BY HANK REICHMAN
Two days ago I posted a piece on this blog about graduate student debt in which I cited an article in the New York Times that reported, among other things, that students in an online social work program at the University of Southern California (USC) averaged an extraordinary $109,486 in student loan debt, even though few social workers earn more than $50,000 per year. In addition, the Times reported, “most of the $275 million in debt incurred by the roughly 2,500 people who earned a master’s degree in social work at USC in 2016 and 2017 didn’t go to the university itself. It was funneled to a publicly traded for-profit technology company called 2U, which provides marketing, recruitment, course design, clinical placement and advising services for online graduate programs, in exchange for which it receives 60 percent of all tuition revenue.”
Today the Los Angeles Times published a piece on the USC social work program under this headline: “Online degrees made USC the world’s biggest social work school. Then things went terribly wrong.” Wrong indeed! Between 2010 and 2016 the online social work program grew from 900 to 3,500 students, making it the largest social work master’s program in the world. Yet today “USC’s Suzanne Dworak-Peck School of Social Work is facing a budget crisis so severe that nearly half of the staff may lose their jobs.”
What happened? Here’s the LA Times‘ take:
Though USC has yet to detail the full scope and causes of the fiscal emergency, some things are clear: Hiring teachers and administrators for the online program proved costly. Fees for the company that runs the digital learning platform ate up more than half of the online tuition revenue. Other, less costly programs came on the market. And the push to fill online classes led to the admission of less qualified students, a decision many on the faculty say damaged the learning experience and the school’s reputation. . . .
The severity of the social work school’s problems is evident in the steps that are being considered to shore up its fiscal footing. Part-time teaching positions are being largely eliminated and professors required to shoulder significantly heavier course loads. A university committee has recommended laying off up to 45% of the non-teaching staff. A USC spokeswoman said in a statement that “all administrative expenses” are being examined for savings and that the human resources department “is continuing to work through what the staff impact will look like.”
As the social work school struggles, there is growing scrutiny on campus about the relationship with 2U.
2U takes a 60% cut of online tuition from the social work program, and the contract carries onerous penalties if USC breaks the arrangement. People familiar with the agreement told The Times it contains a so-called poison tail that requires the university to continue handing over its revenue share for two years after canceling.
The university’s current contract runs through 2030.
The online program was the brainchild of USC former president C.L. Max Nikias, who resigned last year after several hundred faculty members charged he had “lost the moral authority to lead” in the wake of revelations that a campus gynecologist was kept on staff for decades despite repeated complaints of sexual abuse. As provost Nikias had initiated the first online contracts with 2U, then a fledgling startup founded by former executives at the Princeton Review and Hooked on Phonics. The social work program followed an online master’s in education. According to the Times, “Marilyn Flynn, former dean of the social work school, told the Huffington Post in April that Nikias made it clear he wanted her and her peers to embrace online degree programs. ‘Our merit reviews would reflect our ability to do this,’ said Flynn.” In addition, “As part of a contract renegotiation, the company donated $2.5 million to the social work school to endow Flynn’s academic chair and made a separate donation to a $6-billion capital campaign spearheaded by Nikias.” Flynn stepped down as dean in June 2018. She left USC entirely last fall “after federal prosecutors started looking into her handling of a donation to the social work school from a county supervisor that ended up in the coffers of a nonprofit controlled by the politician’s son.”
USC now offers more than half a dozen online degrees through 2U, including physical therapy, public policy, design and school counseling. “When 2U went public in 2014, about 70% of its revenues were coming from just two USC programs: the master’s degrees in teaching and social work. Tax records show that by last year, USC had paid at least $166 million to 2U. As of last year, more than 20% of company revenue came from the university.” In fact, 2U’s chief executive once claimed that the USC provost had “called him out of the blue and invited company executives to dream up a new graduate degree for the university to offer.” So much for institutional autonomy and faculty control of curriculum!
