Market intelligence for international student recruitment from ICEF
21st Feb 2024

Former edtech unicorn’s stock price plunges as universities take DIY approach to online learning

Short on time? Here are the highlights:
  • Edtech giant 2U is in financial distress, reflecting the increasing challenges for Online Programme Managers (OPMs) in general
  • Major universities have grown more able to resource and manage their own online programming and marketing rather than outsourcing online delivery
  • At the same time, US government scrutiny of OPMs is increasing

The edtech giant 2U is experiencing market and financial pressures severe enough that earlier this month it warned investors that there was “substantial doubt about its ability to continue as a going concern” if it could not secure more capital or reduce its debt.

This represents a significant reversal of fortune. Four years after 2U – an online programme manager (OPM) – went public in 2014, its stock traded at close to US$100. This year, it has been hovering at or under US$1 due to signs of trouble – including some universities ending their contracts.

Following 2U’s announcement of its doubt about remaining “going concern,” major investment firms downgraded the stock; Goldman Sachs dropped its coverage of 2U entirely.

Background

The worsening outlook for 2U reflects a weakening role for OPMs in the global education market. By way of background, OPMs help universities and colleges bring their programmes online. They typically offer a broad basket of services – everything from strategic advice and instructional design to technology and systems to recruitment, retention, and student support. Universities remain responsible for core academic functions, notably admissions, teaching, and curriculum. OPMs typically also cover the upfront costs of converting an existing university programme for online delivery, in return for which they receive a portion of the resulting programme revenues.

OPMs’ heyday occurred in the COVID-19 pandemic amid the rush to online learning as face-to-face teaching was severely restricted or ended while infection-prevention measures were most strongly and widely enforced. Universities and other institutions needed extensive support to shift their business model, and OPMs represented the most efficient way of doing so for many of them.

For 2U, the pandemic seemed to be an ideal time to expand its reach, and it famously bought the online learning platform edX in 2021, giving it:

  • A combined portfolio of more than 3,500 offerings from 230 top universities and corporations;
  • Access to edX’s 39 million users all over the world.

The bet was that by buying edX’s existing audience, 2U could reduce the cost of acquiring students overall. 2U took on debt for the acquisition, but revenue gains did not follow to offset the carrying costs of that debt. Quite the opposite: revenue declined steadily after the acquisition and staff were laid off.

2U was not the only OPM facing serious challenges in 2021 and 2022 as (1) demand for online learning abated due to the elimination of COVID-19 travel restrictions, (2) universities became more interested in and adept at running their own online programming and delivery.

Across the board, universities began to ask for shorter contracts with OPM providers and more share of revenue – or no contracts at all:

Scrutiny of OPMs increases

Adding to OPMs’ current challenge is momentum in the US for the Biden administration to “crack down” on relationships between colleges and OPMs. There is a formal review underway of the legislation allowing colleges to pay OPMs commission based on the amount of tuition revenue they help to generate. Fuelling the review is a worry that OPMs’ marketing to students is diluting the perceived value of higher education and encouraging students enrol in “low-value” programmes instead of degrees.

Online learning participation dips

The number of US students enrolled in at least one online course dropped from 57% in 2021/22 to 53% in 2022/23 according to National Center for Education Statistics data released in January 2024. Participation remains higher than before the pandemic, but industry experts say detailed data shows that students who were exclusively enrolled in online courses are more likely to be pivoting to entirely in-person classes than to a blend of online/in-person instruction.

At the same time, participation in online learning dipped by 2 percentage points in Europe between 2021 and 2022.

Despite the slight dip in online course enrolments, however, the fact remains that there are millions of students worldwide who require more affordable options than in-person study abroad. The online learning market may be evolving, but it is certainly here to stay.

For additional background, please see:

Most Recent

  • US institutions bracing for a challenging enrolment outlook for 2025/26 Read More
  • How the UK’s Agent Quality Framework will shape the future of agent training Read More
  • Dutch government walks back controversial measures to constrain English-taught degrees Read More

Most Popular

  • Which countries will contribute the most to global student mobility in 2030? Read More
  • Research shows link between study abroad and poverty alleviation  Read More
  • Beyond the Big Four: How demand for study abroad is shifting to destinations in Asia and Europe Read More

Because you found this article interesting

US institutions bracing for a challenging enrolment outlook for 2025/26 The Institute of International Education’s (IIE) twice-yearly snapshot surveys are always required reading for international educators. That is...
Read more
Dutch government walks back controversial measures to constrain English-taught degrees In a 3 July 2025 letter to the Dutch parliament, Education Minister Eppo Bruins explained that the government...
Read more
The surging demand for skills training in a rapidly changing global economy With more than 175 million users, Coursera is the largest online learning platform in the world. It currently...
Read more
Survey finds US institutions expanding agency engagement and focusing on new student markets AIRC (The Association of International Enrollment Management) and BONARD have just released a second edition of the State...
Read more
How have changes in policy settings impacted international student recruitment at Australian universities? Over the past couple of years, Australian universities have been operating within a policy framework that makes it...
Read more
New analysis sounds a note of caution for UK immigration reforms Within the UK’s higher education system, there are a group of institutions known as “Post-1992 universities”. The term...
Read more
The number of students in higher education abroad has more than tripled since the turn of the century The latest figures from UNESCO indicate continued strong growth in higher education enrolments globally. From the year 2000,...
Read more
UK: Study visa applications up by nearly a third year to date The early data we are seeing so far this year makes a couple of things clear. First, there...
Read more
What are you looking for?
Quick Links