performing candidates, and competency matches will get better and better.

At some point, a student will walk into the college admissions office and say: "I've read your programs of study, and your Environmental Engineering program looks interesting. But how will it help me take my competency profile from where it is today to where LinkedIn says it needs to be in order to get an entry-level job as an engineer?" Colleges and universities that offer competency-based programs will at least speak the same language as this student. That's necessary, but not sufficient. A sufficient response will require unbundling the degree.

Likewise, colleges and universities may soon transition from the bloated degree model to an "Education-as-a-Service" (EaaS) model. Successful providers will sell students what they need when they need it: a "just-in-time" educational model that is much closer to today's coding schools than current degree programs.

Each of these is a potential revenue stream for competency marketplaces, either from the employer or from the education provider.

If ownership is held by the competency marketplace, we may find ourselves in a world where there's more money to be made from owning the competency profile than from delivering postsecondary education.

To avoid marginalization, colleges and universities need to insist that individuals own their competencies. Ensuring that ownership lies with the individual could make the competency profile portable and could facilitate movement across marketplaces, as well as to higher education institutions. In an era of unbundling, when colleges and universities need to move from selling degrees to selling EaaS subscriptions, the winners will be those that can turn their students into "students for life"—providing the right educational programs and experiences at the right time. This becomes possible when individuals own their competencies and allow institutions to manage their profiles, suggesting educational programs and even employment.

In the coming years, many institutions will succumb to the current inertia that is too prevalent in higher education. Some institutions will address some of these issues and will survive. Others will successfully address most of these issues and will then need to prepare for the next seismic change in higher education: The Great Unbundling.

Especially attractive is competency-based education’s prospect of accelerating time to degree, since students can potentially receive credit for skills and knowledge acquired through life experience or alternative forms of education.

But with the U.S. Department of Education and accreditors increasingly willing to allow institutions to experiment with competency-based models and direct assessment, such programs are poised to take off. The trend is moving beyond just a few institutions like Western Governors University, as even Harvard Business School, for example, launched its HBX CORe program, a “boot camp” for liberal arts college students who want to understand the fundamentals of business. 

Personalization has been the hallmark of contemporary retailing and marketing, and now it’s coming to higher education

But recognition of the fact that all students do not learn best by following the same path at the same pace is beginning to influence instructional design even in traditional courses, which are beginning to offer students customized trajectories through course material.

Convinced that a curricular smorgasbord of disconnected classes squanders faculty resources and allows too many students to graduate without a serious understanding of the sweep of human history, the diversity of human cultures, the major systems of belief and value, or great works of art, literature, and music, a growing number of institutions have sought to create a more coherent curriculum for at least a portion of their student body.

companies like Learning Ace are creating new portals that allow faculty and students to easily search for content in e-books, subscription databases, and on the web.

By promoting system-wide or state-wide purchasing, institutions seek to take advantage of scale in procurement of software and other services.

large-scale data storage, and high bandwidth data access, enables researchers within 15 UT System institutions to collaborate with one another

As more and more students enroll in community college to save money, a great challenge is to insure that courses at various institutions are truly equivalent, which will require genuine collaboration between faculty members on multiple campuses.

By inverting the classroom, off-loading direct instruction and maximizing the value of face-to-face time, the flipped classroom are supposed to help students understand course material  in greater depth.

Institutions like MIT, “Future of MIT Education” and Stanford, “Stanford2025,” aware of such tensions and risks, are taking both bottom-up and top-down approaches to ensure they get the best of the flipped classroom without sacrificing face-to-face interactions.

A growing number of institutions are launching a single contact point for student services, whether involving registration, billing, and financial aid, academic support, or career advising.  The most innovative, inspired by the example of the for-profits, make services available anytime. When it opens in Fall 2015, the new University of Texas Rio Grande Valley, which will serve an expansive 60-mile-wide region, will offer students a holistic student lifecycle management and CRM and support system accessible across the region.

Even as these ten innovations gradually become part of the higher education ecosystem, several new educational models are appearing, which potentially challenge business as usual.

Early college/dual enrollment programs that grant high school students college credit.  Expanded access to Advanced Placement courses. Bachelor degree-granting community colleges. Three-year bachelors degree programs. All of these efforts to accelerate time to degree are gaining traction. Particularly disruptive is the way students now consume higher education, acquiring credits in a variety of ways from various providers, face-to-face and online.

