College Meltdown Fall 2025

The Fall 2025 semester begins under intensifying pressure in U.S. higher education. Institutions are responding to long-term changes in enrollment, public funding, demographics, technology, and labor markets. The result is a gradual disassembly of parts of the postsecondary system, with ongoing layoffs, program cuts, and institutional restructuring across both public and private sectors.

The Destruction of ED

In a stunning turn, the U.S. Department of Education has undergone a massive downsizing, slashing nearly half its workforce as part of the Trump administration’s push to dismantle the agency entirely. Education Secretary Linda McMahon framed the move as a “final mission” to restore state control and eliminate federal bureaucracy, but critics warn of chaos for vulnerable students and families who rely on federal programs. With responsibilities like student loans, Pell Grants, and civil rights enforcement now in limbo, Higher Education Institutions face a volatile landscape. The absence of centralized oversight has accelerated the fragmentation of standards, funding, and accountability—leaving colleges scrambling to navigate a patchwork of state policies and shrinking federal support.

AI Disruption: Academic Integrity and Graduate Employment 

Artificial Intelligence has rapidly reshaped higher education, introducing both powerful tools and profound challenges. On campus, AI-driven platforms like ChatGPT have become ubiquitous—92% of students now use them, and 88% admit to deploying AI for graded assignments. This surge has triggered a spike in academic misconduct, with detection systems struggling to keep pace and disproportionately flagging non-native English speakers Meanwhile, the job market for graduates is undergoing a seismic shift. Entry-level roles in tech, finance, and consulting are vanishing as companies automate routine tasks once reserved for junior staff. AI-driven layoffs have already claimed over 10,000 jobs in 2025 alone, and some experts predict that up to half of all white-collar entry-level positions could be eliminated within five years. For recent grads, this means navigating a landscape where degrees may hold less weight, and adaptability, AI fluency, and human-centered skills are more critical than ever.

Unsustainable Student Loan Debt and Federal Funding 

A recent report from the American Enterprise Institute (AEI) highlights the depth of the crisis: more than 1,000 colleges could lose access to federal student aid based on current student loan repayment rates—if existing rules were fully enforced. The findings expose systemic failures in accountability and student outcomes. Many of these colleges enroll high numbers of low-income students but leave them with unsustainable debt and limited job prospects.

Institutional Cuts and Layoffs Across the Country

Job losses and cost reductions are increasing across a range of universities.

Stanford University is cutting staff due to a projected $200 million budget shortfall.
University of Oregon has announced budget reductions and academic restructuring.
Michigan State University is implementing layoffs and reorganizing departments.
Vanderbilt University Medical Center is eliminating positions to manage healthcare operating costs.
Harvard Kennedy School is reducing programs and offering early retirement.
Brown University is freezing hiring and reviewing academic offerings.
Penn State University System is closing three Commonwealth Campuses.
Indiana public colleges are merging administrative functions and reviewing low-enrollment programs.

These actions affect not only employees and students but also local communities and regional labor markets.

Enrollment Decline and Demographic Change

Undergraduate enrollment has fallen 14.6% since Fall 2019, according to the National Student Clearinghouse Research Center. Community colleges have experienced the largest losses, with some regions seeing more than 20% declines.

The “demographic cliff” tied to declining birth rates is now reflected in enrollment trends. The Western Interstate Commission for Higher Education (WICHE) projects a 15% decline in high school graduates between 2025 and 2037 in parts of the Midwest and Northeast.

Aging Population and Shifts in Public Spending

The U.S. population is aging. By 2030, all baby boomers will be over 65. The number of Americans aged 80 and older is expected to rise from 13 million in 2020 to nearly 20 million by 2035. Public resources are being redirected toward Social Security, Medicare, and elder care, placing higher education in direct competition for limited federal and state funds.

State-Level Cuts to Higher Education Budgets

According to the State Higher Education Executive Officers Association (SHEEO), 28 states saw a decline in inflation-adjusted funding per student in FY2024.

The California State University system faces a $400 million structural deficit.
West Virginia has reduced academic programs in favor of workforce-focused realignment.
Indiana has ordered cost-cutting measures across public campuses.

These reductions are leading to fewer courses, increased workloads, and, in some cases, higher tuition.

Closures and Mergers Continue

Since 2020, more than 100 campuses have closed or merged, based on Education Dive and HEI data. In 2025, Penn State began closing three Commonwealth Campuses. A number of small private colleges—especially those with enrollments under 1,000 and limited endowments—are seeking mergers or shutting down entirely.

International Enrollment Faces Obstacles

The Institute of International Education (IIE) reports a 12% decline in new international student enrollment in Fall 2024. Contributing factors include visa delays and tighter immigration rules. Students from India, Nigeria, and Iran have experienced longer wait times and increased rejection rates. Graduate programs in STEM and business are particularly affected.

Increased Surveillance and Restrictions on Campus Speech

Data from FIRE and the Electronic Frontier Foundation (EFF) show increased use of surveillance tools on campuses since 2023. At least 15 public universities now use facial recognition, social media monitoring, or geofencing. State laws in Florida, Texas, and Georgia have introduced new restrictions on protests and diversity programs.

Automated Education Expands

Online Program Managers (OPMs) such as 2U, Kaplan, and Coursera are running over 500 online degree programs at more than 200 institutions, enrolling more than 1.5 million students. These programs often rely on AI-generated content and automated grading systems, with minimal instructor interaction.

Research from the Century Foundation shows that undergraduate programs operated by OPMs have completion rates below 35%, while charging tuition comparable to in-person degrees. Regulatory efforts to improve transparency and accountability remain stalled.

Oversight Gaps Remain

Accrediting agencies continue to approve closures, mergers, and new credential programs with limited transparency. Institutions are increasingly expanding short-term credential offerings and corporate partnerships with minimal external review.

Cost Shifts to Students, Faculty, and Communities

The ongoing restructuring of higher education is shifting costs and risks onto students, employees, and communities. Students face rising tuition, fewer available courses, and increased reliance on loans. Faculty and staff encounter job insecurity and heavier workloads. Outside the ivory tower, communities will lose access to educational services, cultural events, and local employment opportunities tied to campuses.

The Higher Education Inquirer will continue to report on the structural changes in U.S. higher education—grounded in data, public records, and the lived experiences of those directly affected.

Sources:
National Student Clearinghouse Research Center, Western Interstate Commission for Higher Education (WICHE), U.S. Census Bureau, State Higher Education Executive Officers Association (SHEEO), Institute of International Education (IIE), Foundation for Individual Rights and Expression (FIRE), Electronic Frontier Foundation (EFF), Government Accountability Office (GAO), The Century Foundation, Stanford University, University of Oregon, Penn State University System, Harvard Kennedy School, Vanderbilt University Medical Center, Education Dive Higher Ed Closures Tracker, American Enterprise Institute (AEI).

The Higher Education Inquirer: Investigating the Dark Corners of U.S. Higher Ed

For nearly a decade, the Higher Education Inquirer (HEI) has cultivated a reputation for relentless, independent journalism in a field often dominated by press-release rewrites and trade-conference boosterism. In 2024 and 2025, that commitment has been on full display, with a series of investigations that not only expose institutional negligence and corporate greed, but also demand structural change.

