Higher Education Inquirer : online program manager

Showing posts with label online program manager. Show all posts

Tuesday, December 17, 2024

Scam Artist or Just Failed CEO?

For eight years, this blog has been investigating greed and corruption in higher education at all levels, from predatory for-profit colleges and student loan servicers to elite university endowments. We have also highlighted the good people in higher education: those who promote transparency, accountability, value, justice, and empathy.

Over those years, we have gained a good number of friends and allies and received a small amount of negative feedback. When we did face staunch criticism, or in a few cases, threats, we had to consider the sources, who were always bad actors or those who worked for them. The bad actor, Christopher (Chip) Paucek, and his attorneys, have filed a federal litigation, suing this blog and its author for giving you, our valued readers, our opinion. Specifically, Paucek has taken exception to our characterization of him as a scam artist.

We stand by our opinion of Chip based on what we learned in more than five years of investigations of 2U, the company Paucek led for over 10 years. And we hope that more people will do their own investigations.

We took our first look at 2U in 2019. In time, we were not the only ones paying attention. Workers in social media presented an inside view of the inner workings of 2U, describing what they viewed as enrollment practices that were highly questionable. Student consumers stepped forward, saying they had been deceived by 2U. Shareholders came forward, presenting Chip’s own words, saying he had misled them. The Wall Street Journal published a number of investigative pieces about 2U and the Chronicle of Higher Education also published two articles. While none of these outlets mentioned Chip, he was the CEO at the time, and in our view was responsible.

By March 2022, Chip Paucek was still CEO of 2U, and was formally setting up the Pro Athlete Community, also known as PAC. There was nothing secret about this venture by this time. But it did seem to us questionable that a CEO of a large corporation would be formally setting up another for-profit organization while the one he was running was failing.

In 2024, Chip admitted in an interview that he should have left 2U in 2019, but he didn’t. Chip also admitted that without his staying at 2U during that five year period, he wouldn’t have been able to start PAC. Last June, while still being paid as a consultant to 2U, a company nearly bankrupt, he led a group of retired players to ring the bell at NASDAQ. No one in the mainstream media picked up on the hypocrisy of all that exuberance on Wall Street. But we did.

Chip’s lawsuit against us was a surprise on several levels. First, our statements were just our opinion–it’s not provable or disprovable. Second, it seems nonsensical to bother with a blog seen by only 25,000 people a month. Third, and most importantly, Chip Paucek’s track record in business could reasonably lead someone to believe he is, indeed, someone who says untrue things to his own benefit.

Our feeling is that this lawsuit is more than a man taking exception to being called out for his track record; it’s, in our view, an attempt to keep us from warning his next potential victims–the athletes, employees, and investors who will be the next to learn about his methods.

Many states (including New Jersey, where Chip filed suit) have a law to deal with situations in which someone uses the courts to squelch investigative journalism. Accordingly, we are pursuing an Anti-SLAPP (strategic lawsuits against public participation) counter suit, asking for his case to be dismissed, and for him to pay our legal fees and court costs.

On November 25th, David Halperin, an ally of ours for many years, let the public know that 2U is likely to be under investigation by the Federal Trade Commission and the California Attorney General. The company Chip left in 2023, but is still being paid by, as a special advisor. We are not surprised.

If Chip would grant us an interview, we’d like to know more.

Department of Education Must Protect Students Following Collapse of For-profit Education Company 2U (Project on Predatory Student Lending)

A Hidden Risk of Online Higher Education (Student Borrower Protection Center)

David Bernard v Climb Credit, University Accounting Services, Loan Science & 2U

2U Investors Reach $37 Million Settlement With Online Educator (Bloomberg Law)

Mounting Evidence from State Watchdog Report Proves That, Yet Again, Public Universities Are Selling Out Students to For-Profit Companies (Student Borrower Protection Center)

USC Ends Partnership with 2U After Graduate Social Work Students Sue Over Online MSW “Diploma Mill” (Project on Predatory Student Lending)

Letter from CFPB to Richard Cordray about 2U

The Long, Steep Fall of an Online Education Giant (Wall Street Journal)

That Fancy University Course? It Might Actually Come From an Education Company.

