Altius Education Changes Course After Accreditation Battles

9/10/13Follow @wroush

Altius Education founder and CEO Paul Freedman says he knew he was taking a risk when he put all of the company’s eggs, save one, into a single basket: an online junior college called Ivy Bridge, owned jointly by Altius and Tiffin University in Ohio. The for-profit college, whose mission was to go traditional junior colleges one better by getting far more of its students into four-year schools, rested on course content created by Tiffin faculty and software designed by Altius.

Now that basket has been crushed.

Tiffin, after coming under pressure from the Higher Learning Commission, the powerful private organization that accredits colleges and universities in Ohio and 18 other states, said last month that it will shut down Ivy Bridge as of October 20. The college’s 3,000 students are now scrambling to transfer to other institutions in mid-semester. And San Francisco-based Altius, which has raised $27 million in venture funding, is scrambling to salvage its business.

In an extensive interview this week, Freedman shared his thoughts about what went wrong with the Tiffin partnership, what its collapse could mean for the larger edtech movement, and how Altius hopes to turn its one remaining egg—a set of online learning-support tools called Helix, originally developed for Ivy Bridge students—into a standalone product.

He’s angry about the commission’s ruling—which has forced Altius to lay off 60 percent of its employees—and says it sends a discouraging message to both students and entrepreneurs. “At Ivy Bridge, we were trying to solve a core problem, which is how you provide more access to education,” Freedman says. “Colleges are failing at it badly, and in my mind, unless you allow for innovation to play a role in that, you are destined for failure.”

Paul Freedman, CEO of Altius Education, in an interview at the 2012 launch of Altius's Helix online learning environment at Arizona State University.

Paul Freedman, CEO of Altius Education, in an interview at the 2012 launch of Altius’s Helix online learning environment at Arizona State University.

Indeed, the tale of Ivy Bridge is a sobering one for anyone who believes that Silicon Valley-style software innovation can help to “disrupt” the higher-education establishment. The difficulty, for organizations like Altius that are trying to invent new kinds of educational institutions, is that accreditation bodies like the Higher Learning Commission have a chokehold on the system of transfer credits. Most colleges won’t accept credits from non-accredited schools, which means entrepreneurs who want to create new online programs must partner with existing, accredited institutions.

That’s exactly why Altius turned to Tiffin for help creating Ivy Bridge in 2008. And the Higher Learning Commission raised no objections to the program when it reviewed Tiffin’s accreditation three years ago and renewed it through 2020. But everything had changed by this summer, when Tiffin officials were told that they could no longer run Ivy Bridge under the umbrella of Tiffin’s accreditation.

Overnight, five years of work at Altius went out the window. Plans to form an independent spinout called Altius University are now dead as well, since they depended on Ivy Bridge’s accreditation through Tiffin as a bridge.

Freedman doesn’t try to hide his bitterness about that outcome, saying it’s an example of the higher education sector’s resistance to change. “It is very clear that the establishment’s view is that the role of technology and innovation is to enable existing institutions, and ensure that key decisions about what you teach and how you price tuition are kept to the existing institutions,” he says. “Technology can be used in support of those institutions, but it can’t displace them.”

The Higher Learning Commission, for its part, says its concerns were more mundane. In statements to the press and in documents and correspondence released by Altius, commission officials have charged that Tiffin, in effect, tried to sell its accreditation to Altius for the joint venture. The commission feared that the university wasn’t clearly in control of the Ivy Bridge curriculum, and that the university hadn’t properly described the whole arrangement in reports to the commission. “People use the innovation cloak to wrap anything in,” the commission’s president, Sylvia Manning, told the publication Inside Higher Ed. “We have an obligation to look at the quality.”

The shutdown is the kind of bad news that’s all too familiar in risky industries like biotech, where an expensive drug R&D program can crash and burn overnight after a poor showing in clinical trials or unfavorable word from the FDA. (See, for example, our story this week about an unlucky South San Francisco biotech called Rigel Pharmaceuticals.) But while the FDA bases its decisions on scientific measures, and usually gives companies an opportunity to marshal evidence in their own support, Freedman says Altius wasn’t given a chance to correct the issues that concerned the commission.

“The accreditation system is always vague, but usually you are afforded opportunity for collaboration or compromise,” Freedman says. “But for whatever reason, what we were trying to do was seen with such deep skepticism that we weren’t afforded the same opportunity. From my perspective, that’s where things went sideways. If the Higher Learning Commission had said, ‘Your graduation rate is at x, and it needs to be y,’ there would be an entirely different narrative.”

How the Ivy Bridge narrative climaxed in disaster is a question that begins, and ends, with the nature of the accreditation system in U.S. higher education.

Nobody wants to go to a school whose credits won’t be transferable to other colleges or universities. The way Freedman describes it, entrepreneurs building new for-profit online degree or certificate program have three choices. First, they can start a school from scratch, try to recruit students, and slowly build up a record that will allow them to win accreditation. “That takes five to 10 years, your degrees aren’t worth anything in the meantime, and you don’t have access to subsidies” like federal financial aid, Freedman says. “The last tier-one research university to be accredited from scratch was Rice, back in 1913, which tells you how frequently this model works.”

