IBL News | New York
2U’s filing for Chapter 11 bankruptcy might prompt the company’s 260 higher education institutions partners and customers to rework their contracts or finally leave OPM, experts told Inside Higher Ed.
Moreover, the bankruptcy could give 2U the chance to renegotiate the current contracts.
The news site also wrote that the 2U revenue-sharing model may no longer be possible under pending regulations from the Department of Education.
2U’s CEO, Paul Lalljie, expects the Chapter 11 process to be completed by the end of September, if not earlier.
If the U.S. bankruptcy court approves the deal, the restructuring agreement will take the company private, allow 2U to reduce its debt by more than half, and provide $110 million in new capital, extending its runway by two years.
Longtime opponents of OPMs, including the Center for American Progress, the Project on Predatory Student Lending, and the Student Borrower Protection Center, said the filing was an easy way out for a company that is long overdue.
These opponents of the OPM model always said it encourages dishonest recruiting methods to attract more students and more profits.
In 2021, 2U Inc. acquired from Harvard and MIT the edx.org platform, paying $800 million. The edX sale straddled 2U with almost $5oo million in debt. By 2022, edX became 2U’s flagship brand and platform.
“The decision to file for bankruptcy protection raises further questions about the long-term sustainability of edX — which continues to offer free, on-demand courses taught by faculty members at Harvard,” wrote The Harvard Crimson.
Currently, edx offers 3,300 courses, including CS50, Harvard’s flagship computer science course.
Harvard and MIT used the $800 million from the sale to launch Axim Collaborative in 2023, a nonprofit dedicated to supporting innovation in education. Axim has funded 15 partnerships with universities, including community and historically Black colleges.