Following the Money: GI Bill Loopholes and Veteran Betrayal

One of HEI’s most impactful 2025 stories examined how billions in GI Bill funds—more than Pell Grants or state scholarships—are diverted to for-profit and low-performing nonprofit institutions. Despite promises of career advancement, many veterans end up underemployed and in debt. The reporting points to deliberate policy gaps, such as the weakened 90–10 rule, that incentivize predatory recruitment over educational quality.

Student Debt Transparency: A FOIA Offensive

HEI has also launched an ambitious Freedom of Information Act campaign to shed light on the federal student loan portfolio and on how rarely student loan debt is discharged through bankruptcy. Requests to the Department of Education seek data going back to 1965—records that could help quantify decades of policy drift away from borrower relief.

The FOIA strategy doesn’t stop at the Department of Education. HEI has queried the Securities and Exchange Commission for complaint data against online program managers 2U and Ambow Education, bringing corporate accountability into sharper focus.

Beyond the Campus: Immigration, Religion, and Geopolitics

While student debt remains a central concern, HEI has broadened its investigative reach. In March 2025, it filed a FOIA with the State Department for details on more than 300 revoked student visas, a move to illuminate opaque policies that can upend lives without public explanation.

Other pieces have examined the rise of Christian cybercharter schools, warning of a drift toward ideological indoctrination in taxpayer-funded education. Internationally, HEI has scrutinized the Gaza Humanitarian Foundation’s U.S. media tour, questioning the intersection of higher education, faith-based advocacy, and political agendas.

Why This Work Matters

What makes HEI’s journalism unique is its sustained follow-through. Many outlets publish a single exposé and move on. HEI revisits stories months or years later, tracking the real-world consequences of policy changes and institutional behavior. This persistence has helped keep public attention on issues like the Corinthian Colleges collapse and the broader failure to deliver promised student debt relief.

By pairing data-driven reporting with insider accounts and whistleblower input, HEI not only documents abuse but also lays out pathways for reform. In a higher education system where financialized logic often outweighs student welfare, that combination is increasingly rare—and increasingly necessary.

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Sources:

• Higher Education Inquirer

• Higher Education Inquirer – GI Bill Reform

• University Leadership Central

• Student Affairs Connection

The Digital Dark Ages of Higher Education: Greed, Myth, and the Ghosts of Lost Knowledge

In a time of unprecedented data collection, artificial intelligence, and networked access to information, it seems unthinkable that we could be slipping into a new Dark Age. But that is precisely what is unfolding in American higher education—a Digital Dark Age marked not just by the disappearance of records, but by the disappearance of truth.

This is not a passive erosion of information. It is a systemic, coordinated effort to conceal institutional failure, to commodify public knowledge, and to weaponize mythology. It is a collapse not of technology, but of ethics and memory.

A Dark Age in Plain Sight

Digital decay is usually associated with vanishing files and outdated formats. In higher education, it takes the more sinister form of intentional erasure. Data that once offered accountability—graduation rates, job placement figures, loan default data, even course materials—have become reputational liabilities. When inconvenient, they vanish.

Gainful Employment data disappeared from federal websites under the Trump administration. Student outcomes from for-profit conversions are obscured through accounting tricks. Internal audits and consultant reports sit behind NDAs and paywalls. And when institutions close or rebrand, their failures are scrubbed from the record like Soviet photographs.

This is a higher education system consumed by image management, where inconvenient truths are buried under branded mythologies.

The Robocolleges and the Rise of the Algorithm

No phenomenon illustrates this transformation more starkly than the rise of robocolleges—fully online institutions like Southern New Hampshire University, University of Phoenix, and Liberty University Online. These institutions, driven more by enrollment growth than educational mission, are built to scale, surveil, and extract.

Their architecture is not intellectual but algorithmic: automated learning systems, outsourced instructors, and AI-driven behavioral analytics replace human-centered pedagogy. Data replaces dialogue. And all of it happens behind proprietary systems controlled by Online Program Managers (OPMs)—for-profit companies like 2U, Academic Partnerships, and Wiley that handle recruitment, curriculum design, and marketing for universities, often taking a majority cut of tuition revenue.

These robocolleges aren’t built to educate; they’re built to profit. They are credential vending machines with advertising budgets, protected by political lobbying and obscured by branding.

And they are perfectly suited to a Digital Dark Age, where metrics are manipulated, failures are hidden, and education is indistinguishable from a subscription service.

Myth #1: The College Degree as Guaranteed Mobility

The dominant myth still peddled by these institutions—and many traditional ones—is that a college degree is a golden ticket to upward mobility. But in an economy of stagnant wages, rising tuition, and unpayable debt, this narrative is a weapon.

Robocolleges and their OPM partners sell dreams on Instagram and YouTube—“Success stories,” “first-gen pride,” and inflated salary stats—while ignoring the mountains of debt, dropout rates, and lifelong economic precarity their students face. And when those stories come to light? They disappear behind legal threats, settlements, and strategic rebranding.

The dream has become a trap, and the myth has become a means of extraction.

Myth #2: Innovation Through EdTech

“Tech will save us” is the second great myth. EdTech companies promise to revolutionize learning through adaptive platforms, AI tutors, and automated assessments. But what they really offer is surveillance, cost-cutting, and outsourcing.

Institutions are increasingly beholden to opaque algorithms and third-party platforms that strip faculty of agency and students of privacy. Assessment becomes analytics. Learning becomes labor. And the metrics these systems produce—completion rates, engagement data—are as easily manipulated as they are misunderstood.

Far from democratizing education, EdTech has helped turn it into a digital panopticon, where every click is monetized, and every action is tracked.

Myth #3: The Digital Campus as a Public Good

Universities love to claim that their digital campuses are open and inclusive. But in truth, access is restricted, commercialized, and disappearing.

Libraries are gutted. Archives are defunded. Publicly funded research is locked behind publisher paywalls. Historical documents, administrative records, even syllabi are now ephemeral—stored on private platforms, subject to deletion at will. The digital campus is a gated community, and the public is locked out.

Third-party vendors now control what students read, how they’re taught, and who can access the past. Memory is no longer a public good—it is a leased service.

Greed, Cheating, and Digital Amnesia

This is not simply a story about decay—it is a story about cheating. Not just by students, but by institutions themselves.

Colleges cheat by manipulating data to mislead accreditors and prospective students. OPMs cheat by obscuring their contracts and revenue-sharing models. Robocolleges cheat by prioritizing growth over learning. And all of them cheat when they hide the truth, delete the data, or suppress the whistleblowers.

Faculty are silenced through non-disclosure agreements. Archivists are laid off. Historians and librarians are told to “streamline” and “rebrand” rather than preserve and inform. The keepers of memory are being dismissed, just when we need them most.

Myth as Memory Hole

The Digital Dark Ages are not merely a result of failing tech—they are the logical outcome of a system that values profit over truth, optics over integrity, and compliance over inquiry.