The University of North Texas’s Dallas campus, designed with the assistance of Bain & Company, the corporate management consulting  firm, has served as a prototype for a lower-cost option, with an emphasis on teaching and mentoring, hybrid and online courses (to minimize facilities’ costs), and a limited number of majors tied to local workforce needs. 

Minerva Project, seek to reinvent the university experience by combining a low residency model, real-world work experience through internships, and significantly reduced degree costs through scaled online learning

the University of Phoenix, Kaplan, and other online-only institutions have created physical locations and even MOOC providers stress the importance of learner MeetUps and are focused on implementing hybrid courses on traditional campuses.

While some corporations partner with academic institutions (GM, for example, offers a MBA through Indiana University), the number of stand-alone corporate universities now exceeds 4,200

Although these corporate units do not offer degrees, they may well pose a threat to traditional universities in two ways.  First, by their very existence, the corporate universities infer that existing undergraduate institutions fail to prepare their graduates for the workplace. Second, these entities may well displace enrollment in existing graduate and continuing education programs.

The irony may be that all the so-called disruption will actually bring higher education back to its core mission. In the words of the public intellectual du jour, William Deresiewicz, “My ultimate hope is that [college] becomes recognized as a right of citizenship, and that we make sure that that right is available to all.”

One risk, according to the auditor, was that colleges and universities would create programs that were just correspondence courses, without any meaningful interaction between students and faculty. Another risk was that students might receive Title IV federal funding for their life experience, without using the school’s learning resources.

the Higher Learning Commission of the North Central Association of Colleges and Schools, had approved the school’s first competency-based degree program: a master's of health professions. The distance learning program is aimed at working professionals in medicine, nursing, dentistry, pharmacy, and social work.

The program doesn’t have traditional campus-based classes — its students interact with mentors by phone, email, video chat, or, for students and mentors near each other, in person.

The Flexible Option program at University of Wisconsin System offers five competency-based online certificates and degrees, targeting adult students with college credits but no degrees.

Wisconsin won approval from the Education Department and an accreditor for its self-paced, direct assessment arts and sciences associate’s degree.

The program is “transdisciplinary” — open to students in any discipline — with a theme-based organization and learning driven by problem-solving instead of how much time is spent in the classroom.

students receive credit based on learned and demonstrated competencies.

Western charges a flat-rate tuition for every six months of enrollment, and students’ advancement is based on what they can prove they know

The 2-year-old program has partnered with 55 employers to create programs for job-specific skills. College for America claims to be the only program of its kind to be approved by a regional accrediting agency and by the Department of Education for Title IV federal financial aid, although the Education Department says there is one other.

The university allows students to receive credit for knowledge already gained through their experience with a “prior learning assessment.” As of Jan. 23, Capella and Southern New Hampshire had the only two programs approved by the Department of Education to receive Title IV financial aid, according to the department.

Northern Arizona University offers a competency-based online learning program, called Personalized Learning, that allows students to use their previous experience to pass pretests and opt out of certain lessons.

is accredited by the Higher Learning Commission of the North Central Association of Colleges and Schools.

"I'd aspired to give people a profound education--to teach them something substantial,"

And yet, all of these efforts have been hampered by the same basic problem: Very few people seem to finish courses when they're not sitting in a lecture hall.

"Sebastian is like the smartest guy you've ever met, but on speed,"

His trip in March of 2011 to the TED Conference in Long Beach, California, where he delivered a talk about his work, led to an unexpected change in his plans. Thrun movingly recounted how a high school friend had been killed in a car accident, the result of the kind of human error that self-driving cars would eliminate. Although he was well received, Thrun was upstaged by a young former hedge-fund analyst named Sal Khan, who spoke of using cheaply produced, wildly popular web videos to tutor millions of high school students on the Internet. Thrun's competitive streak kicked in. "I was a fully tenured Stanford professor . . . and here's this guy who teaches millions," he would later recount. "It was embarrassing." Though Thrun insists the timing was coincidental, just a few weeks later, he informed Stanford that he would be giving up tenure and joining Google full time as a VP. (He did continue teaching and is still a faculty member.)

"I can't teach at Stanford again," he said definitively. "I feel like there's a red pill and a blue pill. And you can take the blue pill and go back to your classroom and lecture your students. But I've taken the red pill. I've seen Wonderland."