As 2U was collecting huge amounts of money from USC’s online social work program the company also signed deals to offer social work degrees at Simmons College in Boston, Fordham University in New York, the University of Denver, and Baylor University in Texas. These programs “were significantly cheaper than a master’s of social work from USC, which runs up to $116,000 for the two-year degree, and those less costly competitors cut into the university’s applicant pool.” Facing heightened competition, USC “made more and more exceptions to fill the online classes. In recent years, about 40% of entering students were so-called conditional admits, meaning they lacked the requisite minimum GPA or failed to meet other stated requirements. In U.S. News & World Report’s ranking, USC’s social work school dropped from the top 10 a decade ago to 25th last year.”
Of course, it’s not only USC. As I reported in The Future of Academic Freedom (p.. 143):
In a damning 2017 report, the Century Foundation found that “the vast majority of public colleges and universities that offer online education programs or courses are now relying upon external companies to do so.” Analyzing over a hundred agreements between universities and so-called online program managers, Century found “a traditional outsourcing model with a dangerous twist” in which these management companies “may prioritize profit over the interests of online students, to whom they owe no loyalty, financial or otherwise.” In search of profits, these firms may also provide private student information to marketers. The report found that “these programs are evading oversight from both sides, lacking the internal oversight that comes from a nonprofit or public structure and the governmental supervision that comes from operating a for-profit school.” Its authors concluded that such “outsourcing of the core educational mission of public institutions of higher education, threaten[s] the consumer-minded focus that results from the public control of schools.”
My University of California friends inform me that 2U also provides the platform for a significant number of “self-supporting” online programs at that public system. For just one example, UC Davis is awaiting final approval on a deal with 2U to offer an online MBA.
USC’s experience should be a cautionary tale for college and university administrators fixated on increasing revenue and reducing costs through online partnerships and a wake-up call to faculty members everywhere, who should be resisting these get-rich-quick schemes with all their collective strength. As Christopher Newfield concluded in his must-read book, The Great Mistake, “Private sector ‘reforms’ are not the cure for the college cost disease — they are the college cost disease.”
ADDENDUM: Since 2U is now a publicly traded company, its CEO’s earnings are public. His 2018 pay was $16,923,643 ($541k in cash base pay plus $378k in cash bonus pay, plus $16 million in stock awards, and $3.7 million in matching employer funds into his 401(k) plus medical, dental, vision, and other benefits. So that’s one thing the USC students’ tuition (and debt) is helping finance.
I wouldn’t strictly conflate (or imply) on-line learning formats with abuses generally in university degree programs. You do cite the partnership or joint venture arrangement, but that too is not ipso facto causal to abuse; either or both of those factors are not necessarily causal to student debt severity either. In fact, on-site (versus on-line) learning, is obviously per se more expensive and more responsible (especially in residency duration still set at 4 years for an undergraduate degree) for student debt accumulation, including in aggregate ($1.55 trillion according to the US Federal Reserve as of Q4 2018, and almost half that amount in some form of deferral, default, arrangement or re-structuring). Clearly however USC, from your report, appears to have adulterated an otherwise efficient and in some applications, appropriate learning format. Indeed, even in a traditional college or university campus, much of curriculum delivery, student-professor interaction, reading, grading, communication and lesson plans, are all on-line. The student’s “body” may be on campus, but their brain is wired into a server and the Internet (or ethernet) while of course their eyes are glued to a smart phone, their fingers nearly bio-mechanically fused with a computer keyboard, and their ears both serving as receptacles for music iphone buds and headsets. Otherwise there are some very fine, experimental and other distance, on-line and mixed residency programs (and good old fashioned “correspondence”), sponsored by several leading universities, and they are expertly managed, held to high standards of fidelity, and cost-efficient. It has its place in the mix of pedagogy and delivery. As for applying the commercial business model to the university, that does have its complications, but it is perhaps especially pronounced in university administration where corporate bureaucracy and social hierarchy are copied, often from Trustee influence, where the vast majority of governance boards are culled for business and financial, rather than educational, qualifications. May I suggest that the university campus itself, may be the core central node of the problems you raise. That, combined with student indulgence in fantastically drawn-out and inefficient degree programs (three years for a JD, on top of 4 years for a “pre-law” humanities program, that in the end is nothing more than an inflated undergrad LLB?). https://www.ft.com/content/2676282a-70f1-11e9-bf5c-6eeb837566c5. Thank you and Regards.