Last week, 2U, a pioneer of the so-called Online Program Management (OPM) model to help universities run online degree programs, announced that He filed for bankruptcy under Chapter 11 with a “prepackaged” agreement arising from a prior negotiation with creditors.
The company was an edtech “unicorn” at its peak (worth billions) and was characterized as a “giant” in the space.
But after a few difficult years, the bankruptcy filing was not so surprising.
The question arises, though: Was that announcement a rejection of the entire OPM model or just the story of a company in trouble?
The answer may have implications for the future of online higher education, as OPMs were once seen as a winning strategy for universities to make money by increasing enrollment and as a way to expand access to advanced learning for students who were unwilling or unable to participate on campus.
A giant falls
In 2U’s early days, the company worked with select institutions with elite reputations to create online graduate programs that charged high tuition fees. In exchange, 2U kept a large portion of the tuition revenue. The company then moved to offering universities “stackable” options instead of its full suite of services, ostensibly to help lower tuition fees.
The COVID-19 pandemic’s forced experiment in emergency remote instruction prompted more universities to seek support from outside companies like 2U to create more permanent online learning options, Robert Ubell, vice dean emeritus for online learning at New York University’s Tandon School of Engineering, argued in a 2021 column for EdSurge. However, he suggested that OPMs were “simply a stopgap therapy” for “universities with insufficient digital infrastructure,” and recommended that institutions look for more sustainable ways to grow their online programs.
In 2021, 2U I bought edX, the massive open online course platform Started by MIT and Harvard, for $800 million, 2U's journey has since been described as “long and steep drop”, with declining enrollment, increasing debt and other factors such as Pressure from regulatorsIn 2023, 2U lost one of its largest and most prominent clients when… I stop running University of Southern California Online Programs.
OPMs have come under scrutiny in recent years, In particular, to share the tuition. contracts that critics say encourage predatory marketing practices and increase student loan debt. A 2019 report by the Century Foundation, called “Dear Universities: Take control of your online courses,” urged institutions to move away from outsourced programs. New regulations for the industry were expected, but have not It has been delayedIn mid-July, the U.S. Department of Education proposed regulations increase oversight of distance education programs, including requiring additional reporting so the government can better monitor student outcomes.
According 2UThe Chapter 11 process initiated with its recent filing will not affect operations. The deal will eliminate half of 2U's debt, give the company more time to repay loans and provide an additional $110 million in financing. according to the termsIn a statement, 2U said it expects the process to take only a couple of months.
Some observers have suggested that 2U's introduction was clearly the result of an overstretched company.
edtech commentator Phil Hill argues that the presentation was a predictable outcome of the company balance sheetHe also argues that the pre-arranged agreement defused the “debt bomb” that 2U was holding, giving them a chance to recover.
But other experts suggest that universities are increasingly turning to alternative models, such as “anti-OPM” for their online programs. In theory, these models allow universities to outsource the creation of online programs and ultimately work to run the programs themselves, helping universities become “self-sufficient.”
The idea that online programs run by outside vendors serve as “milk hens” for universities hasn’t worked, argued Emily Ravenwood, manager of academic technology consultants at the University of Michigan, in a 2021 essay for EdSurge. And she also called the approach “pedagogically flawed,” writing:
“Once we stop allowing enrollment growth to be the driving force behind online programs, what will we let drive development? I would say we need to start with our institutional missions and goals. What are the communities we serve and draw our students from? What do they need to fully engage with our offerings? What can technology bring to our school’s mission? If we start with these questions, a very different and much more diversified approach to online learning can emerge. We have already seen some first steps in this direction from some schools; let’s continue down that path.”
Since 2U works with about 260 colleges and universities, its ultimate destination will likely play a major role in the future of the OPM model.
