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Saturday, July 19, 2025

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.

Friday, October 4, 2019

2U Expands College Meltdown to Elite Universities

Related article: Education is a Racket

Related Article: Observations of the College Meltdown in Real Time

Related Article: Many People Saw The Crash Of A Billion Dollar EdTech Company Coming (Derek Newton, Forbes)

Related Article: TCF Analysis of 70+ University-OPM Contracts Reveals Increasing Risks to Students, Public Education

Related Article: How They (Online Graduate Programs) Get You (Katerina Manoff, The Atlantic)

Once restricted to for-profit colleges and community colleges, the College Meltdown has advanced to elite colleges like Harvard and Cal Berkeley. These schools have enormous firewalls (e.g. large endowments, strong alumni associations, and powerful donors), but that does not shield them from skepticism about overpriced online graduate degrees and certificates. Adam Looney at Brookings has already outed USC about their outrageously priced MSW program, but that's just one example. The collapse of 2U, the online program manager (OPM) for several elite colleges, exposes this subprime elite degree mess even more.

With 2U, we are not talking about subprime colleges like University of Phoenix or Purdue University Global, but prestigious schools like American University, Baylor University, George Washington University, Harvard University, Pepperdine University, Rice University, Syracuse University, University of California, Berkeley, University of North Carolina, University of Southern California, and Washington University.



"Steer clear for your own sanity"

Admissions Counselors at 2U perform work much closer to fraud telemarketing than "counseling." The volume bleeds the human element out of every phone call because you will constantly be striving to hit metrics and enrollment goals.

3) 2U programs are godawful expensive. For many programs, 2U also has multiple offerings for the same discipline, so ACs working for the more expensive option are often out of luck if a student is admitted to a cheaper competing program. Kinda hard to convince someone to take out 40k more in loans than they have to. You will be tacitly encouraged to manipulate students into taking on more debt just to meet your goal. They want you to do everything just shy of outright lying. Admissions is a breeding ground for exaggerated claims, half-truths, and lies by omission. In short, you will be kicking water uphill every day in this role, trying to meet laughably unrealistic targets made by leadership.

That's not even to touch on the sham "Core Values" 2U shoves down your throat. They literally have these values in neon tube lights on the walls in HQ. Now, of course every company has their own brand of BS, but 2U is insane about theirs. It is cult-like. People use the phrase “drink the Kool-Aid” unironically. Maybe it’s just me, but using the language of a mass s–c-de in a positive sense...doesn’t exactly sit right. Anyway, here are my thoughts on the core values.

1) ”Cherish every opportunity"–so long as you make 75 calls every day, annoying the heck out of people who just wanted a brochure about the program! Also, if someone has a low GPA or GRE scores and cannot help you meet your goal, that is not an opportunity, so don’t cherish it. This would be an accurate value if it said, "Cherish every opportunity that can make the company money. Forget everything else."

2) ”Be candid, honest, and open" —Honestly, for this one I might as well just post the prĂ©cis of the pending lawsuit against this company: “[2U] throughout the Class Period made false and/or misleading statements and/or failed to disclose that: (1) the Company faced increasing competition in online education and particularly regarding graduate programs; (2) the Company faced certain program-specific issues that negatively impacted its performance; (3) as a result, the Company’s business model was not sustainable; (4) the Company would slow its program launches; and (5) as a result, 2U’s public statements were materially false and misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.”

2U also doesn’t want you being “candid honest and open” with the students. Generally speaking, none of these students even know 2U exists, let alone that it gets a large chunk of their tuition money. You are lying by omission on every phone call, every time you send an email from your university email address. Students assume you are directly tied to the actual campus of the program you represent, because 2U spoofs the phone numbers, so every AC calling from say, Maryland, has an area code local to the school they are representing. Here's another hilarious thing: in September 2019, after mass firing 67 tenured employees and, again GETTING SUED BY ITS INVESTORS, 2U put out a "Framework for Transparency," which asserts, "2U has always publicly listed the degree and non-degree offerings we power," which, while technically true, is exactly the sort of PR/optics sophistry you should expect from this company. Yes, they list their university partners on their website. But at no point in an AC's correspondence with a prospective student is the name 2U ever brought up. Students would have to already know what an OPM is, and what 2U is for this "transparency" to actually do anything. As it stands, this Framework for Transparency looks to me like just another PR maneuver designed to give 2U rhetorical wiggle room to claim they’re being forthcoming while actually being the opposite.