It's hard to imagine a story that more thoroughly flatters the current sensibilities of Silicon Valley than the one into which Thrun stumbled. Not only is reinventing the university a worthy goal--tuition prices at both public and private colleges have soared in recent years, and the debt burden borne by American students is more than $1 trillion--but it's hard to imagine an industry more ripe for disruption than one in which the professionals literally still don medieval robes. "Education hasn't changed for 1,000 years," says Peter Levine, a partner with Andreessen Horowitz and a Udacity board member, summing up the Valley's conventional wisdom on the topic. "Udacity just seemed like a fundamentally new way to change how communities of people are educated."

Learning, after all, is about more than some concrete set of vocational skills. It is about thinking critically and asking questions, about finding ways to see the world from different points of view rather than one's own. These, I point out, are not skills easily acquired by YouTube video. Thrun seems to enjoy this objection. He tells me he wasn't arguing that Udacity's current courses would replace a traditional education--only that it would augment it. "We're not doing anything as rich and powerful as what a traditional liberal-arts education would offer you," he says. He adds that the university system will most likely evolve to shorter-form courses that focus more on professional development. "The medium will change," he says.

"The sort of simplistic suggestion that MOOCs are going to disrupt the entire education system is very premature," he says.

"We were on the front pages of newspapers and magazines, and at the same time, I was realizing, we don't educate people as others wished, or as I wished. We have a lousy product," Thrun tells me. "It was a painful moment." Turns out he doesn't even like the term MOOC.

"From a pedagogical perspective, it was the best I could have done," he says. "It was a good class." Only it wasn't: For all of his efforts, Statistics 101 students were not any more engaged than any of Udacity's other students. "Nothing we had done had changed the drop-off curve," Thrun acknowledges.

At a press conference the following January, Brown and Thrun announced that Udacity would open enrollment in three subjects--remedial math, college algebra, and elementary statistics--and they would count toward credit at San Jose State University, a 30,000-student public college. Courses were offered for just $150 each, and students were drawn from a lower-income high school and the underperforming ranks of SJSU's student body. "A lot of these failures are avoidable," Thrun said at the press conference. "I would love to set these students up for success, not for failure."

Viewed within this frame, the results were disastrous. Among those pupils who took remedial math during the pilot program, just 25% passed. And when the online class was compared with the in-person variety, the numbers were even more discouraging. A student taking college algebra in person was 52% more likely to pass than one taking a Udacity class, making the $150 price tag--roughly one-third the normal in-state tuition--seem like something less than a bargain. The one bright spot: Completion rates shot through the roof; 86% of students made it all the way through the classes, better than eight times Udacity's old rate.

"These were students from difficult neighborhoods, without good access to computers, and with all kinds of challenges in their lives," he says. "It's a group for which this medium is not a good fit."

Udacity won't disclose how much it is making, but Levine of Andreessen Horowitz says he's pleased. "The attitude from the beginning, about how we'd make money, was, 'We'll figure it out,'" he says. "Well, we figured it out." Thrun, ever a master of academic branding, terms this sponsored-course model the Open Education Alliance and says it is both the future of Udacity and, more generally, college education. "At the end of the day, the true value proposition of education is employment," Thrun says, sounding more CEO than professor. "If you focus on the single question of who knows best what students need in the workforce, it's the people already in the workforce. Why not give industry a voice?"

Thrun initially approached the problem of low completion rates as one that he could solve single-handedly. "I was looking at the data, and I decided I would make a really good class," he recalls.

This January, several hundred computer science students around the world will begin taking classes for an online master's degree program being jointly offered by Udacity and the Georgia Institute of Technology. Fees will be substantial--$6,600 for the equivalent of a three-semester course of study--but still less than one-third of what an in-state student would pay at Georgia Tech, and one-seventh of the tuition charged to an out-of-state one.

Georgia Tech professors will teach the courses and handle admissions and accreditation, and students will get a Georgia Tech diploma when they're done, but Udacity will host the course material. Thrun expects the partnership to generate $1.3 million by the end of its first year. The sum will be divided 60-40 between the university and Udacity, respectively, giving the startup its single largest revenue source to date.

Crucially, the program won't ultimately cost either Udacity or Georgia Tech anything. Expenses are being covered by AT&T, which put up $2 million in seed capital in the hope of getting access to a new pool of well-trained engineers.

