Last week, 2U, a pioneer in the Online Program Management (OPM) model that helps universities run online degree programs, The company filed for Chapter 11 bankruptcy. It was a “packaged” deal that emerged from prior negotiations with creditors.
At its peak, the company was an edtech “unicorn” worth billions of dollars and was characterized as a “giant” in the sector.
But after several unstable years, the bankruptcy filing wasn’t much of a surprise.
But it raises the question of whether the announcement was an indictment of the entire OPM model, or just the story of one troubled company.
The answer could have implications for the future of online higher education, since OPM was once seen as both a winning strategy for boosting enrollment and helping universities increase profits, as well as a way to expand access to advanced learning to students who won’t or can’t participate on campus.
Huge waterfall
When 2U first launched, it partnered with select institutions with elite reputations to launch online graduate programs that charged high tuition fees. In return, 2U received a large cut of tuition revenue. The company later shifted to offering universities “stackable” options rather than a full package of services, ostensibly to help lower tuition prices.
Robert Uebel, associate dean for online learning at New York University’s Tandon School of Engineering, argued in an EdSurge column in 2021 that the emergency distance learning experiments forced by the COVID-19 pandemic have prompted more universities to turn to outside companies like 2U for help in creating more permanent online learning options. But Uebel said OPM is “only a temporary fix” for “universities with poor digital infrastructure” and suggested universities should look for more sustainable ways to grow their online programs.
2021, 2U Acquires edX, a massive online open course platform 2U, which was started by MIT and Harvard with $800 million in funding, has had a trajectory ofLong, steep downhillDeclining enrollment, rising debt and other factors Regulatory pressureIn 2023, 2U lost one of its largest and most prominent clients. I stopped running University of Southern California online program.
OPM has come under scrutiny in recent years. Especially regarding tuition fee sharing. Critics argue that these deals encourage predatory marketing practices and inflate student loan debt. A 2019 report from the Century Foundation,For Universities: Manage your online courses” urged agencies to end outsourcing programs. New regulations on the industry were expected. LateIn mid-July, the U.S. Department of Education Proposed Regulation Increase oversight of distance learning programs, including requiring additional reporting, to allow the government to better monitor student outcomes.
according to 2UThe Chapter 11 bankruptcy proceedings triggered by the recent filing will not disrupt operations. The deal eliminates half of 2U’s debt, gives the company more time to pay off its loans and provides an additional $110 million in funding. According to the conditions2U said in a statement that it expects the process to take only two to three months.
Some observers have suggested that 2U’s filing is indeed the result of the company being overburdened.
Edtech critic Phil Hill argues that the lawsuit was a predictable outcome. Company balance sheetHe also argues that the pre-packaged deal defuses 2U’s “debt bomb” and gives the company a chance to get back on its feet.
But other experts say the university “Anti-OPMUniversities have introduced new models for online programs called “online programming.” In theory, these models allow universities to outsource the construction of online programs while ultimately running the programs themselves, allowing the universities to become “self-sustaining.”
In a 2021 EdSurge essay, Emily Ravenwood, manager of academic technology consulting at the University of Michigan, argued that the idea that online programs run by external vendors would be a “cash cow” for universities has not worked. She called the approach “educationally bankrupt,” writing:
“Once enrollment growth stops being the driver for online programs, what will drive development? I think we need to start with the mission and goals of the school. What communities do we serve and draw students from? What do they need to fully take advantage of our offerings? What can technology add to the school’s mission? If we start with these questions, we may see a completely different and much more diverse approach to online learning. Some schools have already taken first steps in this direction. Let’s continue in that direction.”
2U works with around 260 universities, so its ultimate fate will likely play a major role in the future of the OPM model.