Greed isn’t incidental. It’s the design. And the myths propagated by robocolleges, OPMs, and traditional universities alike are the cover stories that keep the public sedated and the money flowing.

American higher education once aspired to be a sanctuary of memory, a force for social mobility, and a guardian of public knowledge. But it is now drifting toward becoming a black box—a mythologized, monetized shadow of its former self, accessible only through marketing and controlled by vendors.

Without intervention—legal, financial, and intellectual—we risk becoming a society where education is an illusion, memory is curated, and truth is whatever survives the deletion script.

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Sources and References:

• Savage Inequalities, Jonathan Kozol

• Tressie McMillan Cottom, Lower Ed

• Christopher Newfield, The Great Mistake

• Nancy MacLean, Democracy in Chains

• U.S. Department of Education archives (missing Gainful Employment data)

• “Paywall: The Business of Scholarship” (2018)

• SPARC (Scholarly Publishing and Academic Resources Coalition)

• Internet Archive reports on digital preservation

• ProPublica and The Century Foundation on OPMs and robocolleges

• Faculty union reports on librarian and archivist layoffs

• Inside Higher Ed and The Chronicle of Higher Education coverage of data manipulation, robocolleges, and institutional opacity

From EdTech Darling to Distressed Asset — A Post-Bankruptcy Autopsy

The fall of 2U, once a poster child of education technology innovation, is a cautionary tale for investors, policymakers, and students alike. After riding a wave of optimism in the online education bo-m, the company declared Chapter 11 bankruptcy in mid-2024, emerging weeks later as a privately held firm now controlled by distressed asset investors. While many of the company’s top executives have been replaced or reshuffled, the story is far from over—and the damage done to public trust in university–edtech partnerships remains.

Founded in 2008 and based in Lanham, Maryland, 2U positioned itself as a premier Online Program Manager (OPM), contracting with top-tier universities to run their online degree programs. By 2019, the company was a billion-dollar operation, boasting partnerships with USC, Georgetown, and Yale. But cracks began to show as questions about cost, transparency, student outcomes, and aggressive recruiting practices became harder to ignore.

By 2023, 2U was bleeding cash, facing multiple lawsuits, regulatory scrutiny, and plummeting investor confidence. The final blow came when the company defaulted on over $450 million in debt. In July 2024, 2U entered and quickly exited Chapter 11 bankruptcy through a pre-packaged deal. The result: 2U is now a private company, with ownership largely transferred to distressed debt investors—Mudrick Capital Management, Greenvale Capital, and Bayside Capital (an affiliate of H.I.G. Capital).

These firms are known not for a commitment to education but for expertise in distressed asset recovery and aggressive restructuring. Mudrick Capital, for instance, made headlines for its role in the AMC “meme stock” frenzy. Bayside Capital has long operated in the shadows of high-risk debt markets, favoring fast-moving deals in stressed financial environments. Greenvale Capital, a lesser-known but analytically rigorous hedge fund, rounds out the group.

Following the takeover, 2U appointed Kees Bol as its new CEO and installed Brian Napack—a veteran of the education sector and former CEO of Wiley—as Executive Chairman of the Board. Whether this new leadership can turn 2U around remains unclear. For now, they are signaling a pivot toward non-degree credentials and corporate upskilling markets, away from costly master’s degree programs that saddled students with debt and poor returns.

But 2U’s shift is not merely a business story. Its implosion exposes broader flaws in the higher education–tech ecosystem. OPMs like 2U operated in a legal gray area, exploiting Title IV federal student aid without direct regulatory oversight. Critics, including lawmakers and consumer protection advocates, argue that these firms served more as enrollment mills than academic partners. The Department of Education’s efforts to rein in the industry through “bundled services” guidance and potential Gainful Employment rules came too late to prevent massive financial fallout.

The universities that partnered with 2U are also complicit. Many ceded control of curriculum design, admissions, and marketing to a for-profit company in exchange for a share of the revenue. In doing so, they risked their reputations—and in some cases, knowingly funneled students into programs with dubious value. These relationships, many of which are still active, should now be reexamined in light of 2U’s restructuring.

Students who enrolled in these programs, often with the promise of career advancement and elite credentials, are left with debt and degrees that may not deliver the expected return. As 2U retools its strategy under the control of financial firms, it's unclear whether these students—or future ones—will benefit at all.

Meanwhile, the venture capitalists and financial engineers behind the scenes have already cashed out or secured their positions in the restructured entity. Like so many stories in the for-profit education sector, 2U’s downfall was not just predictable—it was profitable for those who knew how to play the system.

Have you worked with 2U—or been affected by it?

The Higher Education Inquirer is continuing its investigation into 2U and the wider online program management (OPM) industry. If you are a former or current employee of 2U, Trilogy Education, EdX, or a related company, a university staff or faculty member who collaborated with 2U, a student or graduate of a 2U-powered program, a marketing contractor, admissions specialist, or vendor affiliated with 2U or its partners, or someone with knowledge of the company's restructuring or operations—we want to hear from you.

We are especially interested in experiences involving enrollment pressure tactics, misleading marketing, internal operations, financial mismanagement, compliance concerns, and revenue-sharing agreements with universities. If 2U’s collapse or restructuring affected your job, finances, or education, your story matters.

You can share information confidentially by contacting us at gmcghee@aya.yale.edu. Anonymity will be protected upon request.

Defunding Public Media and the Dumbing Down of the United States of America

In the summer of 2025, as political battles raged over spending priorities, the Trump administration quietly moved to strip federal funding from the Corporation for Public Broadcasting (CPB), which helps sustain PBS and NPR. The justification? Cost-cutting and “eliminating liberal bias.” But beneath the surface, the defunding of public media is part of a much larger and more troubling trend: the deliberate degradation of public knowledge and critical thinking in the United States.

While elites send their children to private schools and consume high-quality journalism behind paywalls, the American public is being left with infotainment, partisan outrage, and algorithm-driven misinformation. Public broadcasting—though imperfect—has long served as one of the few accessible sources of educational content, cultural programming, and fact-based journalism available to all. Its erosion is a symbolic and practical blow to civic literacy in a country already struggling with basic educational attainment.

A Nation Struggling with Literacy

According to the U.S. Department of Education and the National Center for Education Statistics, only about half of U.S. adults read above a sixth-grade level. The OECD’s Programme for the International Assessment of Adult Competencies (PIAAC) has also found that nearly 20% of U.S. adults perform at or below the lowest levels of literacy and numeracy, placing the U.S. behind many other developed countries in basic skills.

A 2020 Gallup report estimated that low levels of literacy cost the U.S. economy more than $200 billion annually in lost productivity, wages, and tax revenue. Yet funding for adult education, public libraries, and public broadcasting continues to shrink—even as disinformation spreads faster and wider.

Who Benefits from a Dumbed-Down Public?

As the Higher Education Inquirer has documented in its reporting on for-profit education, digital credential mills, and the student debt crisis, the American knowledge economy is deeply stratified. Access to high-quality information, critical discourse, and even basic educational tools is increasingly a function of wealth and geography.

