Disruption Alert: Startups Ready to Compete with Colleges

How pricey is a traditional four-year education?

So pricey that even the mayor of New York City, who lives rent-free, earns $225K per annum, and owns two Brooklyn homes, considers the cost of schooling his two children “a big challenge,” according to a recent New York Times story.

[Related: Women Gets Student Loan Debt Wiped Clean]

In a new book, The End of College: Creating the Future of Learning and the University of Everywhere, author Kevin Carey distills a brave new world in which a myriad of lower-cost solutions–most in their infancy–threaten to upend the four-year, high-tuition business model by which colleges and universities have traditionally thrived.

Whether Carey or his publishers are overstating their case–“the end of college” is no small claim, hedged as it is in the subtitle–is a question time will settle. What matters more, for entrepreneurs, is how fertile the opportunity is for startups to explore what Carey reports is a $4.6 trillion market for global education.

Carey’s book describes many of these startups, all of which are taking aim at vulnerabilities in the incumbent business model. Here’s a rundown.

1. Rafter
Using cloud-based e-textbooks and course materials, Rafter helps campus bookstores digitize their offerings and keep their prices low, allowing them to regain the market share they were losing to other stores and course-materials marketplaces.

The school wins because store revenues rise. The students win because course materials are cheaper. And then Rafter wins, boasting of the results in convincing win-win customer testimonials. Rafter’s customers include the University of Hawaii, North Carolina State University, and Thomas More College.

2. Piazza
Piazza is an online study room where students can anonymously ask questions to teachers and other students. The best answers get pushed to the top through repeated user endorsement. Like Rafter, Piazza serves existing schools (1,000 of them, including Stanford, MIT, and Princeton). And it boasts endorsements from several professors at those schools.

How does Piazza make money? As Adam Vaccaro reported last year on Inc.com, Piazza offers recruiters access to its talent pool of 1.25 million global students.

3. InsideTrack
As do the above two companies, InsideTrack sells its services to universities. It provides highly personalized coaching to students and it helps colleges assess whether their technology and processes are equipped to measure student progress.

In short, it helps students learn, and it also helps colleges collect and manage the technology that assists and provides evidence of that learning. By combining high-tech analytics with flesh-and-blood tutors, InsideTrack helps schools do what they’re supposed to do: Teach.

The company boasts testimonials from leaders at Arizona State, the University of Virginia, and others. In addition, InsideTrack recently announced a partnership with Chegg, through which it will provide its coaching services directly to students.

Read about the other 13 startups at Inc.com.