Lessons from 2U's Bankruptcy: Navigating the Future of Online Higher Education
“This lack of oversight puts students at significant risk — as we’ve seen today — and the Department of Education needs to act immediately to reduce further harm.” - Stephanie Hall, Senior Director for Higher Education Policy at the Center for American Progress
The Rise and Fall of 2U: Lessons from a Rapidly Evolving Industry
The trajectory of 2U, a prominent online program manager (OPM), is a compelling narrative that underscores the dynamism and volatility of the higher education sector. At the beginning of 2021, 2U stood as a significant player, buoyed by the global shift to online learning amid the COVID-19 pandemic. The company’s revenue soared to $774.5 million in 2020, with a market cap reaching $4 billion by early 2021. The strategic acquisition of edX for $800 million highlighted 2U's ambition to cement its dominance.
A Transformational Journey
2U's journey is marked by both impressive growth and significant setbacks. Initially, the company leveraged its partnerships with prestigious universities like USC, NYU, and Berkeley to expand its footprint. However, as the pandemic-induced online learning boom waned, 2U faced a diminishing market. Students returned to traditional classrooms, and the demand for tech education credentials shrank alongside broader economic contractions. Artificial intelligence's rapid uptake further eroded the need for certain programs, like coding boot camps, that had previously been profitable for 2U.
Financial Turmoil and Legal Challenges
Financial instability and legal accusations compounded 2U's challenges. The company's debt exceeded $900 million, alongside an accumulated deficit of nearly $1.6 billion. Legal issues, including allegations of misleading marketing practices in partnership with USC, tarnished its reputation and strained university collaborations. Despite efforts to cut costs and restructure debt, 2U ultimately filed for bankruptcy in 2024.
Looking Forward: Industry Implications
The 2U saga offers critical insights into the higher education sector's broader trends. As universities reevaluate the feasibility of managing online programs independently, this case underscores the need for robust regulatory oversight and sustainable business models. The Department of Education's potential revision of revenue-sharing guidelines with OPMs reflects a crucial step toward safeguarding student interests. By learning from 2U's experiences, stakeholders can drive innovation and ensure resilient, high-quality educational offerings in the future.