The defunding of NPR and PBS aligns with other coordinated efforts to dismantle public goods: the closure of public libraries, the corporatization of public universities, and the privatization of K-12 education through charter networks and voucher programs. These moves benefit private equity, edtech entrepreneurs, and ideological actors who profit when the public cannot think critically or access reliable information.

Far-right activists have long targeted public media as an enemy, not because it is radical, but because it provides a baseline of factual reporting that challenges misinformation and offers cultural programming outside the commercial marketplace. As trust in mainstream institutions declines, the vacuum is filled by influencers, conspiracy theorists, and partisan content creators—many of whom now dominate online spaces where public discourse once lived.

The Role of Public Media in Civic Life

PBS and NPR have historically played an important role in fostering civic engagement and lifelong learning. Shows like Frontline, Nova, NewsHour, and Morning Edition offered context and depth not found on commercial networks. Educational programming for children, such as Sesame Street and Arthur, supported early literacy and social development, particularly for families without access to high-quality preschool.

The attack on public media is, therefore, not just about money. It is about erasing a platform for critical inquiry and shared public knowledge. In many rural communities, public radio is still the most consistent, nonpartisan news source. Removing federal support won’t just weaken these outlets—it may silence them entirely.

A Broader War on Intelligence

This latest move fits within a broader campaign to delegitimize expertise, suppress academic freedom, and dismantle public education. As we reported in “Socrates in Space: University of Austin and the Billionaire Pipeline,” there’s a concerted effort by political operatives and billionaires to replace traditional knowledge institutions with ideologically-aligned alternatives.

The result is a country in which millions lack the literacy to read a ballot initiative, interpret a news article, or understand a contract—and where those with access to capital can shape the discourse while the rest are locked out.

In this environment, public media is not simply an institution—it is a last line of defense.

Consolidating Informational Power

The defunding of PBS and NPR is not an isolated event. It is part of a systemic effort to dismantle civic infrastructure, suppress critical thinking, and consolidate informational power in the hands of the wealthy and the politically connected. In a country where half the adult population cannot read beyond a sixth-grade level, eliminating access to high-quality, accessible programming is not just negligent—it is a form of engineered ignorance.

The Higher Education Inquirer will continue to investigate the erosion of public knowledge and its consequences. If you have stories about media access, censorship, or attacks on public institutions in your community, contact us at gmcghee@aya.yale.edu..

Sources:

• U.S. Department of Education, National Center for Education Statistics (NCES), “Adult Literacy in the United States,” 2020

• OECD, “Skills Matter: Further Results from the Survey of Adult Skills (PIAAC),” 2016

• Gallup, “Assessing the Economic Gains of Eradicating Illiteracy Nationally and Regionally in the United States,” 2020

• Corporation for Public Broadcasting (CPB), Budget History

• Pew Research Center, “News Consumption Across Social Media in 2023”

• Higher Education Inquirer, “Socrates in Space: University of Austin and the Billionaire Pipeline,” 2024

• Higher Education Inquirer, “The 2U-PAC Nexus,” 2025

Trump Signs Crypto Bill: A Gateway to Corruption and Financial Oppression

On July 17, 2025, Donald Trump signed into law the “American Digital Freedom Act,” a sweeping piece of legislation that federalizes and deregulates cryptocurrency markets in the United States. While hailed by supporters as a victory for innovation and financial autonomy, the new law is more accurately understood as a major victory for crypto billionaires, libertarian think tanks, and political operatives seeking to reshape American financial life with minimal public accountability.

This bill, which strips oversight powers from the Securities and Exchange Commission (SEC) and restricts consumer protections, was heavily influenced by the cryptocurrency lobby. It legitimizes risky, unregulated financial products, undermines state enforcement power, and further embeds private power into public infrastructure. Far from delivering financial freedom to everyday Americans, this law opens the door to unprecedented corruption and control, continuing a pattern long warned about in the pages of the Higher Education Inquirer.

Echoes of Student Debt, EdTech Fraud, and Neoliberal Capture

In our May 2025 article, "How the New Cryptocurrency Bill Could Open the Door to Corruption and Control," we warned that the crypto bill was less about democratizing finance and more about creating new extractive markets. As with the for-profit college industry, the gigification of academic labor, and the student loan crisis, the crypto sector markets itself to the financially desperate, the underemployed, and the debt-burdened.

Cryptocurrency platforms promise opportunity and empowerment, just as subprime for-profit colleges did during the early 2000s. Instead, they profit from volatility, speculation, and financial illiteracy. The collapse of companies like FTX and the unraveling of various "blockchain for education" experiments—like those pitched by Minerva, 2U, and Lambda School—should have served as a warning. Instead, the American Digital Freedom Act enshrines their business models into law.

From Financial Risk to Political Weapon

While proponents describe the law as a pro-innovation framework, the political context suggests otherwise. The crypto bill was pushed through by some of the same operatives behind efforts to weaken the Department of Education, dismantle Title IX protections, and privatize public universities. The legislation also dovetails with Trump-aligned plans to create “digital citizenship” systems linked to financial identity—a move critics argue could be used to surveil and suppress dissent.

By reducing AML (Anti-Money Laundering) standards and weakening Know Your Customer (KYC) rules, the new law also makes it easier for dark money to enter U.S. elections and political campaigns. The line between crypto lobbying, national security risks, and voter manipulation is already blurred—and this legislation will only accelerate the trend.

As the Higher Education Inquirer, there is a growing convergence of tech capital, deregulated finance, and political ideology that promotes “freedom” while gutting accountability. The crypto bill fits squarely within this pattern.

Targeting the Dispossessed

The communities that will bear the brunt of the consequences are already stretched thin: working-class students drowning in loan debt, unemployed graduates with useless credentials, and gig workers living paycheck to paycheck. These are the same groups now being told that speculative crypto investments are their only shot at economic mobility.

It’s no surprise that crypto apps are targeting community college students, veterans, and underbanked populations with gamified interfaces and referral incentives—echoing the same predatory logic as diploma mills. Instead of building generational wealth, these platforms often lock users into a new form of digital serfdom, driven by data extraction and monetized hype.

The Long Game of Financialized Authoritarianism

The Higher Education Inquirer has consistently highlighted the dangers of unregulated private capital colonizing public institutions. Whether through for-profit colleges, hollow credential marketplaces, or now unregulated crypto markets, the pattern is the same: promise empowerment, deliver exploitation, and consolidate power.

The crypto bill signed by Trump is not an end—it is a gateway. A gateway to a political economy where finance, tech, and politics are indistinguishable, and where the price of dissent may be counted not only in speech, but in digital wallets and blockchain-based reputations.

We will continue reporting on the consequences of this legislation—especially where it intersects with higher education, student debt, and the erosion of democratic infrastructure. If you’ve been affected by crypto scams in academic settings or targeted by blockchain-backed “innovation” schemes, we want to hear from you.

