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A College Education on the Cheap? Tech Start-Ups Take on Higher Ed

Dave Bradley Photography | Getty Images

Technology start-ups are cracking into the higher education market and their pitch is an enticing one: A college education for anyone at almost no cost.

Sound to good to be true? The founders of tech start-ups behind this revolutionary idea say they have already had success with their models, but they say there needs to be more momentum if their idea is to succeed.

“The 99 percent should be protesting college campuses,” says Sebastian Thrun, a Stanford University artificial intelligence professor, who recently co-founded Udacity, a technology start-up dedicated to providing higher education at a very low cost.

With the average cost to attend a private university on the rise, more and more people, who have the intellectual capacity to excel at that level, are unable to afford it.

Thrun is helping to lead a new surge of Silicon Valley start-ups with the quest to “democratize education” or make advanced education available to all people.

Thrun says, “Less than one percent of U.S. college students attend Ivy League schools and these students don’t necessarily reflect the world’s brightest and most capable thought leaders, but rather the people who’ve been afforded the most opportunities to succeed.”

Democratizing Education

Eren Bali, founder of Udemy, which is not related to Udacity, is a community platform that allows “millions of experts to teach and share what they know” couldn’t agree more. And he speaks from experience.

Bali grew up in a small, under-developed village, called Durulova, located in the southeastern part of Turkey.

As a child, Bali developed a passion for math and science and quickly surpassed the instructional limits of his teachers. So his parents bought him a computer and through content he found online, he taught himself what his teachers could not.

Bali ultimately beat the odds and was accepted to the top engineering school in Turkey.

So far, both Thrun and Bali have had made big inroads in democratizing America's higher education system.

“It’s cool to be a drop out these days,“ Bali says. “It’s the dying companies that value college degrees. You have to think beyond that piece of paper.”

In the very first class Thrun taught through Udacity’s online platform, more than 160,000 students enrolled from more than 190 countries. The eight-week “Introduction to Artificial Intelligence” course was completely free for students, and those who passed the final exam were issued a certificate of completion from Stanford University.

Udemy currently has over 6,000 online courses, from Economics to Russian Literature, which gets over 70,000 lecture views a month. Students can also access over 130 subject areas for web development, more than any university offers in the U.S.

Although these early stage “Ed Tech” companies have experienced some early success in their core services to students, they still have a long way to go before both disrupting the established higher education infrastructure and becoming profitable companies, educators say.

Both companies are exploring various revenue streams, which include nominal fees for some classes as well as recruiting fees paid by corporations for placement services.

But the major challenge with providing talent to corporations is ensuring the quality of the candidate; establishing a known standard of certification and then verifying that a student has achieved it.

These challenges could be why elite universities may be reluctant to share its courses with non-university students. Elite schools have established a standard that companies recognize and value. If they give away their intellectual property to everyone, then why would corporations pay for access to Ivy League students?

Despite these issues though, Thrun maintains that online academies can offer something traditional universities may not offer.

“It’s not necessarily about educating, but discovering,” Thrun says, “We can reach and then develop talent that most universities cannot.”

email: tech@cnbc.com

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