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July 12, 2021updated 03 Dec 2021 10:11am

How the sale of a MOOC provider has shaken US online higher education

By GlobalData Thematic Research

A significant shift has occurred in the rarefied air of what you might call Big Ed, the upper echelons of US higher education.

Harvard University and the Massachusetts Institute of Technology (MIT) are selling edX, the pioneering massive, open, online courses (MOOC) provider they created in 2012, for $800m. The acquirer will be 2U, an online program management (OPM) company that helps universities bring their programs into the online market.

Financially, it’s a good deal. 2U gets access to edX’s 50 million users, 1,200 enterprise clients, a top brand, and hundreds of university and corporate partners. Harvard and MIT get $800m, which will be used to create a new non-profit led by the universities that will focus on closing the learning and opportunity gap by developing new partnerships, digital tools, and strategies.

A landmark but unpopular deal in higher education

But the deal has raised passions in the higher education world. An article in the Chronicle of Higher Education described the deal as ‘a gross betrayal’ and accused Harvard and MIT of ‘auctioning off the lecture halls of the future.’

2U has explained its rationale for the deal in simple terms. If it converts only .03% of registered edX learners into its regular offerings, it will reduce the cost of student acquisition by 10% to 15%. The cost of acquisition is significant in online education, accounting for 20% or more of an organization’s overall budget. 2U’s programs are currently too expensive for growth markets abroad, such as India. In that sense, the acquisition offers 2U both leads and product offerings.

The reality is that the non-profit edX has been unable to compete with Coursera, the for-profit online course and program provider. 2U’s financial resources and experience in marketing and student support give edX a better prospect of competing with Coursera, though that won’t satisfy some critics.

Jefferson Pooley, professor of media and communication at Muhlenberg College in Pennsylvania, said: “2U’s mission is fundamentally misaligned with the university tradition. 2U, Coursera, and their venture-funded competitors are built to squeeze profit from our students, using our faculty and course offerings. Harvard and MIT had no right, in the meaningful sense, to sell us off. None of us — not faculty members, not students — signed up for edX to increase Silicon Valley’s wallet share. We will look back on this careless abrogation of stewardship as the tragic squandering that it is.”

Rapid growth in edtech

In higher education, as in all sectors, the pandemic has fostered significant digital change, which some organizations will embrace. Others will shrink in the face of the thematic disruption Covid-19 has wrought. Those that have built and grown assets, like Harvard and MIT with edX, have earned the right to sell them at a premium price.

Education now comprises coding boot camps, online certification programs, and so-called ‘micro-credentials’: sub-degree credentials of short duration ranging from industry-recognized certifications to short term ‘badges’. The change has driven the rapid growth of an array of edtech unicorns, notably in China and India, which may well become some of the education names of the future to rival Harvard, MIT, and others’ storied histories.

Despite the rancor over the deal, some believe it will eventually offer more affordable online higher education options for would-be students around the globe. That may well be a justifiable outcome for a deal that has shaken US higher education’s online foundations.