Sources:

• “How the New Cryptocurrency Bill Could Open the Door to Corruption and Control,” Higher Education Inquirer, May 2025

• “Socrates in Space: University of Austin and the Billionaire Pipeline,” Higher Education Inquirer, July 2024

• U.S. Congressional Record, July 17, 2025

• CoinDesk, “Trump Signs Historic Crypto Deregulation Bill,” July 2025

• Public Citizen, “Crypto Lobby’s Push to Rewrite U.S. Law,” June 2025

• SEC Chair Gary Gensler’s Remarks, April–June 2025

• Financial Times, “Digital Authoritarianism and Financial Surveillance,” May 2025

The Enshitification of Higher Education in the United States

Cory Doctorow’s theory of enshitification—originally coined to describe how digital platforms decay over time—perfectly captures the grim evolution of U.S. higher education. Institutions that once positioned themselves as public goods now exist primarily to sustain themselves, extracting revenue, prestige, and labor at the expense of students, faculty, and the broader public.

In the post–World War II era, higher education in the United States was broadly seen as a driver of social mobility, economic growth, and democratic citizenship. The GI Bill and substantial state funding opened college doors to millions. Tuition at public institutions was minimal or nonexistent. Academic freedom, faculty governance, and research for the common good were foundational ideals.

By the 1980s, neoliberal policies began to reshape the higher education landscape. Public disinvestment led institutions to rely more heavily on tuition, philanthropy, corporate partnerships, and student debt. Universities became more bureaucratic and brand-conscious. Students were reframed as consumers, and education as a commodity. Faculty positions gave way to underpaid adjunct labor, and Online Program Managers like 2U, Academic Partnerships (aka Risepoint) and Kaplan emerged to monetize digital learning. Marketing budgets ballooned. Classrooms and research labs became secondary to enrollment targets and revenue generation.

A 2019 Higher Education Inquirer report revealed how elite universities joined the downward spiral. Institutions like Harvard, Yale, and USC outsourced online graduate programs to 2U, employing aggressive recruitment tactics that resembled those of discredited for-profit colleges. Applicants were encouraged to take on excessive debt for degrees with uncertain returns. Whistleblowers likened it to fraud-by-phone—evidence that even the most prestigious universities were embracing an extractive model.

Doctoral education offers a deeper glimpse into how enshitification has hollowed out academia. Sold as a noble pursuit of truth and a path to secure academic employment, the Ph.D. has become, for many, a journey into economic instability, psychological distress, and underemployment. Only a small percentage of doctoral students land tenure-track jobs. Graduate schools continue to admit far more students than they can responsibly support, while providing little preparation for careers outside academia. Mentorship is often lacking, and financial support is frequently inadequate. Many graduate students rely on food pantries, defer medical care, or take on gig work just to survive. Meanwhile, universities benefit from their labor in teaching and research.

International graduate students face even steeper challenges. Promised opportunity, they instead encounter a saturated job market, low wages, and immigration precarity. Their labor props up U.S. research and rankings, but their long-term prospects are often bleak.

The rise of career-transition consultants—like Cheeky Scientist and The Professor Is In—has become a booming cottage industry, a byproduct of the failed academic job pipeline. For most Ph.D.s, what was once considered “alternative academia” is now the only path forward.

Financial hardship compounds the crisis. Graduate stipends in many programs are far below local living wages, especially in high-cost cities like San Francisco, Boston, or New York. Few programs provide retirement benefits or financial literacy resources. The financial toll of earning a doctorate is often hidden until students are years deep into their programs—and years behind in wealth accumulation.

Meanwhile, university medical centers—often affiliated with elite institutions—offer a parallel example of institutional enshitification. These hospitals have long histories of exploitation, particularly of poor and minority patients. Even today, these facilities prioritize affluent patients and donors, while relying on precariously employed staff and treating marginalized communities as research subjects. The disparities are systematic and ongoing. The rhetoric of innovation and healing masks a legacy of racial injustice and extractive labor practices.

Legacy admissions further entrench inequality. While race-conscious admissions have been rolled back, legacy preferences remain largely untouched. They serve to maintain elite networks, ensuring that wealth and access remain intergenerational. These policies not only contradict the rhetoric of meritocracy but also deepen structural inequities in the name of tradition.

Today, higher education serves itself. Institutions protect billion-dollar endowments, award executive salaries in the millions, expand sports programs and real estate portfolios, and depend on underpaid faculty and indebted students. Campuses are rife with inequality, surveillance of student protest, and performative gestures of inclusion, even as DEI initiatives are gutted by state governments or internal austerity.

The consequences are clear. Enrollment is declining. Campuses are closing. Faculty are being laid off. Public trust is eroding. And even elite institutions are feeling the strain. Doctorow’s theory suggests that once a system has fully enshittified, collapse becomes inevitable. The College Meltdown is not hypothetical—it’s here.

And yet, collapse can be a beginning. Higher education must be radically reimagined: public investment, tuition-free education, student debt relief, labor protections, honest admissions policies, and genuine democratic governance. The alternative is more of the same: a system that costs more, delivers less, and cannibalizes its future to feed its prestige economy.

---

Selected Sources

Caterine, Christopher L. Leaving Academia: A Practical Guide. Princeton University Press, 2020.

Cassuto, Leonard. The Graduate School Mess: What Caused It and How We Can Fix It. Harvard University Press, 2015.

Kelsky, Karen. The Professor Is In: The Essential Guide to Turning Your Ph.D. into a Job. Three Rivers Press, 2015.

Roberts, Emily. Personal Finance for Ph.D.s. https://www.pfforphds.com

Shaulis, Dahn. “2U Expands College Meltdown to Elite Universities.” Higher Education Inquirer, Oct. 4, 2019. https://www.highereducationinquirer.org/2019/10/college-meltdown-expands-to-elite.html

Shaulis, Dahn. “The Dark Legacy of Elite University Medical Centers.” Higher Education Inquirer, Mar. 13, 2025. https://www.highereducationinquirer.org/2025/03/the-dark-legacy-of-elite-university.html

Doctorow, Cory. “TikTok's Enshittification.” Pluralistic.net, Jan. 21, 2023. https://pluralistic.net/2023/01/21/potemkin-ai/

American Association of University Professors. Annual Report on the Economic Status of the Profession, 2023. https://www.aaup.org

National Student Clearinghouse Research Center. Current Term Enrollment Estimates, 2024. https://nscresearchcenter.org

Newfield, Christopher. The Great Mistake: How We Wrecked Public Universities and How We Can Fix Them. Johns Hopkins University Press, 2016.

Goldrick-Rab, Sara. Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream. University of Chicago Press, 2016.

Roth, Gary. The Educated Underclass: Students and the Promise of Social Mobility. Pluto Press, 2019.

