Clarification on 2U and Its Role as a Target

Author

Phil Hill
July 20, 2022

I’ve gotten a lot of feedback on yesterday’s OPM Market Landscape and Dynamics post, particularly around the changes to the Mad Max diagram. There is one clarification I want to make on the protrayal of 2U, which is important in terms of the referenced Wall Street Journal (WSJ) article.

Wheel Off but No Crash

2U has been going through an interesting time since I described its move with the edX acquisition to create an online education platform model with a flywheel effect. Its market valuation has dropped below the price paid for edX, and increasingly 2U has become a target for those who view the OPM market as harmful. I showed the vehicle with engine smoke and a wheel on the ground but without any crash, and I did this for a reason.

What I did not mean to imply is that 2U has an existential risk in the same way that Zovio does (which is why Zovio is crashing) – this is not a simple “the wheels are coming off prior to a full crash”. The meaning is that in my opinion the company is losing its ability to steer and control its own destiny due to the financial pressures – more market valuation in nature than revenue or profit-based. One year ago 2U acquired edX based on its desired strategy and not in reaction to other conditions. The company is still the flamboyant symbol of the market, but it will need to get that wheel back on in order to start steering again.

Further, we do not know yet if the reporting around Byju’s acquisition offer is accurate or not, and if accurate, whether 2U’s board will accept the offer. That’s why the grappling hook is hovering but not attached.

Activists

What we do know is that somewhat indepedently of the company”s financial challenges, 2U has become a target for activists who desire to dramatically change the OPM market, in particular by taking away the option of tuition revenue sharing as a primary business model. That is the reason for this part of the graphic and the gun pointing at 2U:

Many of these activists view their role as primarily about consumer protection, with several government groups starting to lead the charge. Based on what I’m seeing, I would include the WSJ in the category of allies.

I mean this in a descriptive fashion, and I realize that some people are cheering these aggressive moves (it’s about time), and some decry them (you’re going to hurt the schools). The problem in my mind is when this activist mindset becomes a higher priority than what should be the primary role of any one group, and I think that’s what we’re seeing with the most recent WSJ article “That Fancy University Course? It Might Actually Come From an Education Company.” That article could have been solid journalism that highlights an area that needs attention and debate, but it ended up being misguided gotcha journalism that missed the mark.

The Article

The premise of the article is that it is not clear to students that online programs might be run by OPM companies.

American universities are searching for ways to generate more revenue. As a result, hundreds of schools—including Vanderbilt University, the University of California, Berkeley, and the University of North Carolina at Chapel Hill—are teaming up with for-profit companies such as 2U to provide online programs.

As part of the arrangement, one that is reshaping higher education, universities sometimes hand over to companies a great deal of control of student recruitment and instructional design, especially for nondegree programs. For their work, the companies receive hefty shares of tuition dollars.

Much of this isn’t clear to prospective and current students. Universities often cooperate with companies in ways that can blur the lines for students between schools and recruiters.

There were several stories in the consumer protection vein, quoting students who did not understand the offering they signed up for. The first student quoted searched for and found a boot camp offered through the University of Oregon web site.

She received a “uoregon.edu” email from someone identifying herself as admissions adviser for the boot camp. It had the university logo, and there was no mention in the email of 2U. Ms. Denkinger paid $11,995 to enroll last December.

“The only reason I signed up for this boot camp was because of the reputation of the university,” she said.

One month into the course, she was disappointed with the quality of instruction and began asking questions. That was when she realized that instructors and course materials were all provided by a unit of 2U, Trilogy Education Services.

2U and the University of Oregon changed the web site after WSJ inquiries but before publication of the article to make 2U / Trilogy’s role more clear at the top of the page.

There are several additional points made in the article, besides 2U recruiters branding as the school they are serving.

  • 2U paid UC Berkeley $4.2 million to enable marketing a similar master’s degree program at SMU for students who are not accepted or do not enroll at Berkeley.

  • There are questions about the admissions standards and minimum grades to get a certificate, as set by the partner universities, and how these contribute to student success outcomes.

  • The online recruitment efforts by 2U and other OPMs is quite aggressive and outside the norm of traditional higher ed.

Alexa Ryan, a former 2U recruiter for an online master’s-degree program at American University in Washington, D.C., said students who called or emailed about interest in a program would be bombarded with emails, calls and text messages. “Every so often someone would get irate and say `Stop calling me,’ ” she said,

2U said recruiters stop calling if students opt out of receiving information.

Confusing Allegations

To me, the feel of the article is ‘we caught 2U doing nefarious things after doing extensive, multi-month research.’ But upon closer reading:

  • There seems to be no allegation that 2U is operating outside the norm of the market, and schools don’t want to confuse students.

2U said the use of local area codes on caller ID is a standard practice across many fields and is one “our partners ask for and expect.” It said its callers are prepared to say who employs them if asked.

A spokeswoman for UNC said its arrangements with 2U follow “industry standard practices such as recruitment and marketing outreach to potential students.”

Vanderbilt said it works closely with 2U to make sure “our efforts are aligned.” USC said: “It is common for these types of contractors to use school email addresses so they do not confuse prospective students.”

  • It appears that the schools review and disburse the scholarships at their discretion, and 2U has given up a portion of their revenue to help fund these scholarships.

American University said all scholarship awards are subject to its review. 2U said that although it “contributes to these awards from our revenue-share, the disbursement of awards is administered by the university.”

  • There is no regulation cited that is being violated.

How did this article as written get through the editors at the WSJ, and why were these questions not asked internally? Somebody in New York needs to watch Season 5 of The Wire.

What Could Have Been

What did this gotcha journalism get in the way of? Solid reporting on an important topic.

There is little guidance or regulations available for non-degree, certificate-granting programs from colleges and universities, yet this is one of the growing trends in education. We need to debate what is appropriate in terms of schools essentially selling their brands and QA for a percentage of revenue for boot camps. We need to figure out what should be allowed and what should be prohibited.

Boot camps and other non-degree online programs are very different from degree-based programs. For degrees, schools directly provide the instruction as well as the admissions and academic standards. But for boot camps, it is the vendor that provides instruction with schools providing QA. This means that courses can be identical between different schools. What disclosures are appropriate in this field of vendor instruction and duplicate courses?

Aggressive recruiting of students for online programs – degree-granting and otherwise – is an annoyance and a weakness of the OPM market. Ironically, that is one of the main reasons that Coursera, 2U, and others are moving to an online education platform model. I don’t know if these practices should be regulated, but they should be highlighted and restrained. And schools need to think about their reputations when considering such aggressive recruiting in their names.

What outcomes should be publicly reported for non-degree programs? Program outcomes are difficult but also are improving for degree programs, but with many students opting for non-degree programs, what data should be reported and by whom?

There was a lot of useful information in the WSJ article, but much of it got lost with the relentless focus on 2U. And that is one example of the activism that I am referring to, where the WSJ forgot its primary role of journalism. 2U absolutely should be subject to scrutiny by the press, but the real story here is that there are industry-wide questions that need to be addressed around non-credit boot camps in order to better serve students in this growing field.