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.

Seeking Whistleblowers in Higher Education

The Higher Education Inquirer is seeking whistleblowers who can tell us what is happening in higher education as the Trump Administration takes control over the federal government. The information needs to be reliable and credible. Leads are fine, but verifiable documents are better. 

We are particularly interested in obtaining information related to the US Department of Education, Department of Homeland Security,  Department of Veterans Affairs, Department of Defense, Department of Labor, the Federal Trade Commission, and other agencies related to higher education and employment. 

We are also interested in those involved in higher education administration and finance, particularly at elite universities and state flagship universities. With a few exceptions, we expect university presidents at elite universities to stay quiet, clamp down further on dissent and fall in line with any new policies, as the threat to tax them at higher rates becomes a concern. 

In the past we have relied heavily on Freedom of Information Act requests, which often take months, and multiple efforts, to obtain important data. Sometimes the information is delayed for years or never comes. And right now, we can't afford to wait.  

Since 2016, HEI has recruited a number of courageous people for inside information about for-profit colleges.  This has included informants from the University of Phoenix, Ashford University (aka University of Arizona Global), and Kaplan University (aka Purdue University Global) and the lead generators they schools have hired. 

We have also communicated with people associated with online program managers, such as 2U and Academic Partnerships.  

All of this information has been helpful in exposing the back rooms of the higher education business. 

Now, more than ever, we need information that folks won't find anytime soon in other news outlets.  News that workers, consumers, and their families can use to make better decisions about their life choices. 

"White Labeling" in Online Higher Education: Simplilearn

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

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

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

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

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

"White Labeling" in Edtech

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

HEI Values Your Feedback

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

Related links:
Edtech Meltdown

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

Layoffs in Higher Education

The Layoff.com is a "simple discussion board" for workers who would like to learn more about the rumors or possibility of job cuts in their organization. It's also been helpful for us to understand what has been happening behind the scenes in the US Higher Education business. 

We have been observing and participating on this website for more than a dozen years, watching the fall of Corinthian Colleges (Everest College, Wyotech, and Heald), ITT Tech, Education Management Corporation (the Art Institutes and South University), the partial collapse of Apollo Group (University of Phoenix), Perdoceo (formerly Career Education Corporation), and Laureate International, and the transformation of Kaplan University to Purdue University Global and Bridgepoint Education (Ashford University) to University of Arizona Global.   

 

 

 

As the College Meltdown has advanced, we have also observed a number of private schools collapse and public colleges and universities struggle. As enrollments continue to drop, we can expect more layoffs to occur and for education related businesses to struggle more.  

 

The contents of this article are updated periodically, to illustrate trends in the College Meltdown.  The most recent update was published October 29, 2024.  2U, the online program manager for elite university certificates has been the poster child in 2024, but there are many other companies and institutions in peril.  

 

2U and edX 

 

Adtalem Global Education  

 

Albright College

 

Baldwin-Wallace University  

Barnes and Noble College Booksellers

 

Cengage

Chegg

 

Concordia University, Ann Arbor

Coursera

 

Delta State University 

 

DeVry University 

 

Emerson College 

 

Gwynedd-Mercy University 

 

Keystone College  

 

Maximus 

 

National American University 

 

Navient 

 

Northern Illinois University 

 

Penn State University  

 

Perdoceo   

 

Portland State University 

 

Saint Cloud State University 

 

Sallie Mae  

 

Southern New Hampshire University 

 

Tennessee State University

 

Udemy 

University of Arizona 

University of Maryland Global 

 

University of New Orleans 

 

University of North Carolina, Asheville

 

University of Phoenix 

 

University of Wisconsin-Milwaukee 

 

Walden University 

 

Western Illinois University   

 

Western Washington University 

West Virginia University 

 

Wittenberg University 

Workers at 2U expect more layoffs in 2024

After successfully completing its recent bankruptcy proceedings, 2U workers expect another round of layoffs.  2U, with its subsidiary edX, is the online program manager for dozens of elite universities, like Harvard and Yale, who offer their brand names to sell online degrees and certificates.  But two schools, the University of Southern California and Fordham, have distanced themselves from the company. 2U's new board chair of is Brian Napack, who served as an executive at John Wiley and McMillan, two other companies that have faced financial challenges. 

Related links: 

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 

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

The collapse of 2U and its subsidiary edX has put Sallie Mae (SLM) on the radar.  Many of those elite brand certificate programs (under the name Harvard, MIT, Cal Berkeley) were propped up by Sallie Mae private student loans. 

When the adult learners who took these certificate courses from edX did not get better jobs that they were promised, some ended up struggling to pay their loans. Some have defaulted on their loans. And a ripple occurs.  As part of a larger edtech meltdown, and with IT jobs being lost each month, the situation promises to get worse.

As a hedge for SLM, most of these loans are processed into Student Loan Asset-Backed Securities (SLABS) and sold off as assets. Large investors, including pension programs are invested directly or indirectly in this mess.

Sallie Mae Boom and Bust 

Sallie Mae (SLM) is a private lender that has had a number of problems.  Despite being bailed out by the US government and spinning off part of itself, SLM has a poor credit rating that's bad and getting worse. 

In 1972, the Nixon administration created the Student Loan Marketing Association, or “Sallie Mae” — a government-sponsored enterprise empowered by the government to use U.S. Treasury money to buy government-backed student loans from banks. 

As a publicly traded corporation Sallie Mae has benefited from decades of close government connections.

SLM was very profitable (and very predatory to consumers) when there was little oversight, and the US economy was booming. But when the Great Recession hit in 2008, SLM had to be bailed out when the US government purchased billions of dollars in government-backed student loans. After that bailout, Sallie Mae returned to maximizing profitability.  Over the last 5 years, SLM shares have gained 144 percent in value as student borrowers have suffered.   

While the economy is doing well enough for the middle class, that could change for the worse, not just for consumers, but also Sallie Mae. 

Recent Troubles, Troubles Ahead

In July 2024, Moody's changed its outlook on SLM's long-term from stable to negative, The bond ratings were already less than stellar, a Ba1 for senior unsecured notes. Ratings for some of its Student Loan Asset-Backed Securities were downgraded in 2022. 

Help for Student Debtors

For student loan debtors, we recommend joining the Debt Collective and contacting other advocates, including the Student Borrower Protection Center and the Project on Predatory Student Lending.

Related links:

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 (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)

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)