3) ”Give a Damn!” – but not about all those poor schmucks with low GPAs who can't help you meet your goal.

4) “Relationships matter!” - remember where I said above they mass fired 67 employees one day? Yeah, they gave these people no notice– people who had been with the company for years, had helped build the business, and had bought into all of 2U's pompous, self-aggrandizing rhetoric about how they are "changing the world!" True believers, hard workers, in other words, fired en masse with no notice. These unfortunate individuals were literally called into an auditorium, let go, and informed “You’re welcome to work for the rest of the day if you want!”

5) “Don’t let the skeptic win!” — by which they mean don’t question anything or think for yourself, peon! Drink the Kool-Aid! DRINK IT I SAID! SHUT UP AND DRINK IT!!! HAVE YOU MADE YOUR DIALS FOR THE DAY YET?!

6) “Be bold and fearless” — I guess it was pretty bold and fearless to abruptly and callously fire a significant chunk of their loyal workforce, so kudos to 2U on this one. And it was pretty brazen to lie to their investors too. So, all right, I've give them this one.

7) “Make service your mission” — in other words, do good volunteer work and take pictures wearing 2U swag so we can take credit and get those sweet sweet PR social justice brownie points. 2U spends a lot of money promoting itself, getting named as a Great Workplace in magazines, maintaining this veneer that they are an ethical, socially conscious organization, when in reality, like most other companies, business is the first priority. Ethics and social consciousness are a very, VERY distant second. Actually, probably more like a very distant tenth or eleventh. This wouldn't even be annoying if they were just honest about it. I get it. A company exists and makes decisions solely to grow its business. So why does 2U seem to demand that its employees pretend otherwise?

8) “Have fun!” – you know the phrase “bread and circuses?” It means to generate public approval, not by excellence in public service or public policy but by diversion, distraction, or by satisfying the most immediate or base requirements of a populace— by offering a palliative: for example, food (bread) or entertainment (circuses). Thanks Wikipedia. Yeah, that is 2U’s main operating strategy. They do all these extravagant events, e.g. random dance parties in HQ, renting out Six Flags for Halloween, or flying everyone to some destination once a year for company meeting. Superficially these are nice, until you remember that these events are bonkers expensive, and that 2U will then lay off 67 people at a moment’s notice due to monetary concerns. I feel reasonably safe in saying those employees would rather have kept their jobs than gotten to see Flo-Rida live in concert. Moreover, the events, particularly company meeting, are basically thinly veiled attempts at brainwashing, stoking the CEO's messiah complex. They give a lot of ra-ra, gosh-aren’t-we-awesome speeches and make you stand in an auditorium chanting company slogans (again, DRINK THE KOOL-AID, SERF). They get great performers and speakers—Michelle Obama in 2018, for example—who lend specious legitimacy to 2U’s alleged mission and values, but are probably told nothing about the company beyond its claims of being "an innovative tech start up increasing accessibility in higher ed."

9) “Strive for excellence!” — in other words, light yourself on fire daily to keep the higher-ups warm. Break your back to carry the company.

In short, this company is an object lesson in disingenuous corporate doublespeak, bad faith business practices, and dogmatic, cultish conformity. Their core values are a bad joke, and if you are an independent thinker at all, you will not like it here. Also, for the record, I was not fired. I left of my own accord before all the firings and lawsuits started. This is not some disgruntled, terminated ex-employee sounding off. This is just an honest appraisal of how 2U does business from my perspective. Work here at your own peril.

