Education Department is ‘concerned’ about potential OPM failures as groups sound alarm on 2U

Higher Ed Dive

Ben Unglesbee

April 5, 2024

Dive Brief:

• The U.S. Department of Education is “concerned” about the impact a potential financial failure of 2U and other online program management companies would have on students, an agency spokesperson told Higher Ed Dive in a statement Thursday.

• The statement was in response to an open letter Tuesday from advocacy groups — the Student Borrower Protection Center, Project on Predatory Lending, and Center for American Progress — calling on the department and Consumer Finance Protection Bureau to protect students from what they described as a “looming collapse” of 2U.

• In a published statement on Friday, 2U said that the groups’ predictions about an imminent shutdown “are unequivocally false and represent a blatant attempt to confuse students and the public.”

Dive Insight:

The online program management sector has increasingly come under financial pressure, and 2U is no exception. After a meteoric rise over the last decade, the company now faces falling annual revenues, long-building losses and looming debt maturities.

Documents filed with the U.S. Securities and Exchange Commission in February and early March included “going concern” warnings, indicating there is “substantial doubt” about 2U’s ability to keep operating if it can’t refinance its debt or raise capital. The March filing noted specifically that 2U might have to file for bankruptcy or liquidate — among other, less dramatic outcomes — if it can’t cover its debt obligations.

As of Dec. 31, the company’s total debt stood at $904.7 million. With a long history of operating losses, 2U has racked up an accumulated deficit of almost $1.5 billion. The company shrank its losses in 2023, but its loss from operations remained steep, at nearly $226 million. Meanwhile revenue declined by about 1.8% for the year to $946 million.

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