USC Pushed a $115,000 Online Degree. Graduates Got Low Salaries, Huge Debts. (Wall Street Journal)

Monday, September 30, 2024

"White Labeling" in Online Higher Education: Simplilearn

Yesterday the NY Times published an article titled "Students Paid Thousands for a Caltech Boot Camp. Caltech Didn’t Teach It." The scandal is likely larger than this NYT article and the small, but important, bits of information in it. Simplilearn, the edtech company involved in the scheme, but not named in the title, is a growing for-profit business with offices in Bengaluru, India and San Francisco.

What makes the story interesting for consumers and consumer advocates is that like 2U-edX, we find another online program manager, Simplilearn, peddling elite university certificates that may not work out for those seeking better work opportunities. What makes the story doubly interesting is that Blackstone, a company with a trillion dollars in assets under management, holds a controlling interest in Simplilearn.

What makes it triply interesting (and not noted by the NY Times) is that GSV Ventures has also been involved in Simplilearn. GSV Ventures includes a number of high-profile names in education, business, and edtech, including Arne Duncan, Johny C. Taylor, Jr., Michael Moe, and Michael Horn.

Simplilearn also markets online certificates with other elite, brand names, including Purdue University, University of Massachusetts, Brown University, and UC San Diego. In June, Simplilearn stated that it was growing dramatically in revenue (35-45%) and becoming profitable. Consumers on Reddit, however, have made critical remarks about Simplilearn bootcamps.

Students can use Splitit, ClimbCredit or Klarna for buy now, pay later financing.

"White Labeling" in Edtech

According to edtech innovator and pioneer John Katzman (Noodle), "White labeling is done everywhere; your GE microwave is not made by GE, and Walgreens doesn't make ibuprofen. And note that these are non-credit, non-accredited programs. Still, I wouldn't put my university's name on other peoples' programs without clear disclosure. Tech and marketing are one thing; teaching and academic advisement are at the core of what a university does."

HEI Values Your Feedback

If there is anyone who has attended one of these bootcamps, please let us know how you financed the program and whether it has resulted in a positive or negative return on investment.

Related links:
Edtech Meltdown

2U Collapse Puts Sallie Mae and SLABS Back on the Radar (Glen McGhee)
OPM Market Landscape And Dynamics: Spring 2023 Updates (Phil Hill)
2U Expands College Meltdown to Elite Universities

Friday, September 29, 2023

2U-edX crash exposes the latest wave of edugrift

2U, a Lanham, Maryland-based edtech company and parent company edX, is facing layoffs of an estimated 200 to 400 workers--a significant number for a company that only employs a few thousand--amid more rumors that the company is for sale. While the pain of their firings may be consequential for those who are experiencing it, the pain of those the company has damaged, mostly striving middle-class consumers and their families, may be worse.

2U's problems are not new. The Higher Education Inquirer first reported on the beginning of company's meltdown in October 2019. In July 2022, 2U announced layoffs as it changed its business model (again) and the US Department of Education scrutinized the company's grad school offerings.

2U began in 2008 as an online program manager (OPM), one of a few companies offering edtech services that required large amounts of capital and labor costs. They expanded through the acquisition of other edtech firms, Trilogy Education Services (2019) and edX (2021). edX is an education platform that was created by Harvard and MIT as a massive open online course (MOOC) platform, but as part of 2U now concentrates on selling a number of elite and brand name tech bootcamps.

In 2022 and 2023, the Wall Street Journal (Lisa Bannon), Chronicle of Higher Education (Mike Vasquez), and USA Today (Chris Quintana) investigated 2U after a few US senators sounded the alarm about consumers being fleeced by 2U and other OPMs.

With 2U's reputation in shambles and layoffs ahead, the parent company wrapped itself around the more respectable edX brand. Bjju's, an Indian edtech firm, was said to be looking at 2U or Chegg as a possible acquisition (Byju's is now facing its own problems).

Concentrating on growth for years, then acquisition, then consolidation and rebranding, 2U has never generated an annual profit--and that trend doesn't appear to be changing.

Earlier this year we listed 2U, Chegg, Coursera, and Guild Education as part of the EdTech Meltdown.

Unlike the prior wave of for-profit college failures of Corinthian Colleges, ITT Tech, Education Management Corporation, and others that hurt working-class student debtors, 2U has collaborated with elite universities, targeting mostly middle-class folks for advanced degrees and certificates with elite brand names such as USC and UC Berkeley. Credentials that frequently are not worth the debt. Credentials that often did not lead to better paying jobs. Credentials that burden (and sometimes crush) consumers financially with private loans from Sallie Mae and others.

edX's website advertises coding, data analytics, cybersecurity, and AI bootcamps from a number of name brands: Ohio State University, Columbia University, University of Texas, Harvard University, Michigan State University, University of Denver, Southern Methodist University, University of Minnesota, University of Central Florida, Arizona State University, Northwestern University, Rice University, the University of North Carolina, and UC-Irvine.