"There's a recruiting angle for us, but there's also a training angle," says Scott Smith, an SVP of human resources at the telco. Though Smith says the grant to Georgia Tech came with no strings attached, AT&T plans to send a large group of its employees through the program and is in talks with Udacity to sponsor additional courses as well. "That's the great thing about this model," Smith says. "Sebastian is reaching out to us and saying, 'Help us build this--and, oh, by the way, the payoff is you get instruction for your employees.'" Says Zachary, "The Georgia Tech deal isn't really a Georgia Tech deal. It's an AT&T deal."

Serving transfer students better is one of the few ways to make a significant, positive impact on the cost of college and degree completion, without the need for new regulations. Every transfer student who has earned postsecondary credits must have a basic set of rights associated with turning those credits into a degree and that degree into opportunity. A bill of rights will help do just that.

students transferring to public institutions benefit from the highest rate of credit acceptance: 20 percent more than students transferring to private non-profit colleges and 52 percent more than students transferring to private for-profit colleges. It’s not clear what academic interests explain this disparity, especially among top public and private colleges.

we need a Transfer Student’s Bill of Rights that guarantees access to degree programs, sequences, and prerequisites guiding higher education to do a much better job in serving the nation’s transfer students.

That means ensuring all students understand what prior courses will transfer to their new institutions before choosing their next university.

It means having access to data from all colleges and universities about their track record accepting credit and the fine print.

Central to transfer students’ rights is an imperative that every higher education institution adopt an infrastructure for electronic student records exchange, so that credits can be discovered and processed in an efficient, effective and timely manner.

Few realize that in higher education today, we have the equivalent of thousands of local railroads, each with its own gauge track. Our independent, decentralized system of higher education has many strengths, but if we are to lead the world in degree attainment our colleges and universities must be equipped with the same institution-to-institution record exchange capabilities that sectors such as finance put in place years ago.

“The department recognizes that this is new territory and they don't have a regulatory framework for it,” said Paul LeBlanc, president of Southern New Hampshire University.

Colleges have faced plenty of red tape as they seek to give competency-based education a try. That is particularly true for “direct assessment” programs, the most aggressive version, which does not rely on the traditional credit hour standard.

Only two institutions -- College for America, a subsidiary of Southern New Hampshire, and Capella University -- have been successful in the lengthy process of getting the department and regional accrediting agencies to approve direct assessment programs. Other institutions have tried and either were rebuffed by the feds or are still waiting for the final word.

For example, the University of Wisconsin-Extension last year created ambitious direct assessment degree tracks. But the university has had to cover for the absence of federal aid for its “Flex Program” by spending more on grants for students. Officials with the system said Tuesday they were eager to participate in the experimental sites program.

The latest round of experimental sites grew out of a request for ideas the department issued last year. Many colleges sent in suggestions.

Mitchell drew rave reviews from several participants in the Washington, D.C., meeting of the Lumina Foundation-funded group, which is called the Competency-Based Education Network (C-BEN).

Jim Selbe is a special assistant to the chancellor of the Kentucky Community and Technical College System, which is a pioneer in competency-based programs in the two-year sector.

Experimental site status would give the Kentucky system the ability to “be broader and have more flexibility,” said Selbe. “This is going to give us a chance to really go field test.”

For example, Selbe said, the system is considering new programs that would charge students a monthly fee for all they can learn. This subscription-style approach could also apply to four-month terms.

A move by the Kentucky system to try subscriptions is “impossible right now” under federal aid rules, said Selbe. But experimental sites could open the door to monthly aid disbursements, saving students time and money. “This will give us a boost to go forward.”

The four targeted areas include self-paced competency-based programs, such as direct assessment degree tracks. Colleges can also test “hybrid” programs, which combine elements of direct assessment and credit-hour-based coursework. That version is currently not allowed under federal rules.

The new experimental sites will also include prior-learning assessment

Finally, the program will test federal work-study programs under which college students mentor high school students in college readiness, student aid, career counseling and financial literacy

Experimental sites programs have rarely been so promising, said Amy Laitinen, deputy director of the New America Foundation's higher education program and a former official at the department and White House.

The supply of learning content will swell.

With learning content available on demand, students will increasingly be able to build degree programs from a wide variety of institutions offering particular courses.

Students are the big winners here.

Existing institutions with large endowments will become the record labels: platforms that invest in great talent.

