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New Business Models: $199/month tuition

Speaking of the potential for technology to facilitate disruptive change in higher education, the Chronicle of Higher Education reports that a new, for-profit online university, New Charter University, has been launched with a business model that "...sidesteps the [federal student] loan system by setting tuition so cheap that most students shouldn't need to borrow. The price: $796 per semester, or $199 a month, for as many classes as they can finish." Based on the competency-based assessment model of Western Governors University, New Charter believes it can increase affordable access to higher education and still make money by avoiding the costs associated with meeting the regulatory burden that comes with qualifying for federal financial aid programs. However, the institution has not yet sought or attained regional accreditation, so concerns remain as to whether the lack of such accreditation will impact the value students and their employers ascribe to the institution's degrees and credentials, and thus the potential demand for the instituiton's programs.

Another interesting innovation in the institution's business model is its use of the "freemium" approach increasingly common in the market for web content and services. The institution will allow students to begin taking courses for free, working at their own pace, with their progress tracked as they proceed. If and when a student decides to pay for the course, s/he gets access to an institutional advisor, course tutors, and the ability to take online proctored exams leading to course credit.


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