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

Related link:

2U Virus Expands College Meltdown to Elite Universities (2019)

Buyer Beware: Servicemembers, Veterans, and Families Need to Be On Guard with College and Career Choices (2021)

College Meltdown 2.1 (2022)

EdTech Meltdown (2023)  

Erica Gallagher Speaks Out About 2U's Shady Practices at Department of Education Virtual Listening Meeting (2023)

"Edugrift" by J.D. Suenram (2020)

When college choice is a fraud (2016)

Monday, November 25, 2024

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.] 

Monday, December 8, 2025

The Prestige of Partnership — and the Problem of Unclear Payoff

For more than a decade, 2U has presented itself as a premier intermediary between elite universities and the expanding global audience for online higher education. The company’s roster of partners includes some of the most recognizable names in academia, as well as a growing list of selective, mid-tier, and international institutions. On its public site, 2U highlights collaborations with universities such as Yale, Northwestern, North Carolina–Chapel Hill, Pepperdine, Maryville, and the University of Surrey. The message is unmistakable: if universities of this caliber trust 2U with their online programs, then students should as well.

These partnerships have fueled the impression that 2U-supported programs deliver high-quality, academically rigorous education backed by prestigious institutional brands. For many learners, especially working adults, international students, and career switchers, such arrangements offer a seemingly ideal blend: the name of an elite university, the flexibility of online learning, and access to fields where credentials are increasingly necessary.

Yet beneath the glossy presentation and impressive partner list, fundamental questions remain unanswered. Despite working with many of the world’s most respected institutions, 2U still does not provide sufficient data to determine the true value of the programs it supports. Even as universities lend their names and curricula, the real-world outcomes of students enrolled in 2U-powered programs remain opaque.

The core difficulty lies in the mismatch between the prestige of the institution and the limited transparency around program performance. For years, 2U issued annual “Transparency and Outcomes” reports designed to demonstrate impact and accountability across its portfolio. But the most recent report available to the public is from 2023. In the fast-moving world of online education—where competition has intensified, student expectations have shifted, and 2U itself has undergone significant financial turmoil—data that old is no longer a reliable indicator of the current state of programs.

This lack of updated reporting is especially notable given 2U’s recent trajectory. After years of rising debt and declining investor confidence, the company filed for Chapter 11 bankruptcy in 2024. Although it has since emerged under new ownership with a streamlined balance sheet, questions persist about its future direction, the stability of its services, and whether its partnerships will endure in their current form. For universities, outsourcing key functions such as marketing, recruitment, student support, and technological infrastructure may expand enrollment and revenue, but it also raises concerns about the consistency and quality of the student experience—areas that become even more vulnerable when the partner company faces financial strain.

This structural opacity makes it nearly impossible for students, policymakers, or even universities themselves to determine whether these programs provide a meaningful return on investment. A degree or certificate bearing the name of Yale or Pepperdine may confer a level of brand recognition, but what does it signify in practice? Are students completing programs at comparable rates to on-campus peers? Are they finding jobs in their fields? Are they earning more than they would have without the credential? Are they satisfied with the instruction, advising, and support they receive? Without rigorous, current, and independently verified data, these remain open—and critical—questions.

The challenge is not solely financial or operational. It is also conceptual. The surge in online learning has created a vast gray zone between institutional brand and educational substance. While universities retain control over academic content, the underlying delivery mechanisms are increasingly intermediated by firms like 2U. Students may assume that an online master’s degree from a prestigious university carries the same weight as an on-campus equivalent, but the learning environments, student services, and community-building opportunities differ dramatically. In many cases, the online experience is shaped more by 2U’s systems and staff than by the university itself.

For prospective students, the implication is clear: a well-known university name is not a guarantee of value. For universities, the stakes are equally high. Partnering with a third-party company can expand their reach, but it can also blur the boundaries of academic identity and accountability. And for anyone tracking the direction of higher education more broadly, 2U’s situation serves as a cautionary example of how prestige can mask the absence of meaningful transparency—and how quickly the economics of online learning can shift.

Until 2U produces up-to-date, independently verifiable data about program quality and student outcomes, the value of its offerings remains an open question. The partnerships look impressive. The marketing is compelling. But the evidence is missing.