Teen Vogue. “The Movement Against Legacy Admissions.” Jan. 2, 2025. https://www.teenvogue.com/story/movement-against-legacy-admissions

The Guardian. “‘Affirmative Action for the Privileged’: Why Democrats Are Fighting Legacy Admissions.” Aug. 11, 2023. https://www.theguardian.com/education/2023/aug/11/college-legacy-admissions-affirmative-action-democrats

Wake Forest and Kaplan: Selling Prestige in a Predatory Credential Market

Wake Forest University, a private institution with a proud 185-year history, has long marketed itself as a place for ethical leadership and elite scholarship. But its recent partnership with Kaplan—an infamous name in for-profit education and test prep—raises serious questions about the erosion of academic integrity and the corporatization of American higher education.

Wake Forest’s online offerings, now delivered in collaboration with Kaplan, are dressed in glowing promotional language. Prospective students are promised access to “a global network of 80,000+ alumni,” “1-on-1 guidance from a dedicated Student Success Manager,” and a curriculum shaped by “a Program Advisory Board of diverse business leaders.” The university assures working professionals that they can “earn a 100% online master’s degree or graduate certificate” on their own terms, with a “streamlined admissions process” and “flexible courses.”

But strip away the buzzwords and what’s left is a degree-granting operation outsourced to a for-profit education company with a controversial legacy. Kaplan, now owned by Graham Holdings (formerly the parent company of The Washington Post), has been at the center of lawsuits, regulatory scrutiny, and allegations of exploitative practices in its higher ed ventures—including its role in managing Purdue Global, formerly Kaplan University. The company has a long history of targeting vulnerable populations—especially working-class adults—with high-cost, low-value credentials that often don’t lead to the promised career outcomes.

So why is Wake Forest—an elite university with a storied reputation—collaborating with Kaplan?

The answer is simple: profit and scale.

In an era when even wealthy private universities are looking to expand their revenue streams, online education has become a lucrative frontier. But building and managing online degree programs in-house requires serious investment, time, and expertise. Enter Kaplan, which provides the infrastructure, marketing, enrollment management, and student support—all in exchange for a share of the revenue.

What does this mean for students?

It means that Wake Forest’s name is now being used to sell online degrees to mid-career professionals under the promise of prestige, convenience, and upward mobility—without the full intellectual, cultural, or communal experience that Wake Forest once symbolized. The degrees may bear the Wake Forest seal, but they are increasingly indistinguishable from the mass-produced credentials churned out by dozens of other universities that have sold access to their brands through partnerships with Online Program Managers (OPMs) like Kaplan, 2U, Wiley, and Coursera.

The “1-on-1 Student Success Manager” may sound supportive, but in practice these positions are often little more than call center roles staffed by Kaplan employees trained to ensure retention and upsell future courses—not to engage in meaningful academic mentorship.

The curriculum may be “developed and led by recognized faculty and industry experts,” but in many cases these are adjunct instructors or contract workers who have limited interaction with students and little say in the structure or pedagogy of the courses. This model contributes to the broader exploitation of contingent academic labor—an issue Wake Forest, like many elite universities, prefers not to discuss.

And the promise of becoming a leader “from anywhere” with a Wake Forest SPS degree? That too should be questioned. These degrees exist in an increasingly saturated credential market where employers are skeptical, return on investment is uncertain, and students often find themselves saddled with debt and disappointment.

If Wake Forest were truly committed to ethical leadership, it would take a hard look at the implications of commodifying its brand through a partnership with a company like Kaplan. Instead, it has chosen to chase market share and tuition revenue at the expense of its academic credibility—and at the risk of misleading students who believe they’re buying into the full Wake Forest experience.

The truth is this: Wake Forest is selling the illusion of prestige, wrapped in a glossy brochure of online convenience and corporate optimism. In reality, it’s another cog in a profit-driven machine that markets higher education as a product rather than a public good. And that’s not transformative change. That’s business as usual in the credential economy.

Robocolleges vs. Public Universities: Debt, Dropouts, and a Fraying Future

As the landscape of American higher education continues to shift, the divide between public universities and tech-heavy “robocolleges” has grown increasingly apparent. Once promoted as affordable and innovative, robocolleges are now under scrutiny for fostering high student debt and low graduation rates.

These institutions prioritize automation, outsourcing, and marketing over traditional teaching models, often sidelining academic integrity in favor of scalability.

Comparing Outcomes: Public Universities vs. Robocolleges

Feature	Public Universities	Robocolleges (e.g., for-profit/online-heavy)
Average Student Debt	~$18,350 at graduation	~$29,000 or higher
Graduation Rates	~60% for full-time students	Often below 30%
Support Services	Academic advising, tutoring, career centers	Often outsourced or minimal
Faculty Interaction	In-person, tenured professors	Automated systems or adjuncts
Cost Efficiency	Lower tuition, especially in-state	Higher cost per credit hour
Outcomes	Better job placement and earnings potential	Mixed results, often lower ROI

Sources: National Center for Education Statistics; Higher Education Inquirer research

Who Are the Robocolleges?

The following institutions have been identified by the Higher Education Inquirer as leading examples of the robocollege model:

• Liberty University Online: A nonprofit institution with massive online enrollment and over $8 billion in federal student loan debt, especially at the graduate level.

• Southern New Hampshire University (SNHU): With more than 160,000 online students, SNHU has become a leader in automation and AI-driven instruction.

• University of Phoenix: Once the largest for-profit college, now operating as a nonprofit affiliate of the University of Idaho. It has reduced instruction and services by $100 million annually while maintaining high profits.

• Colorado Technical University (CTU): Known for its use of machine learning and data analytics to manage student advising and engagement.

• Purdue University Global: A public university operating a former for-profit model, with deep ties to Kaplan Education and significant outsourcing.

• University of Arizona Global Campus (UAGC): Formerly Ashford University, now part of the University of Arizona system. It offers accelerated online degrees with limited faculty interaction.

The Robocollege Model

These schools rely on automated learning platforms, outsourced services, and aggressive marketing to attract students—often working adults, veterans, and low-income learners. While they promise flexibility and access, critics argue they deliver shallow curricula, minimal support, and poor job placement.

The Consequences

Many students leave robocolleges with significant debt and no degree to show for it. Partnerships with Online Program Managers (OPMs) like 2U and EducationDynamics have drawn criticism for deceptive recruitment practices and inflated costs. Public confidence in higher ed is eroding, and students are increasingly seeking alternative routes to meaningful work.

What’s Next?

As tuition costs rise and outcomes falter, the Higher Education Inquirer will continue investigating whether robocolleges represent a legitimate future for learning—or a cautionary tale of commercialized education gone awry.

John Katzman · Founder & CEO, Noodle (Ed on the Edge)

John Katzman is the founder and CEO of Noodle. Prior to Noodle, he founded and ran 2U, which is also involved in online learning, and The Princeton Review, which helps students find, get into, and pay for higher ed. ‍Katzman is the co-author of five books and has served as a director of several for- and non-profits, including Carnegie Learning, Renaissance Learning, the National Association of Independent Schools, the Institute for Citizens & Scholars, and the National Alliance of Public Charter Schools.

 

AFT President Selling Out to Edtech?

American Federation of Teachers (AFT) President Randi Weingarten is scheduled to speak at the upcoming ASU-GSV summit. For 16 years, the conference has been a space for those in edtech to hype their ideas, both good and bad.  We have noted a few of these bad ideas from bad actors over the years, to include 2U, Guild, and Ambow Education. 