The second option is to acquire an already-accredited university. “You simply buy the accreditation, like a liquor license,” Freedman says. But that model, too, is full of hazards. It’s been tried by institutions like Blair, NE-based Dana College, a financially troubled school that proposed in 2010 to sell itself to a group of private investors who wanted to build a large study-abroad program. The Higher Learning Commission forbade the sale, and Dana, like Ivy Bridge, had to close its doors.

The third route—“what we thought was a more genuine and elegant way of bridging the gap,” in Freedman’s words—is to partner with an established school. “You go through the well-oiled accreditation pathway, work with the university to create an online branch campus, and ultimately, when you’ve demonstrated competency, you’re ready to be independently accredited.”

That was always the plan for Ivy Bridge. The school was set up as a joint venture between Altius and Tiffin, with the university taking a 20 percent share of ownership, revenue, and potential profits. The company’s main focus was on growing Ivy Bridge, which had reached 3,000 students by mid-2013. But the hope was that it would eventually be able to spin out the program in the form of a new Altius-controlled school called Altius University.

In fact, in 2011, Altius approached the Western Association of Schools and Colleges, one of the Higher Learning Commission’s sister accrediting organizations, about beginning the reviews that would be needed to get Ivy Bridge accredited independently. (WASC oversees accreditation for schools in California, Hawaii, and the Pacific territories.)

But that’s roughly when Tiffin’s woes with the Higher Learning Commission began. Private takeovers of non-profit colleges and universities had become a political issue, and the commission had come under fire from Congress for granting accreditation to Ashford University, an Iowa school that had been purchased by San Diego-based Bridgepoint Education and transformed into an online university with 75,000 students. In March 2011 Senate hearings led by Iowa Senator Tom Harkin, lawmakers said high dropout and loan default rates at Ashford and other Bridgepoint-owned schools should have triggered reviews by the commission.

Sylvia Manning told Harkin that the commission was already busy revising its rules on how to accredit for-profit schools, as well as non-profit schools outsourcing parts of their operations to private companies. In 2010, for example, the commission told schools they’d have to get its permission before selling or transferring their assets. It also reserved the right to approve or disapprove any contract outsourcing more than 25 percent of a school’s educational programs to an unaccredited entity.

Both rules were implemented after the commission renewed Tiffin’s accreditation. But as it turned out, Ivy Bridge wasn’t grandfathered in. The documents released by Altius show that Manning, Tiffin president Paul Marion, and staff at both organizations spent much of 2011 and early 2012 debating whether the agreement with Altius constituted outsourcing and whether Tiffin was, in fact, in control of the Ivy Bridge curriculum.

In the end, the commission made it clear that it considered Ivy Bridge to be an unauthorized extension of Tiffin’s operations. On July 25, it ordered Tiffin to stop enrolling students in Ivy Bridge and to dissolve its relationship with Altius. The university gave in, and Altius announced on August 1 that Ivy Bridge will be shut down by October 20. (Students are being allowed to complete fall-semester courses, and Altius and Tiffin are helping them transfer their credits to Tiffin and other institutions.)

The commission’s move has put an abrupt end not just to Ivy Bridge, but to the startup’s plans for Altius University, since the action came before WASC could complete its own review.

That’s a severe blow for Altius—Freedman has already had to lay off 110 of the company’s 180 employees. But, like a biotech startup that’s been rebuffed by the FDA but still has money in the bank and other experimental drugs in its pipeline, Altius does have a fallback plan. It’s switching its focus to Helix, the platform it built to organize Ivy Bridge students’ day-to-day studies.

I described Helix in depth in an April 2012 story about Altius. Freedman says it’s designed to give instructors more room to personalize course content and student interactions than older “learning management systems” like Pearson Education’s OpenClass or the open-source system Moodle, both of which Altius tried and discarded.

For example, a professor teaching statistics to nursing students could use Helix to insert examples built around patients in hospital situations, rather than using abstract examples with less resonance for students, Freedman explained. The system also supports live tutoring sessions, collaboration between students, and adaptive learning, meaning students are given the opportunity to skip over material they already know.

Those features fit well with one of the hottest trends in instructional design, “competency-based learning,” Freedman says. He thinks established schools building their own fast-growing online degree programs—such as Western Governors University in Salt Lake City, UT, and Southern New Hampshire University in Manchester, NH—may want to turn to Altius for software that lets students progress at their own pace. “That market will be dominated by a few well-positioned players, and we feel like we have the only natively built technology platform for the market,” Freedman says.

In essence, then, Altius is transforming itself into a software startup that will have to compete directly with Pearson Education and other vendors of online course management systems. And that could mean more downsizing, at least in the short term. “We are going to have to retrench based on being much more of a SaaS software vendor,” Freedman says. “We don’t know what the numbers need to be when the smoke clears, but it’s obviously smaller than what we needed for the growth of Ivy Bridge College, and more in line with what a software startup would need.”

But if it can support other organizations testing new online models for higher education, Altius won’t have to abandon its original mission, Freedman says.

“We are deeply unsettled about the fact that the accreditation process is preventing new, innovative entries into the market,” he says. “But there are a few organizations that already have accreditation that are innovators in their own right, and are setting up pilots, and Helix is well positioned to be a platform for those innovators. The best thing Altius can do now is to support people who already have membership in the club.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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