And distribution platforms that curate content will do well, commanding both economies of scale and scope.

In education, a cohort of new entrepreneurs and existing institutions will greatly increase personal choice for all of us.

The Lumina Foundation just awarded the university a $1.25 million grant to evaluate the program and document its creation so that it can be replicated at other schools.

For public universities, new ways of thinking about fundamental business models are becoming a necessity. “Our reliance on state funding is shrinking, and that’s true in every state that I'm aware of,” says Cross. “But it’s increasingly difficult for students to afford higher education costs at all levels. That is not a sustainable trend. It just is not. We need to seek alternatives.”

Most MOOC participants already have degrees and live in developed countries. ​"These online classes aren't really reaching the poor," Wildavsky says. "They aren't reaching the uneducated.

"Courses requiring extremely specialized or expert knowledge grant people access to ideas and concepts that they might not ever encounter otherwise," Curtis Bonk, an ​education professor at Indiana University, said via email. "With such new learning opportunities, one’s sense of self or identity as a learner is enhanced.

"It's easy to deflate the over-the-top rhetoric that has characterized the advent of MOOCs," ​ Wildavsky wrote in a recent article. "But the developing world has much to gain from this new educational era."

“There was still an audience that we were missing, and that was working adults,” Box says. The problem was one of scheduling, because many “could not commit to a traditional semester.”

Under Learn on Demand, students can enroll whenever they want. There are no class schedules or assignment deadlines in the self-paced courses. And students can leave without facing problems when they re-enroll. As Box says, with modular courses, students have “exit points along the way.”

Each module is worth a half-credit, and the course is pay-as-you go, like other modular classes. Tuition is a flat $140 per credit. So in the management course, that’s $67.50 per module. With additional fees, such as charges for e-texts, the course’s modules range from $88 to $105, which is fairly standard across the program. So students can expect to drop no more than a c-note per credit.

Faculty members at Kentucky’s two-year colleges studied the Western Governors model when they were building their new online program, officials said. They also took a long look at the University of Phoenix, mostly to try to duplicate how the for-profit runs its online programs all day, every day, with instructors and student services always on-call. Rio Salado College, an online two-year institution that is part of Arizona's Maricopa Community College System, also served as an example.

Does it really make sense to expect, even implicitly, that a person already engaged in work and family should step out of that life in order to participate in an institution-based learning community? Instead, shouldn’t we be asking how to provide educational experiences that foster collaborative learning, supporting growth and development, to people who are already fully engaged in their lives outside of an educational institution?

The question is not how to help an adult student engage in a university-designed learning community; it’s how institutions can help students incorporate quality educational experiences and opportunities into their existing lives.

Adult learners need multiple opportunities to earn degrees, including educational models that differ greatly from traditional college programs.[9] They need new models that are structured around the entire 12-month calendar, where one can start and stop without penalty, and quickly move forward when mastery over material is demonstrated. We need to make use of new technologies and the latest in the science of learning to allow students to integrate their education into existing lives and careers. In short, to educate the population that is currently not served well by our traditional institutions of higher education, we need new models and methods that allow education to fit the interests, motivations and lives of our adult learners, not ask them to fit their lives into an educational system geared to 18- to 24-year-old full-time students. This is the promise of CBE.

The best CBE programs will design competencies that articulate the skills and abilities needed by productive citizens, and evaluate mastery of those competencies through assessments that blend seamlessly into students work and family.

Schejbal sees the difference as a great example of why competency-based education makes sense.

Traditional students may need the structured learning experience and all of the knowledge and information that comes from a standard, semester-based model because they don’t bring as much with them to the classroom. Older students, though, come to the classroom with experience from work, the military, self-study, or previous college. Schejbal says they need a more malleable learning experience that lets them demonstrate what they know, apply that knowledge to a program, and spend time learning only the additional information they need.

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These non-degree options are distinct from stackable credentials that Schejbal sees less value in, though he says the stackable credentials are fine if they’re within the realm of traditional credits.

Schejbal sees the value in both the traditional model for younger students and newer, alternative models for the “nontraditional” learner

But serving such a diverse student population — and doing it well — is complicated.

Schejbal says culture plays a major role in whether a college or university makes the effort to find a way. “Some institutions have both cultures and business models that are rooted in traditional higher education structures,” Schejbal said. “Those institutions have very little incentive to change.”