Last week, 2U, a pioneer of the so-called Online Program Management (OPM) model for helping colleges run online degree programs, announced that it filed for Chapter 11 bankruptcy with a “prepackaged” deal arising from prior negotiation with creditors.

The company was an edtech “unicorn” at its height — worth billions — and characterized as a “giant” in the space.

But after a rocky few years, a bankruptcy filing wasn’t all that surprising.

Nevertheless, it raises the question: Was that announcement a rebuke of the entire OPM model — or just the story of one troubled company?

The answer may have consequences for the future of online higher ed, since OPMs were once viewed both as a winning strategy for universities to make money by increasing enrollments and as a pathway to expand access to advanced learning for students who wouldn’t or couldn’t participate on campus.

A Giant Falls

In the early days of 2U, the company worked with selective institutions with elite reputations to create online graduate programs that charged high tuition rates. In exchange, 2U took a large share of tuition revenue. Then the company shifted to offering universities “stackable” options instead of its full package of services, ostensibly to help lower tuition.

The COVID-19 pandemic’s forced experiment in emergency remote instruction prompted more colleges to seek support from outside companies like 2U to create more-permanent online learning options, argued Robert Ubell, vice dean emeritus of online learning at NYU’s Tandon School of Engineering, in 2021 in a column for EdSurge. Yet he suggested that OPMs were “merely a stopgap therapy” for “colleges with insufficient digital infrastructure,” recommending that institutions seek more sustainable ways to grow their online programs.

In 2021, 2U bought edX, the massive-online open course platform started by MIT and Harvard, for $800 million. Since then, 2U’s trajectory has been called a “long, steep fall,” with declining enrollments, increasing debt and other factors like pressure from regulators. In 2023, 2U lost one of its biggest and most prominent clients when it stopped running the University of Southern California’s online programs.

OPMs have come under scrutiny in recent years, particularly for tuition-sharing contracts that critics say encourage predatory marketing practices and swell student loan debt. A 2019 report from the Century Foundation, called “Dear Colleges: Take Control of Your Online Courses,” urged institutions to turn away from outsourced programs. New regulations were expected for the industry, but they have been delayed. In the middle of July, the U.S. Department of Education proposed regulations to increase oversight over distance education programs, including requiring additional reporting to better enable the government to monitor student outcomes.

According to 2U, the Chapter 11 process started by its recent filing won’t disrupt operations. The deal will eliminate half of 2U’s debt, give the company more time to pay back loans and provide an additional $110 million in financing, according to terms. In a release, 2U said it expects the process to last only a couple of months.

Some observers have suggested that 2U’s filing was squarely the result of an overstretched company.

Edtech commentator Phil Hill argues that the filing was a predictable result of the company’s balance sheet. He also argues that the pre-packaged deal defused the “debt bomb” that 2U held, giving them a chance to bounce back.

But other experts suggest that colleges are increasingly turning to alternative models, such as “anti-OPMs,” for their online programs. In theory, these models allow colleges to outsource building online programs while ultimately working to run the programs themselves, thereby helping universities become “self-sufficient.”

The idea that online programs run by external vendors serve as “cash cows” for universities hasn’t worked, argued Emily Ravenwood, manager of academic technology consultants at the University of Michigan, in 2021 in an essay for EdSurge. And she also called the approach “pedagogically bankrupt,” writing:

Since 2U works with some 260 colleges and universities, its ultimate fate will likely play a big role in the future of the OPM model.