Sources

2U Partners Page
2U 2023 Transparency and Outcomes Report
2U announcements on new degree partnerships and expansions
Washington Post coverage of 2U’s 2024 bankruptcy filing
PR Newswire statements on 2U’s financial restructuring and emergence as a private company

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.

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)

Wednesday, December 4, 2024

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

Wednesday, August 7, 2024

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

2U (TWOU), the online program manager for a number of elite and brand name schools has been suspended from the NASDAQ today for regulatory non-compliance. 

A number of law firms have also announced potential shareholder lawsuits as 2U attempts to reorganize.Their contention is that shareholders were misled by key executives of 2U. 

If these legal contentions are true, the Securities and Exchange Commission has the power to fine and ban executives and former executives from taking part as senior executives with other publicly traded companies. There is a precedent for this. In 2018, the former CEO and CFO of ITT Tech (ESI), Kevin Modany and Daniel Fitzpatrick, accepted penalties.   

Potential Relief from Fraud for Elite Online Degrees and Certificates 

2U has operated as an online program manager for about 70 clients, mostly highly regarded universities, including Harvard University, Yale University, MIT, University of Pennsylvania, Columbia University, Georgia Tech, University of California, Berkeley, Pepperdine University, Rice University, University of North Carolina, and University of Texas. 2U made false claims about the relationship it had with corporate employers, leading consumers to believe that these brand name credentials would be a ticket to better work

Students who used federal student loans for 2U's online graduate programs for the University of Southern California and the University of North Carolina may be eligible for debt forgiveness if they can prove that they were defrauded. We recommend contacting the Project on Predatory Student Lending for a potential remedy. 

For those who were misled about elite certificates, we recommend contacting the Federal Trade Commission and your state attorney general. However, both options will not result in easy answers. 

Related links:

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 (2024)

2U-edX crash exposes the latest wave of edugrift (2023)

2U Virus Expands College Meltdown to Elite Universities (2019)

Buyer Beware: Servicemembers, Veterans, and Families Need to Be On Guard with College and Career Choices (2021)

College Meltdown 2.1 (2022)

EdTech Meltdown (2023)  

Erica Gallagher Speaks Out About 2U's Shady Practices at Department of Education Virtual Listening Meeting (2023)

Tuesday, September 17, 2024

Friday, August 22, 2025

The Right-Wing Roots of EdTech

The modern EdTech industry is often portrayed as a neutral, innovative force, but its origins are deeply political. Its growth has been fueled by a fusion of neoliberal economics, right-wing techno-utopianism, patriarchy, and classism, reinforced by racialized inequality. One of the key intellectual architects of this vision was George Gilder, a conservative supply-side evangelist whose work glorified technology and markets as liberating forces. His influence helped pave the way for the “Gilder Effect”: a reshaping of education into a market where technology, finance, and ideology collide, often at the expense of marginalized students and workers.

The for-profit college boom provides the clearest demonstration of how the Gilder Effect operates. John Sperling’s University of Phoenix, later run by executives like Todd Nelson, was engineered as a credential factory, funded by federal student aid and Wall Street. Its model was then exported across the sector, including Risepoint (formerly Academic Partnerships), a company that sold universities on revenue-sharing deals for online programs. These ventures disproportionately targeted working-class women, single mothers, military veterans, and Black and Latino students. The model was not accidental—it was designed to exploit populations with the least generational wealth and the most limited alternatives. Here, patriarchy, classism, and racism intersected: students from marginalized backgrounds were marketed promises of upward mobility but instead left with debt, unstable credentials, and limited job prospects.

Clayton Christensen and Michael Horn of Harvard Business School popularized the concept of “disruption,” providing a respectable academic justification for dismantling public higher education. Their theory of disruptive innovation framed traditional universities as outdated and made way for venture-capital-backed intermediaries. Yet this rhetoric concealed a brutal truth: disruption worked not by empowering the disadvantaged but by extracting value from them, often reinforcing existing inequalities of race, gender, and class.

