Final week, 2U, a pioneer of the so-called On-line Program Administration (OPM) mannequin for serving to schools run on-line diploma packages, 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 peak — value billions — and characterised as a “large” within the area.
However after a rocky few years, a chapter submitting wasn’t all that stunning.
Nonetheless, it raises the query: Was that announcement a rebuke of the whole OPM mannequin — or simply the story of 1 troubled firm?
The reply might have penalties for the way forward for on-line larger ed, since OPMs have been as soon as seen each as a profitable technique for universities to earn money by rising enrollments and as a pathway to develop entry to superior studying for college students 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 packages 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 an alternative of its full package deal of companies, ostensibly to assist decrease tuition.
The COVID-19 pandemic’s pressured experiment in emergency distant instruction prompted extra schools to hunt help from exterior 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 Faculty of Engineering, in 2021 in a column for EdSurge. But he urged that OPMs have been “merely a stopgap remedy” for “schools with inadequate digital infrastructure,” recommending that establishments search extra sustainable methods to develop their on-line packages.
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 known as a “lengthy, steep fall,” with declining enrollments, rising debt and different components like strain from regulators. In 2023, 2U misplaced one in every of its largest and most outstanding shoppers when it stopped working the College of Southern California’s on-line packages.
OPMs have come beneath scrutiny in recent times, significantly for tuition-sharing contracts that critics say encourage predatory advertising and marketing practices and swell scholar mortgage debt. A 2019 report from the Century Basis, known as “Pricey Schools: Take Management of Your On-line Programs,” urged establishments to show away from outsourced packages. 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 teaching programs, together with requiring further reporting to raised allow the federal government to observe scholar outcomes.
In accordance with 2U, the Chapter 11 course of began by its current submitting gained’t disrupt operations. The deal will eradicate half of 2U’s debt, give the corporate extra time to pay again loans and supply a further $110 million in financing, based on phrases. In a launch, 2U mentioned it expects the method to final solely a few months.
Some observers have urged 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 stability 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 specialists counsel that faculties are more and more turning to different fashions, reminiscent of “anti-OPMs,” for his or her on-line packages. In principle, these fashions enable schools to outsource constructing on-line packages whereas finally working to run the packages themselves, thereby serving to universities turn into “self-sufficient.”
The concept on-line packages run by exterior distributors function “money cows” for universities hasn’t labored, argued Emily Ravenwood, supervisor of educational expertise consultants on the College of Michigan, in 2021 in an essay for EdSurge. And she or he additionally known as the method “pedagogically bankrupt,” writing:
“As soon as we cease permitting larger enrollment to be the driving power behind on-line packages, what can we let drive improvement? I’d argue that we have to begin with our institutional missions and targets. Who’re the communities we serve and draw our college students from? What do they want with the intention to absolutely partake of our choices? What can expertise add to our faculty’s mission? If we begin with these questions, a really completely different and way more diversified method to on-line studying might emerge. We’ve already seen some first steps on this route, from a couple of colleges; allow us to proceed that manner.”
Since 2U works with some 260 schools and universities, its final destiny will seemingly play a giant function in the way forward for the OPM mannequin.
