Last week, Sebastian Thrun, founder of the $1B e-learning startup Udacity, made three important announcements:

• New Prices: Udacity is revamping its Nanodegree pricing scheme: fixed fees are replaced by a $399 monthly fee — amounting to a significant overall price hike.
• New Mentors: Udacity is expanding its mentorship model to offer more individualized, end-to-end support to Nanodegree students.
• New Scholarships: Udacity is launching two scholarships, sponsored by Facebook and Bertelsmann, that will allow selected learners to pursue a Nanodegree in an AI area.

The first two initiatives are the culmination of a restructuring plan initiated by Udacity in late 2018 to increase Nanodegree graduations and reach profitability by the end of 2019.

Rough Patch

In Udacity’s Year in Review, Dhawal Shah, Class Central CEO, noted that 2018 had been a difficult year for Udacity. The company registered lackluster growth, forcing it to take drastic measures. Vishal Makhijani stepped down as CEO and Sebastian Thrun, Udacity founder, stepped in. The company closed or downscaled several of its offices around the world. Some of its Nanodegrees, such as those dedicated to virtual reality, aren’t accepting enrollments anymore. And in three rounds of layoffs, Udacity parted with over 40% of its employees.

https://twitter.com/parnianbarekat/status/1123718191883145217

Alluding to the need for restructuring, Thrun simply explained: “our trajectory was not long-term tenable.” He later added that through these initiatives, he was confident Udacity could “continue to grow […] while achieving a break-even position.”

Increased Prices

Amid the two other, seemingly positive announcements, Udacity revealed an important change to its Nanodegree pricing.

Since the company completed its switch to term-based scheduling in June 2018, as originally reported by Class Central, Nanodegrees have had a fixed price (between $600 and $2,400) that gave learners access to the Nanodegree content for a predetermined amount of time (between 3 and 8 months).

Going forward, all Nanodegrees will cost $399 per month, with estimated completion times ranging from 3 to 6 months. According to Udacity, these time estimates are data-driven: “The suggestions are based on data we collect on what is a realistic time frame to fully get the most out of our Nanodegree programs.”

Therefore, in light of Udacity’s own time estimates, students can expect to pay between $1,200 and $2,400 for their Nanodegree. So although the cost of the longer, more expensive Nanodegrees remains the same, the cost of the shorter, more affordable ones — that is, the vast majority of Udacity’s catalog — has effectively doubled.

Udacity argues that its new pricing scheme is more flexible. And all Nanodegrees now include the extended Mentor and Career support. But whether students will be willing to pay a premium for these features remains to be seen — particularly considering that:

• Last year, Udacity already increased Nanodegree prices by as much as 300% — these used to cost $200 per month at launch.
• Two years ago, Udacity stopped promising Nanodegree graduates a job and 50% of their tuition back if they graduated in less than a year.

Revamped Mentorships

For the better part of the past year, Udacity has been using a community-centered approach to learner support: Nanodegree students would ask questions on the Student Hub — a Slack-like communication tool built into the Udacity platform — and receive help from Mentors and students alike. This form of support will continue to be available.

But moving forward, each Nanodegree student will also be paired with a dedicated Mentor who will offer one-on-one support via chat or video calls, and present webinars on technical subjects. Besides answering questions, Mentors will provide students with a sense of accountability by helping them set weekly learning goals.

In addition, Nanodegree students will receive support from Career Coaches. According to Udacity, half of their students are job seekers. Career Coaches will assist them through their job search, notably by offering personalized resume feedback and interview advice.

In a sense, Udacity is reverting back to its old ways: up until mid-2018, they used to match students with dedicated Mentors in some Nanodegrees. However, their new approach strengthens the bond between Mentors and Mentees with a view to building a community that isn’t just large, but also cohesive. The approach reminds us of other e-learning companies, such as Springboard, which also includes one-on-one technical and career assistance for an end-to-end support experience.

Through this new mentorship model, Udacity hopes to raise Nanodegree graduation rates from 34% to 60%.

New Scholarships

Udacity announced the launch of two new scholarship programs. These involve a two-step selection process. Students that make it to the end will get the chance to complete a Nanodegree in an AI-related subject, free of cost.

The first scholarship is offered by Facebook and is a continuation of last year’s PyTorch Scholarship. This year’s scholarship is centered around AI, privacy, and data security, and will allow top-performing students to pursue a Computer Vision or Deep Learning Nanodegree.

The second is offered by Bertelsmann — one of Udacity’s largest shareholders — and is a continuation of last year’s Data Science Scholarship. The scholarship is centered around cloud computing, data, and AI.

Applications for Facebook’s scholarship have already opened; the deadline is on May 21st. Applications for Bertelsmann’s scholarship will open in summer.