Myth: Online Program Managers (OPMs) leave student borrowers with a low-value education, excessive debt and low-paying jobs after graduation.
Fact: 2U’s financial success is directly linked to strong student outcomes. 2U’s financial success hinges on helping partners develop high-quality online programs, attract qualified applicants, and provide the ongoing support needed for students to succeed.
While outcomes of 2Uʼs partner programs vary by school and by program, they generally meet or exceed their campus-based counterparts in the areas of retention and graduation rates.
2U powers a wide-range of programs across disciplines and price-points to help learners identify opportunities that best fit their needs. And there is evidence that alumni of partners’ degree programs have positive post-graduate outcomes.
In the 2020 Gallup-2U Graduate Alumni Study, 97% of all alumni from 2U partner degree programs achieved a positive career outcome after graduation, including 94% of Black alumni and 97% of first-generation alumni.
As reported in 2U’s most recent Transparency & Outcomes Report, the percentage of degree programs in 2U’s portfolio priced at or below their compatible campus-based programs increased from over 80% in 2020 to over 86% in 2022.
Myth: OPMs like 2U prioritize profits over student success through revenue sharing agreements.
Fact: 2U’s financial success is directly linked to strong student outcomes. Strong student outcomes are not possible without good standing relationships between 2U and their university partners to develop high-quality programs and provide the ongoing support students need to succeed.
Strictly from a financial perspective, 2U has a greater incentive to help prospective students find the program that is right for them, rather than getting just any student to enroll in any program.
2U earns no funds upon enrollment. 2U’s university partners pay 2U on a per-credit basis as students progress through their programs. 2U only earns when students progress through, and ultimately graduate from, a program.
The strong retention and graduation rates of 2U’s university partners programs prove the point.
2U powered degree programs have a:
90% retention rate
73% graduation rate
These rates are competitive with traditional campus rates.
2U would fail as a public company if students and university partners were not happy with their services.
Myth: 2U engages in deceptive and aggressive marketing and recruiting practices.
Fact: 2U takes pride in having a culture of ethical compliance and on doing right by their students and university partners. There is simply no incentive for 2U, or companies like 2U, to engage in aggressive recruiting practices. An independent legal counsel found that 2U’s compliance controls are rigorous and risk-based.
2U resolved to dig into allegations of aggressive or deceptive marketing and recruiting practices to inform and supplement their work via an independent investigation and analysis conducted with the assistance of well respected, experienced outside legal counsel, Latham & Watkins.
Contrary to many of the allegations levied against 2U over the past year, the independent counsel:
did not find any evidence to suggest that 2U engaged in aggressive or misleading marketing or recruiting practices.
also found no evidence suggesting 2U’s systematic noncompliance with applicable laws or regulations.
To the contrary, their review of company documentation and marketing materials, analysis of more than two years of data detailing outreach to prospective students including reviewing call recordings between admissions counselors and prospective students, and interviewing over a dozen employees led them to conclude that:
2U’s compliance controls are rigorous and risk-based; the allegations about 2U’s marketing and recruiting practices are completely without merit.
Isolated instances of student dissatisfaction do not support a conclusion of a systemic issue regarding 2U's marketing or recruiting practices. 2U acknowledges that isolated instances of dissatisfaction are one too many and are committed to a continued effort to strive for quality experiences for all students.
Myth: OPMs like 2U drive up tuition costs.
Fact: Affordable online education is better for students and better for 2U’s business.
From the beginning, 2U’s mission has been to increase access to the world’s best higher education through online learning. Developing affordable, high-quality online education options for students is a top priority. Over the years, 2U has had numerous conversations with university partners about the student debt crisis in our nation and the urgent need to reduce the cost of higher education.
There is a common misperception that 2U benefits financially from more expensive tuition prices. But in reality, the higher the tuition price, the more expensive it is to market a program and attract students. Higher education is not an inelastic good. As tuition prices go up, student demand goes down, which leads to even higher marketing costs that are shouldered by 2U, not the university.
Lower tuition prices are not only a win for students, but they also financially benefit 2U’s business. That’s why 2U has strongly and consistently advocated for lower prices, all while respecting the institutional independence of partners to set tuition rates. Over the years, 2U has seen the positive impact of these efforts as more and more 2U partners have reduced tuition, launched disruptively-priced new degrees, and introduced innovative financing models that benefit students.
