Final week, 2U, a pioneer of the so-called On-line Program Administration (OPM) mannequin for serving to faculties run on-line diploma applications, introduced that it filed for Chapter 11 chapter with a “prepackaged” deal arising from prior negotiation with collectors.
The corporate was an edtech “unicorn” at its top — value billions — and characterised as a “big” within the area.
However after a rocky few years, a chapter submitting wasn’t all that shocking.
However, it raises the query: Was that announcement a rebuke of the complete OPM mannequin — or simply the story of 1 troubled firm?
The reply could have penalties for the way forward for on-line increased ed, since OPMs have been as soon as seen each as a profitable technique for universities to generate income by growing enrollments and as a pathway to develop entry to superior studying for college kids who wouldn’t or couldn’t take part on campus.
A Large Falls
In the early days of 2U, the corporate labored with selective establishments with elite reputations to create on-line graduate applications that charged excessive tuition charges. In trade, 2U took a big share of tuition income. Then the corporate shifted to providing universities “stackable” choices as a substitute of its full package deal of providers, ostensibly to assist decrease tuition.
The COVID-19 pandemic’s compelled experiment in emergency distant instruction prompted extra faculties to hunt help from outdoors corporations like 2U to create more-permanent on-line studying choices, argued Robert Ubell, vice dean emeritus of on-line studying at NYU’s Tandon College of Engineering, in 2021 in a column for EdSurge. But he prompt that OPMs have been “merely a stopgap remedy” for “faculties with inadequate digital infrastructure,” recommending that establishments search extra sustainable methods to develop their on-line applications.
In 2021, 2U purchased edX, the massive-online open course platform began by MIT and Harvard, for $800 million. Since then, 2U’s trajectory has been referred to as a “lengthy, steep fall,” with declining enrollments, growing debt and different components like strain from regulators. In 2023, 2U misplaced certainly one of its largest and most distinguished shoppers when it stopped working the College of Southern California’s on-line applications.
OPMs have come beneath scrutiny lately, significantly for tuition-sharing contracts that critics say encourage predatory advertising practices and swell scholar mortgage debt. A 2019 report from the Century Basis, referred to as “Pricey Schools: Take Management of Your On-line Programs,” urged establishments to show away from outsourced applications. New laws have been anticipated for the trade, however they’ve been delayed. In the course of July, the U.S. Division of Training proposed laws to extend oversight over distance education schemes, together with requiring further reporting to raised allow the federal government to observe scholar outcomes.
In line with 2U, the Chapter 11 course of began by its latest submitting gained’t disrupt operations. The deal will remove half of 2U’s debt, give the corporate extra time to pay again loans and supply an extra $110 million in financing, in line with phrases. In a launch, 2U stated it expects the method to final solely a few months.
Some observers have prompt that 2U’s submitting was squarely the results of an overstretched firm.
Edtech commentator Phil Hill argues that the submitting was a predictable results of the firm’s steadiness sheet. He additionally argues that the pre-packaged deal defused the “debt bomb” that 2U held, giving them an opportunity to bounce again.
However different consultants counsel that faculties are more and more turning to different fashions, reminiscent of “anti-OPMs,” for his or her on-line applications. In principle, these fashions enable faculties to outsource constructing on-line applications whereas finally working to run the applications themselves, thereby serving to universities turn into “self-sufficient.”
The concept on-line applications run by exterior distributors function “money cows” for universities hasn’t labored, argued Emily Ravenwood, supervisor of educational know-how consultants on the College of Michigan, in 2021 in an essay for EdSurge. And she or he additionally referred to as the strategy “pedagogically bankrupt,” writing:
“As soon as we cease permitting increased enrollment to be the driving drive behind on-line applications, what will we let drive growth? I might argue that we have to begin with our institutional missions and objectives. Who’re the communities we serve and draw our college students from? What do they want in an effort to absolutely partake of our choices? What can know-how add to our faculty’s mission? If we begin with these questions, a really completely different and much more diversified strategy to on-line studying could emerge. We’ve already seen some first steps on this course, from a couple of faculties; allow us to proceed that approach.”
Since 2U works with some 260 faculties and universities, its final destiny will seemingly play an enormous position in the way forward for the OPM mannequin.