Ohio State University AI Bootcamp $11,745
University of Texas Coding Bootcamp $12,495
Berkeley Extension Coding Bootcamp $13,495
University of Pennsylvania Cybersecurity Bootcamp $13,995
Columbia University Data Analytics Bootcamp $14,745

It's not clear how well managed the programs are and how much these schools are involved in instruction and career guidance. However, edX claims that with their bootcamp certificates, graduates will "gain access to more than 260 employers--including half of the Fortune 100--seeking skilled bootcamp graduates."

While the targets of for-profit colleges and 2U may have been different, their approaches were similar: sell a dream to consumers that often does not materialize. Spend tens of millions on targeted (and sometimes misleading) advertising and enrollment. Keep the confidence game going as long as it will last. But that may not be much longer.

In April 2023, 2U filed a lawsuit against the US Department of Education to avoid further government oversight. A familiar defensive strategy in the for-profit college business.

There is much we don't know about how significant the damage has been to those who bought the 2U story and spent tens of thousands on elite degrees and certificates, but it must be significant. Most US families do not have that kind of money to spend on something that doesn't result in financial gains.

Recent reviews of edX on TrustPilot have been scathing. And social media have been brutal on 2U, Trilogy, and EdX. Reddit, for example, has posts like "The dirty truth about edX/Trilogy Boot Camps." In a more recent post about edX, there was a flurry of negative reviews.

In 2016, we wrote "When college choice is a fraud." At that time we were focusing on the tough choices that working-class people have deciding between their local community college or a for-profit career school. Little did we know that the education business was already moving its way up the food chain and that edtech companies like 2U would be engaging in the latest form of edugrift.

Friday, May 12, 2023

OPM Market Landscape And Dynamics: Spring 2023 Updates (Phil Hill)

Editor's Note: This article first appeared in Phil Hill's On EdTech Blog.

Wow. Just wow – the last twelve months have been something.

Was this forwarded to you by a friend? Sign up, and get your own copy of the news that mattered sent to your inbox every week. Sign up for the On EdTech newsletter. Interested in additional analysis? It’s free through May 24, 2023. Upgrade to the On EdTech+ newsletter.

On to the update. [full-page audio link]

During several keynotes, podcast interviews, and panel sessions over the past two years, I have described how the Online Program Management (OPM) market was facing enormous pressures and would change dramatically. I took some heat in private conversations for overstating the case, but as the past 12 months have shown, it turns out that I understated the turmoil and change of the market.

With that in mind, it is time to update our two main OPM Market graphics that were last shared in the Summer 2022 update.

OPM Market Landscape

Market valuations of publicly-traded OPM companies have continued to drop, with 2U/edX, Coursera, and Keypath all down 75% or more from March 2021.
Pearson tapped out of the market, agreeing to sell its OPM business to private equity firm Regent.
Zovio is no more. It has ceased to be.
FutureLearn sold the remnants of its business to a for-profit system, and it now has the most obnoxious website of any OPM provider, past or present.
Byju’s, which (according to multiple media accounts) had been considering an acquisition of 2U/edX or Coursera, abandoned these plans to go off and deal with its own financial crisis.
Noodle acquired South Africa-based Hubble Studios.
The Government Accountability Office (GAO) released a report on the OPM market, triggering (but not causing) official efforts to make massive regulatory changes.

As readers of On EdTech know, this last bullet is now the driver for market dynamics for 2023 and probably 2024.

As always, please note that this view is intended to give a visual overview of the market landscape and is not mean to be comprehensive in terms of vendors represented. This is particularly true in the smaller customer base and fee for service categories.

OPM Market Dynamics

When we first came up with the Mad Max graphic in 2018, it was intended to counter the golly gee, the OPM market is rich, well-funded, and growing like crazy coverage, or the flip side of these companies are all getting rich pulling profits out of the schools coverage that we saw in EdTech and national media through 2022.

This year there are two primary changes with the overall message of the graphic:

Online enrollments in the largest OPM market (US graduate schools) are no longer growing – they’re dropping and in structural ways. OPMs are still chasing those enrollments and tuition revenue, but the dynamics change when the target has its own problems.
The small threat from the Department of Education and its activist allies to the OPM market has become a major threat, with an all-out assault.