Given Weingarten's track record as President of AFT, we don't expect much from her in terms of speaking truth to power. There are many people in edtech that Weingarten should criticize at the summit. But she is too much of a politician to do such a thing when it is needed.  

Weingarten has been the President of AFT since 2008, a union with about 1.7 million members across the US. While AFT has had some victories, those victories were won by the rank-and-file and the hard work of AFT organizers, not due to the actions of Weingarten. With numbers that large, AFT could pose as a serious presence at demonstrations in DC and across the nation. They have done that, when they had to, but not when other folks' lives were at stake. 

In 2013, while Weingarten was President of AFT, we recommended that the union use its clout to tell teachers' pension programs and state retirement funds from investing in for-profit colleges like Corinthian Colleges, Education Management Corporation, ITT Tech, and the University of Phoenix. They refused. We have not forgotten how AFT was unwilling to defend consumers, student debtors, and retirees. 

Since that time, AFT has done little to defend folks against subprime robocolleges and online program managers like 2U and Academic Partnerships/Risepoint when they certainly needed to call them out. And now their ranks are full of educators and administrators with marginal online degrees.

HEI Continuing Investigations Include SEC FOIA Requests

The Higher Education Inquirer has recently sent Freedom of Information (FOIA) requests to the US Securities and Exchange Commission (SEC) regarding two edtech companies, 2U and Ambow Education.  In both cases, we have requested the number of SEC complaints lodged against these corporations.  

2U has dealt with a number of shareholder lawsuits, starting in 2019. In 2024, the online program manager for elite universities went through Chapter 11 bankruptcy and was delisted by the NASDAQ.  The FOIA is 25-01645. We are requesting a count of the number of complaints made against 2U since 2016.

Ambow Education has also had financial problems over the years and we have documented some of these problems since 2022.  One of its two US schools, Bay State College, was closed in 2023.  The FOIA is 25-01633. We are requesting a count of the number of complaints made against Ambow since 2010.

Tech Investor Cathie Wood Bets Big on Crypto

Cathie Wood, once the largest shareholder in 2U with ARK Invest, is also a major crypto investor. Wood believes that Bitcoin could top $1M by 2030. With US government guardrails weakened in the coming months, it should be interesting to watch the crypto boom and what happens after that, not just in the economy, but in society. Schools like the Kellogg Institute at Notre Dame have written positively about the use of crypto, discussing the downsides as an afterthought. The Wharton school has been accepting crypto since 2021. 

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.

Related links:

“A Perverse Outcome”: Advocates Warn that 2U Bankruptcy Could Protect Executives at Students’ Expense (Student Borrowers Protection Center). 

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)

More Layoffs at 2U, the Online Program Manager for Elite Universities

2U, the parent company of edX, has announced more layoffs today. The layoffs were announced to staff and it's not known yet whether they will be publicly reported. It appears that many of the cuts will come from edX bootcamps which may be closing by June 2025. 

2U filed for bankruptcy earlier this year and the bankruptcy was approved by the U.S. Bankruptcy Court for the Southern District of New York on September 9th. Mudrick Capital Management is currently involved in the turnaround plan. 

According to David Halperin, the edtech company may also be the subject of investigations by the Federal Trade Commission and California Attorney General.

2U is the online program manager for a number of elite universities, including Harvard, Yale, MIT, and the University of California. Some of the programs have been the subject of public scorn by consumers who claim they were defrauded. HEI has been investigating 2U since 2019. The Wall Street Journal has also investigated 2U and written several critical stories. 

edX promises career support to people who sign up for bootcamps. But what happens when the bootcamps close?    

Related links:

FTC and California AG Have Been Investigating Online College Provider 2U (David Halperin) 

Workers at 2U expect more layoffs in 2024 

2U Collapse Puts Sallie Mae and SLABS Back on the Radar (Glen McGhee)

2U Suspended from NASDAQ. Help for USC and UNC Student Loan Debtors.

2U Declares Chapter 11 Bankruptcy. Will Anyone Else Name All The Elite Universities That Were Complicit?

HurricaneTWOU.com: Digital Protest Exposes Syracuse, USC, Pepperdine, and University of North Carolina in 2U edX Edugrift

2U-edX crash exposes the latest wave of edugrift

2U Virus Expands College Meltdown to Elite Universities

Buyer Beware: Servicemembers, Veterans, and Families Need to Be On Guard with College and Career Choices

EdTech Meltdown

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

FTC and California AG Have Been Investigating Online College Provider 2U (David Halperin)

Struggling online program management operation 2U has this year been under investigation by both the Federal Trade Commission and California’s attorney general, filings in federal bankruptcy court reveal.

Maryland-based 2U, which has faced scrutiny and lawsuits over alleged deceptive practices and has struggled with heavy debt, filed for Chapter 11 bankruptcy in federal court in Manhattan in July. The company emerged from bankruptcy on September 13, after a federal court approved its restructuring plan, but not before at least two filings in the case indicated that the FTC and the California AG are probing the company.

The very last page of a 128-page filing that 2U’s lawyers submitted in the bankruptcy case on September 4 notes that the FTC and California’s AG requested language in the court’s proposed order “that explicitly preserves governmental claims.”  Since there are apparently no contractual or business ties between 2U and the FTC or the California AG, the governmental claims almost certainly relate to a law enforcement request or investigation that could potentially result in penalties or judgments against the company. The notation indicates that 2U reached agreement with the federal and state law enforcement agencies that their claims would not be voided by the proposed bankruptcy restructuring.

Similarly, a September 23 filing includes an extensive list of 2U’s creditors — entities that may be owed money by the company. One entity on that list is “UNITED STATES FEDERAL TRADE COMMISSION” and the contact listed is the email address for Kimberly Nelson, an attorney in the FTC’s enforcement division, the branch, within the FTC’s Bureau of Consumer Protection, that investigates and brings actions against companies for deceptive and unfair business practices. (The California attorney general’s office does not appear on that particular list of creditors.)

An FTC spokesperson declined to comment. A spokesperson for the California Department of Justice emailed a statement saying, “To protect its integrity, we’re unable to comment on, even to confirm or deny, a potential or ongoing investigation.”

2U did not respond to a request for comment. 

David Vladeck, a former director of the FTC’s Bureau of Consumer Protection, told me today that he “can’t imagine any other reason” that the FTC and the California AG would appear in these bankruptcy documents other than that those agencies were “looking at” 2U. “The FTC often gets involved when a company under investigation is in bankruptcy,” Vladeck said. “I think it is absolutely fair to say that the FTC and the California AG are investigating this company.” 

Vladeck also said that, at least when he was at the FTC (from 2009 to 2012), a vote of the FTC commissioners would have been required to authorize commission lawyers to submit a filing in a bankruptcy case that would disclose a potential investigation of a company. 

