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 

HEI receives cease-and-desist letter from Chip Paucek's lawyers

The Higher Education Inquirer has received a cease-and-desist letter from lawyers representing Chip Paucek and the Pro Athlete Community (PAC). Out of respect for PAC co-CEO Kaleb Thornhill and members of PAC, we have removed the article. However, we stand by all the facts of the story and our characterizations about Mr. Paucek, the former CEO of 2U and Smarterville (aka Hooked on Phonics). These characterizations are based on information and opinions obtained from experts in the education business in addition to publicly available business records and government records, to include earnings call transcripts, consumer lawsuits, and citizen/consumer testimony.    

 

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 

Scam Alert: Chip Paucek and Pro Athlete Community (aka PAC)

The Higher Education Inquirer (HEI) is conducting an extensive investigation of former 2U CEO Chip Paucek. While we are compiling and analyzing this information, HEI is putting out a warning to current and former professional athletes who may be contacted by Paucek's newest enterprise, Pro Athlete Community (PAC). 

As the co-CEO of Pro Athlete Community, Chip Paucek rang the opening bell at NASDAQ on June 13, 2024, just months after driving another company, 2U, to near failure. 

Pro Athlete Community is recruiting former professional athletes to become members, offering dreams of success. A number of former NFL players have already signed up and are being used to sell PAC's services. PAC is also working with the Miami Dolphins to educate current players about getting into business. 

From September 14-19, in Austin, Texas, PAC is holding live sessions to sell their dreams. The event is called Next Chapter U. They are also working with the University of Miami's Herbert School of Business on a certificate program for PAC members.

We encourage those who are contacted by Pro Athlete Community to do their due diligence, given Paucek's track record as a businessperson. We are also asking those who have been contacted to document any material statements made, to consult their lawyers, and to let us know what promises may be said on the back stage. We will share with you what we know. 

Chip Paucek, co-CEO of Pro Athlete Community, brought his sales pitch to ASU-GSV in April 2024. Paucek used a number of former NFL players to represent the PAC brand.

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)

Higher Education, Technology, and A Growing Social Anxiety

The Era We Are In

We are living in a neoliberal/libertarian era filled with technological change, emotional and behavioral change, and social change. An era resulting in alienation (disconnection/isolation) for the working class and anomie (lawlessness) among elites and those who serve them. We are simultaneously moving forward with technology and backward with human values and principles. Elites are reestablishing a more brutal world, hearkening back to previous centuries--a world the Higher Education Inquirer has been observing and documenting since 2016. No wonder folks of the working class and middle class are anxious. 

Manufactured College Mania

For years, authorities such as the New York Federal Reserve expressed the notion (or perhaps myth) that higher education was an imperative for young folks. They said that the wealth premium for college graduates was a million dollars over the course of a lifetime--ignoring the fact that a large percentage of people who started college never graduated--and that tens of millions of consumers and their families were drowning in student loan debt. 

2U, Guild Education, and a number of online robocolleges reflected the neoliberal promise of higher education and online technology to improve social mobility.  The mainstream media were largely complicit with these higher ed schemes. 

2U brought advanced degrees and certificates to the masses, using brand names such as Harvard, MIT, Yale, USC, University of North Carolina, and the University of Texas to promote the expensive credentials that did not work for many consumers. 

Guild Education brought educational opportunities to folks at Walmart, Target, Macy's and other Fortune 500 companies who would be replacing their workers with robotics, AI, and other technologies. But the educational opportunities were for credentials from subprime online schools like Purdue University Global. Few workers took the bait. 

As 2U files for bankruptcy, it leaves a number of debt holders holding the bag, including more than $500M to Wilmington Trust, and $30M to other vendors and clients, including Guild Education, and a number of elite universities. Guild Education is still alive, but like 2U, has had to fire a quarter of its workers, even downsizing its name to Guild, as investor money dries up. It continues to spend money on its image, as a Team USA sponsor.    

The online robocolleges (including Liberty University, Grand Canyon University, University of Phoenix, Purdue University Global, and University of Arizona Global)  brought adult education and hope to the masses, especially those who were underemployed. In many cases, it was false hope, as they also brought insurmountable student debt to American consumers. Billions and billions in debt that cannot be repaid, now considered toxic assets to the US government. 

Along the way there have been important detractors in popular culture, especially on the right. Conservative radio celebrity Dave Ramsey, railed against irresponsible folks carrying lots of debt, including student loan debt. He was not wrong, but he did not implicate those who preyed on student consumers. On the left, the Debt Collective also railed against student loan debt, long before the right, but they were often ignored or marginalized. 

Adapting to a Brutal System

The system  works for elites and some of those who serve them, but not for others, even some of the middle class. Good jobs once at the end of the education pipeline have been replaced by 12-hour shifts, 60 hour work weeks, bullsh*t jobs, and gig work. 