The rise and collapse of 2U shows how this ideology plays out. Founded in 2008, 2U promised to bring elite universities online, selling the dream of access to graduate degrees for working professionals. Its “flywheel effect” growth strategy relied on massive enrollment expansion and unsustainable spending. Despite raising billions, the company never turned a profit. Its high-profile acquisition of edX from Harvard and MIT only deepened its financial instability. When 2U filed for bankruptcy, it was not simply a corporate failure—it was a symptom of an entire system built on hype and dispossession.

2U also became notorious for its workplace practices. In 2015, it faced a pregnancy discrimination lawsuit after firing an enrollment director who disclosed her pregnancy. Women workers, especially mothers, were treated as expendable, a reflection of patriarchal corporate norms. Meanwhile, many front-line employees—disproportionately women and people of color—faced surveillance, low wages, and impossible sales quotas. Here the intersections of race, gender, and class were not incidental but central to the business model. The company extracted labor from marginalized workers while selling an educational dream to marginalized students, creating a cycle of exploitation at both ends of the pipeline.

Financialization extended these dynamics. Lenders like Sallie Mae and Navient, and servicers like Maximus, turned students into streams of revenue, with Student Loan Asset-Backed Securities (SLABS) trading debt obligations on Wall Street. Universities, including Purdue Global and University of Arizona Global, rebranded failing for-profits as “public” ventures, but their revenue-driven practices remained intact. These arrangements consistently offloaded risk onto working-class students, especially women and students of color, while enriching executives and investors.

The Gilder Effect, then, is not just about technology or efficiency. It is about reshaping higher education into a site of extraction, where the burdens of debt and labor fall hardest on those already disadvantaged by patriarchy, classism, and racism. Intersectionality reveals what the industry’s boosters obscure: EdTech has not democratized education but has deepened inequality. The failure of 2U and the persistence of predatory for-profit models are not accidents—they are the logical outcome of an ideological project rooted in conservative economics and systemic oppression.


Sources

Thursday, July 25, 2024

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

2U declared Chapter 11 bankruptcy today and the company is now valued at less than $5M. That's a small shadow of the $5.4B perceived value it had in mid-2018.

As a company that will be owned and operated by vulture capitalists (VCs), 2U (TWOU) and its subsidiary edX will fall below the radar. But that won't stop the company from ensnaring more students for overpriced "elite" and "brand name" degrees and certificates--as it tries to survive. In fact, it might make it easier. The visible economic market and its media won't care anymore. 

According to Higher Education Dive, backers of the latest scheme include three vulture capital firms: Mudrick Capital Management (Madison Avenue in NYC), Greenvale Capital (London) and Bayside Capital (Miami/London). 

Somehow, these VC firms will try to extract value from the bankruptcy deal. But how they do that is a mystery. C-suite executives have already gotten some of their bonuses, leaving little else for workers. Reducing labor costs (firing people) will be essential. Not paying their bills is another. Continuing to deceive consumers would be difficult to change. Even after the deal, 2U will still be laden with more than $400M in debt.

Since 2019, we have tried to expose 2U and its business practices, as well as the role of elite university partners in enabling the sale of advanced degrees and edtech certificates that led to few good jobs and lots of consumer debt.  When they acquired edX from Harvard and MIT for $800M, we doubled down.

The Higher Education Inquirer has been the only outlet to name the elite schools that were complicit in this scheme that took money away from consumers just trying to get ahead. Not just USC, but Harvard and MIT, and Yale, and Cal Berkeley, and the University of North Carolina, and Syracuse, and Pepperdine, and many others. Check out the links below to learn more about how this higher ed scheme developed and collapsed. And how this is just the latest wave of edugrift. 

 


Related links:

HurricaneTWOU.com: Digital Protest Exposes Syracuse, USC, Pepperdine, and University of North Carolina in 2U edX Edugrift (2024)

2U-edX crash exposes the latest wave of edugrift (2023)

2U Virus Expands College Meltdown to Elite Universities (2019)

Buyer Beware: Servicemembers, Veterans, and Families Need to Be On Guard with College and Career Choices (2021)

College Meltdown 2.1 (2022)

EdTech Meltdown (2023)  

Erica Gallagher Speaks Out About 2U's Shady Practices at Department of Education Virtual Listening Meeting (2023)