Until its reorganization became effective on September 23, 2U was a publicly-traded company, and therefore was required to report significant events, such as the existence of a federal or state law enforcement investigation, in public filings to the Securities and Exchange Commission. I can’t, however, find any reference to an FTC or California AG investigation in 2U’s SEC filings this year. Company practices regarding an SEC disclosure threshold vary, and I don’t know if the FTC and California AG communications with 2U were of sufficient magnitude that they should have triggered such a reporting obligation for 2U. 

2U has long been a leader in the OPM space, partnering with colleges and universities to offer programs online. As of earlier this year, more than 67,000 students were enrolled in 2U programs, including more than 43,000 pursuing degrees at programs branded by public and private colleges. But advocates and students charge that 2U has offered low-quality programs using deceptive marketing and recruiting, often misleading students into thinking they are interacting with personnel of a well-known school rather than 2U employees.

In February, 2U had warned in Securities and Exchange Commission filings that it may not be able to stay in business. Yet in March, the company approved nearly $5 million in bonuses for a handful of top executives, including $2.3 million for CEO Paul Lalljie.

[Editor's note: This article originally appeared on Republic Report.] 

The Admissions Game

History and Structure of Selective Admissions

Folks are not privy to the inner workings of admissions, especially at elite and brand name schools.  The College Admissions Scandal (aka Varsity Blues) gave us a small window into this structure, but that story will soon be forgotten. And it only touched the surface of how the system works for some and not for others.   

What little the public has access about selective admissions can be found in a few historical and sociological sources, like Craig Steven Wilder's Ebony and Ivy: Race, Slavery, and the Troubled History of America's Universities and William Domhoff's Who Rules America?: The Corporate Rich, White Nationalist Republicans, and Inclusionary Democrats in the 2020s. Books that are not best sellers or readily available in public libraries. 

The 400 year history of American higher education begins with selective admissions. From the 1600s to the 1860s, access was largely restricted to white, Anglo-Saxon Protestant male landowners, reflecting the societal norms of the time. A few Native American elites were forced into universities as tools of assimilation, colonization, and cultural erasure.

There were some notable exceptions. Georgetown, a Catholic college, was founded in 1789, and like other schools relied on enslaved people for labor.  For others, there were for-profit trade schools for bookkeeping, engineering and technical drawing. In 1836, the first women's college, Wesleyan College, was founded. 

Higher Education Segregation and the Morrill (Land-Grant Colleges) Act

In the 19th century, as the United States industrialized and urbanized, the concept of meritocracy began to take hold. However, this meritocracy was often defined narrowly, excluding women, people of color, religious minorities, and those from lower socioeconomic classes.

 

Elite colleges continued to favor students from wealthy families, often requiring them to pass entrance exams that tested knowledge of Latin and Greek, subjects typically studied at private preparatory schools. 

 

Separate colleges for African Americans were established. 

 

After the Civil War, opportunities opened up for other white males with the emergence of federal land grants that established state flagship universities. The state universities, were in fact, established on land stolen from indigenous nations. 

 

With a demand for more folks with degrees, degree mills also rose. 

The GI Bill and Civil Rights

The 20th century saw some progress in expanding access to higher education. The GI Bill, for example, provided educational benefits to male veterans, including many from marginalized backgrounds. However, systemic racism and sexism continued to limit opportunities for Black students and women. 

 

Diploma mills again sprang up, in response to this large influx of government funds.

 

It wasn't until the Civil Rights Movement of the 1960s that significant strides were made in desegregating higher education. And the first tribal college, Diné College, was established in 1968 by the Navajo Nation. 

Affirmative Action and DEI

Today, while elite colleges have become more diverse, they remain elite in nature, especially in terms of social class (wealth, power, prestige). The private school pipeline, legacy admissions, active recruiting, and the financial motivations of these institutions continue to perpetuate inequalities. Students from under-resourced schools and communities may still face significant barriers to admission, even with impressive academic records.

The admissions process at elite colleges and universities has become increasingly scrutinized in recent years. Critics argue that the system favors a select group of students, often from privileged backgrounds, while excluding others with equally impressive credentials. 

Feeder Schools: The Private School Pipeline

Private schools provide students with a distinct advantage in the college admissions process. These schools offer smaller class sizes, specialized resources, and extracurricular opportunities that can enhance a student's application. Private schools also have established relationships with admissions officers at top colleges, which can give their students an edge. This pipeline effectively funnels a disproportionate number of students from wealthy families into elite institutions.

Legacy Admissions

Legacy admissions, which give preference to applicants whose parents or grandparents attended the same college, further perpetuate the advantages of wealth and privilege. Studies have shown that legacy students are significantly more likely to be admitted to top schools, even when compared to non-legacy applicants with higher test scores and GPAs. This practice raises questions about meritocracy and equal opportunity in higher education.

Active Recruiting

Elite colleges engage in extensive recruiting efforts to attract top students. They often target high-achieving students at selective high schools and even travel internationally to scout talent. While this practice may seem beneficial, it can also reinforce existing inequalities. Students from under-resourced schools and communities may not have the same access to information and opportunities, making it difficult for them to compete in the admissions process.

International Students

Elite universities often attract students from developing countries who pay substantial tuition fees, contributing significantly to the universities' financial stability. Critics argue that this practice exploits the global education gap, as students from wealthier countries often have better access to quality higher education within their own nations. Additionally, the "brain drain" phenomenon, where talented individuals from developing countries migrate to developed nations for education and employment, can further exacerbate economic disparities. While universities may tout the benefits of cultural exchange and global citizenship, the economic incentives and power dynamics involved in international student recruitment raise concerns about the ethical implications of this practice.

The Profit Motive

It is important to acknowledge that elite colleges are businesses. They generate significant revenue from tuition, endowments, and other sources. Admissions practices, such as legacy preferences and active recruiting, can be seen as strategies to attract wealthy students who can contribute to the institution's financial bottom line. This raises concerns about whether the primary goal of these colleges is to provide a quality education or to maximize profits.  

 

Many elite schools, including Harvard and MIT, have also used online program managers like 2U to peddle certificates of questionable value. 

The Admissions Lottery 

While a "lottery mindset" isn't directly beneficial to elite universities in terms of increasing applications, it can indirectly impact the perception of the admissions process. As more and more qualified students apply to these institutions, the acceptance rate decreases, making it feel like a lottery. This perception can lead to several outcomes:

 
Increased Application Volume: Students may feel compelled to apply to a wider range of schools, including elite universities, increasing the overall application pool.

 
Early Decision Strategies: Students and parents may be more inclined to apply early decision to increase their chances, as it often has a higher acceptance rate.

Focus on Holistic Review: As the application pool grows, admissions officers may place greater emphasis on holistic review, considering factors beyond grades and test scores. This can benefit students with unique talents, experiences, or backgrounds.

However, it's important to note that a "lottery mindset" can also be detrimental. It can lead to increased stress and anxiety among applicants, as well as a sense of disillusionment with the college admissions process. Ultimately, while a lottery mindset may have some unintended consequences, it's essential to remember that college admissions is not solely a game of chance. Hard work, dedication, and a well-rounded application can significantly improve a student's chances of acceptance.