Working-class Americans are living shorter lives, lives in some cases made worse not so much by lack of education, but by the destruction of union jobs, and by social media, and other intended and unintended consequences of technology and neoliberalism. Millions of folks, working class and some middle class, who have invested in higher education and have overwhelming debt and fading job prospects, feel like they have been lied to.

We also have lives made more sedentary and solitary by technology. Lives made more hectic and less tolerable. Inequality making lives too easy for those with privilege and lives too difficult for the working class to manage. Lives managed by having fewer relationships and fewer children. Many smartly choosing not to bring children into this new world. All of this manufactured by technology and human greed.  

The College Dream is Over...for the Working Class

There are two competing messages about higher education: the first that college brings opportunity and wealth and the second, that higher education may bring debt and misery. The truth is, these different messages are meant for two groups: pushing brand name schools and student loans for the most ambitious middle class/working class and a lesser form of education for the struggling working class. 

In 2020, Gary Roth said that the college dream was over. Yet the socially manufactured college mania continues, flooding the internet with ads for college and college loans, as social realities point to a future with fewer good and meaningful jobs even for those with degrees. Higher education will continue to work for some, but should every consumer, especially among the struggling working class, believe the message is for them? 

Related links:

More than half of college grads are stuck in jobs that don't require degrees (msn.com)

AI-ROBOT CAPITALISTS WILL DESTROY THE HUMAN ECONOMY (Randall Collins)

Edtech Meltdown 

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

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

College Mania!: An Open Letter to the NY Fed (2019)

"Let's all pretend we couldn't see it coming": The US Working-Class Depression (2020)

The College Dream is Over (Gary Roth, 2020)

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)

Methods of Student Nonviolent Resistance

Resistance has been an essential part of democracy. And the Higher Education Inquirer has reported on a number of nonviolent actions taken by college students and workers across the US. We have also recognized the brutal physical and economic violence that has been a part of US history and social structure and a major contributor to the ineffective counter-violence that has sometimes resulted. 

According to the Albert Einstein Institution, "far too often people struggling for democratic rights and justice are not aware of the full range of methods of nonviolent action. Wise strategy, attention to the dynamics of nonviolent struggle, and careful selection of methods can increase a group’s chances of success." 

Nonviolent strategies include three broad categories: (1) nonviolent protest and persuasion, (2) noncooperation (social, economic, and political), and (3) nonviolent intervention. 

A list of 198 Methods of Nonviolent Action is posted on the Brandeis University website. The list is based on Gene Sharp's Methods of Nonviolent Action (1973), but this document is not exhaustive.  Strategies and tactics may need to change with what works in these times: with new technology and greater understanding about how humans think and behave.

 

Historical Examples

Nonviolent protests for justice and democracy and against white supremacy occurred at Shaw University (1919), Fisk (1924-25), Howard (1925), and Hampton Institute (1925-27).  

In the early 1940s, James Farmer, a Howard Divinity School graduate, with students from the University of Chicago established the Congress of Racial Equality (CORE), an interracial group focused on nonviolent direct action for civil rights. 

The 1960s were recognized for student activism, including the formation of the Student Nonviolent Coordinating Committee (SNCC), at Shaw University. This organization, and people like Ella Baker, were an essential part of the civil rights movement. 

In the 1970s and 1980s, divestment campaigns were an important part of the campaign against South African apartheid. Protesting for divestment against private prisons has also occurred on US campuses.  

Most recently, there were a number of campus occupations to protest the destruction of Gaza and the mass killing of civilians. And protests about climate change have been visible on a number of campuses for years. In these cases, we can expect more serious conflict to occur if these issues are not sufficiently addressed. 

As always, we appreciate your comments and constructive criticism.  

Related links: 

Black Study, Black Struggle (Robin D.G. Kelley, Boston Review)

A People's History of Higher Education in the US? 

Student Activism 

Student Nonviolent Coordinating Committee

Modeling civil unrest in the United States: some historical cases (Bryan Alexander)

One Fascism or Two?: The Reemergence of "Fascism(s)" in US Higher Education

US Higher Education and the Intellectualization of White Supremacy

Democratic Protests on Campus: Modeling the Better World We Seek (Annelise Orleck)

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

Wikipedia Community Documents Pro-Palestinian Protests on University and College Campuses

Rutgers University Workers Waging Historic Strike For Economic Justice (Hank Kalet)

University of California Academic Workers Strike For Economic Justice (November 14 to December 23, 2022)

Terri Givens and “Radical Empathy: Finding a Path to Bridge Racial Divides”

I Went on Strike to Cancel My Student Debt and Won. Every Debtor Deserves the Same. (Ann Bowers)

DEBT STRIKE! (Debt Collective)