We still get a picture of a chaotic market that is not for the faint of heart, and one that is seeing consolidations and category changes, and these changes will continue. All of this in a Mad Max-style pursuit of college online course and program revenue (whether rev share or fee-for-service or a blend, and whether degree- or certificate-based).

Note the changes in the program revenue target:

as well as the central market threat from ED regulations, going after both revenue sharing and TPS status, all in the name of protecting the helpless:

with 2U being the chosen target to personify the regulatory actions:

We also see Pearson getting out of the OPM business:

Zovio’s crash:

and Byju’s flying away from the scene.

ASU+GSV Angle

Next week I (along with Glenda Morgan) will be at ASU+GSV, and I will be on a panel with Ryan Craig, Mike Goldstein, Katherine Lee Carey, and Toby Jackson. The session is titled “Decoding the Dear Colleague Letter – What’s a TPS?!”, scheduled for Wednesday at 11am PDT. I am eager to find out at the conference if the investment community is aware of the significance of ED’s targeting of the OPM market, at least for revenue sharing business models, and of the potential impact of TPS guidance.

Update 4/13: Added bullet on Noodle acquiring Hubble Studios.

Monday, April 10, 2023

EdTech Meltdown

The Silicon Valley tech downturn has been creating reverberations in other parts of the economy and in other areas of the US.

Edtech, a small subset of the tech industry that overlaps with higher education, is facing major headwinds as skepticism about higher education and the economy grows. Even two industry insiders, Noodle CEO John Katzman and Kaplan executive Brandon Busteed have been critical of the short-term thinking and questionable outcomes of edtech. Katzman has called some companies in the space "more adtech than edtech," implying that some do little more than marketing and advertising for colleges and universities.

Ultimately, it's US consumers who are feeling the greatest pain as participants in online education--a mode of instruction that for millions of people may have more risks than benefits--within an increasingly dysfunctional economy that produces expensive education and fewer good jobs.

Significant problems that were observed in large subprime colleges like University of Phoenix, Corinthian Colleges, ITT Tech, DeVry University, Colorado Tech, and the Art Institutes more than a dozen years ago have resurfaced in edtech. And other problems unique to edtech have emerged.

Chegg is an edtech company based in Santa Clara, California, and provides homework help, online tutoring, and other student services. The company's value grew more than 300 percent in 2020, during the Covid pandemic, but has faced headwinds for the last two years. This includes allegations that Chegg enables students to cheat on homework and other assignments. Derek Newton has chronicled this problem in the substack The Cheat Sheet.

[Chegg shares grew in 2020 during the Covid pandemic. Source: Seeking Alpha]

Coursera is a publicly traded MOOC based in Mountain View California. Shares started trading in April 2021. The company has under-performed as a profit making enterprise. Massive Open Online Courses were once seen as a wave of the future in adult education but their popularity has waned.

[Coursera has underperformed since its IPO in April 2021. Source: Seeking Alpha]

2U (based in Lanham, MD) and Guild Education (based in Denver) and are two edtech companies based outside of Silicon Valley.

2U is a publicly traded Online Program Manager (OPM). The company services major universities such as the University of Southern California and University of North Carolina with support for some of their online degree programs. 2U has received an enormous amount of funding from Cathie Wood, a major Silicon Valley investor, and has continued to receive support despite a long record of financial losses.

Some 2U investors have grown tired of persistent losses--and it has shown in the declining share price. The company also faces increased scrutiny in DC for recruiting consumers unable to recoup the cost of education for high-priced masters degrees in areas such as social work. 2U acquired edX, the Harvard-MIT MOOC in 2021 and its profitability remains to be seen.

In 2023, 2U sued the US Department of Education for attempting to require more transparency between OPMs and their clients. This strategy is similar to the defensive strategy that subprime colleges have used to stop gainful employment regulations, and more recently, borrower defense to repayment rules.

[2U shares have dropped more than 90 percent over the last 5 years. Source: Seeking Alpha]

Guild Education is a privately held corporation that grew to an estimated $4.4B evaluation in a few years. Guild serves businesses by administering online education benefits for large corporations such as Walmart, Target, and Macy's. While its work may help companies with their bottom line, they appear to do little for their workers.