Universities have 100% control in setting tuition for their programs. 2U has, and will continue to, advocate for universities to make their degree programs more affordable, while respecting their institutional independence and exclusive control over setting tuition prices.
2U powers a wide-range of programs across disciplines and price-points to help learners identify opportunities that best fit their needs. 2U connects learners around the world with more than 4,200 digital education offerings on its global online learning platform, edX – from free courses to full degrees, many of which are disruptively priced.
2022-2023 additions to 2U’s platform include:
A full $10,000 MS in Artificial Intelligence from the University of Texas at Austin
A full $24,000 MBA from Boston University
Myth: The bundled services Dear Colleague Letter (DCL) is a “loophole,” contrary to the underlying Federal statute, and not aligned with the Higher Education Act.
Fact: The Dear Colleague Letter has allowed over 50 million learners to access higher education online.
In 2011, the Department of Education issued a Dear Colleague Letter (DCL) providing guidance to institutions and service providers regarding bundled services, which has been the understanding for three decades across five presidential administrations. The DCL confirms that the Higher Education Act permits "tuition sharing" if paid to an unrelated third party for a variety of bundled services, including recruiting services, as long as certain conditions are met.
The DCL aligns with the legislative history of the Higher Education Act, which prohibits the payment of incentives for success in enrolling individual students but does not forbid tuition revenue sharing more broadly, especially when compensation is paid for a broad array of bundled services. Therefore, the DCL is not a "loophole" and is directly aligned with the underlying Federal statute.
Myth: The Dear Colleague Letter (DCL) enables/incentivizes aggressive and deceptive practices.
Fact: The DCL has significant safeguards that disincentivize and/or prohibit this type of behavior: The DCL sets out several criteria for legal revenue-sharing with a third party that provides bundled services:
First, and most importantly, the Title IV institution itself—not the third-party service provider—must retain control over the number of enrollments and the admission of students into its program.
Second, and distinct from the 2002 safe-harbor provision, the third-party service provider must be independent of all Title IV institutions, including the institutions which it serves.
Third, the third party may not make incentive payments to its employees based on the number of students who are successfully enrolled.
Fourth, the third party must provide a wide range of services to the Title IV institution.
Finally, the third party may not receive separate payment for services relating to recruitment.
2U complies with all of these restrictions.
Myth: Because of revenue-sharing agreements, OPMs focus heavily on marketing and sales to get students to enroll since they get paid more the more students they succeed in enrolling.
Fact: Only 2U’s university partners set admissions standards and make admissions decisions. Recruiters at 2U are not permitted to be incentivized with commissions by Federal regulations.
2U does not get paid more simply for securing enrollments, they receive more revenue if the students succeed in the program and ultimately graduate.
2U complies with the Department of Education’s (ED) regulations on incentive compensation. Employees covered by the ban are legally prohibited from receiving any bonus or other monetary compensation based in any way on their success in securing enrollments.
2U’s admissions counselors only reach out to people who specifically request that they do so—people who have seen a program’s marketing materials and request more information.
For bundled services, “Marketing and Sales” includes the cost of Search Engine Optimization, Search Engine Marketing, and Social Media Optimization (which are significant expenditures), among other things. These are not recruiting activities and should not be highlighted as such.
Myth: Because of the revenue sharing agreement, 2U encourages students to take full advantage of the federal Grad Plus student loan program, which allows students to borrow as much as universities charge.
Fact: 2U does not set tuition prices, their admission counselors don’t make admission decisions, and they do not counsel applicants on their financial aid options.
2U does not set its university partners’ admission standards, make enrollment decisions, or administer financial aid. It is estimated in 2U’s most recent annual Transparency & Outcomes Report that only ~29% of 2U’s total 2022 revenue was derived from Title IV funds, down from ~32% in 2021.
2U’s role, and their counselors’ goal, is to:
Identify interested and academically qualified students
Guide them through the program-specific application process using materials provided by and approved by 2U partners, and
Send completed applications to university partners
The university partners then review the applications, make admissions decisions, and work directly with students to finance their education.