At least ten of Guild's investors are based in Silicon Valley, including Silicon Valley Bank and venture capital firms in San Francisco, Palo Alto, and Menlo Park, California. Valuations.fyi reports Guild's estimated value at $1.3B, a 70 percent drop from its peak in June 2022.

[Image above: Guild's valuation in Billions from valuations.fyi]

The Higher Education Inquirer will continue to observe changes in edtech as the College Meltdown advances.

A ‘rigged’ economy and skepticism about college (Paul Fain, Open Campus)

How University of Phoenix Failed. It's a Long Story. But It's Important for the Future of Higher Education.

The Cheat Sheet (Derek Newton)

2U Virus Expands College Meltdown to Elite Universities

Erica Gallagher Speaks Out About 2U's Shady Practices at Department of Education Virtual Listening Meeting

Borrower Defense Claims Surpass 750,000. Consumers Empowered. Subprime Colleges and Programs Threatened.

Guild Education: Enablers of Anti-Union Corporations and Subprime College Programs

College Meltdown 2.0

The Growth of "RoboColleges" and "Robostudents"

The American Dream is Over (Gary Roth)

Sunday, September 11, 2022

State Universities and the College Meltdown

State Universities are using Google Ads to boost enrollment numbers.

(Updated November 28, 2022)

While for-profit colleges, community colleges, and small private schools received the most attention in the first iteration of the College Meltdown, regional public universities (and a few flagship schools) have also experienced financial challenges, reorganizations, and mergers, enrollment losses, layoffs and resignations, off-campus learning site closings and campus dorm closings, lower graduation rates, and the necessity to lower admissions standards. They are not facing these downturns, though, without a fight.

State universities, for example, are attempting to maintain or boost their enrollment through marketing and advertising--sometimes with the assistance of helpful, yet sometimes questionable online program managers (OPMs) like 2U and Academic Partnerships and lead generators such as EducationDynamics.

Academic Partnerships claims to serve 50 university clients. HEI has identified 25 of them.

Google ads also follow consumers across the Web, with links to enrollment pages. And enrollment pages include cookies to learn about those who click onto the enrollment pages. Schools share the information that consumers provide with Google Analytics and Chartbeat.

A pop-up Google Ad for Penn State World Campus

Advanced marketing will not improve institutional quality directly but it may raise awareness of these state schools to targeted audiences. Whether this becomes predatory may be an issue worth examining.

In order to stay competitive, state universities have to have a strong online presence and spend an inordinate amount of money on marketing and advertising. Ohio University and other schools now offer programs that are 100 percent online.

State universities have joined for-profit colleges in the television advertising space.

Despite marketing and enrollment appeals like this, we believe the financial situation could worsen at non-flagship state universities when austerity is reemployed--something likely to happen during the next economic downturn.

While state flagship universities have multiple revenue streams, they are often unaffordable for working families. Elite state universities, also known as the Public Ivies, have increasingly shut out state residents--in favor of people from out of state and outside the US--who are willing to pay more in tuition.

Aaron Klein at the Brookings Institution calls this significant (and dysfunctional) out-of-state enrollment pattern as The Great Student Swap.

State Universities with more than 4000 foreign students include UC San Diego, University of Illinois, UC Irvine, University of Washington, Arizona State University, Purdue University, Ohio State University, Michigan State University, and UC Berkeley.

People fortunate enough to attend large state universities as undergrads may feel alienated by large and impersonal classrooms led by graduate assistants and other adjuncts. There are also significant and often under-addressed social problems related to larger universities, including hunger, substance abuse, sexually transmitted diseases, hazing and sexual assault.

Online only versions of flagship schools may not be of the same quality as their brick and mortar counterparts. Purdue University Global and University of Arizona Global Campus, for example, are open enrollment schools for working adults which produce questionable student outcomes. These "robocollege" schools hire few full-time instructors and often spend a great deal of their resources on marketing and advertising.

EducationDynamics is a lead generator for "robocolleges" such as Purdue University Global and University of Arizona, Global Campus.

Purdue University Global has used questionable marketing and advertising.

The Higher Education Inquirer has already noticed the following schools in the Summer and Fall 2022 that received media scrutiny for lower enrollment, financial problems, or labor issues:

Westfield State University

Connecticut State Colleges and Universities

Western Connecticut State University

State University of New York

Montclair State University (Merger with Bloomfield College)

William Paterson University

Montclair State University

Rutgers University, Camden

New Jersey City University

Penn State University

Indiana University of Pennsylvania

Slippery Rock University of Pennsylvania