Can edX fulfill its goal of providing access to free education as part of for-profit 2U
Krishna Rajagopal resigned as dean of digital learning at MIT following the sale of edX to 2U
April 21, 2022
In 2012, Anant Agarwal started edX, a Cambridge, Massachusetts non-profit, to provide online courses free or for relatively low fees. “While teaching at MIT, it dawned on me that higher education was only reaching a tiny fraction of the world’s most curious minds at the time,” Anant Agarwal told a 2U blog post interviewer. “I thought there must be a way to democratize education and reimagine how it is delivered. And that’s where the idea for edX first began.”
Agarwal, 62-years-old, a professor in Electrical Engineering and Computer Science at the Massachusetts Institute of Technology (MIT), was supported in setting up edX by MIT and Harvard University. EdX is “about the best courses, from the best schools and the best professors,” Agarwal described it in a marketing video.
In its early days, some of edX courses attracted thousands of students from around the globe. For instance, the first course on circuits and electronics taught by Agarwal attracted 155,000 students from 162 countries; 7,200 passed the course. “I would have to teach at MIT for 36 years to have this many students pass my course,” Agarwal stated in a edX blog. “That was my ‘aha’ moment. We were doing something right.”
By 2020, more than 15,000 instructors, from MIT, Harvard, Sorbonne, Hong Kong Polytechnic and 160 other universities around the globe, were teaching courses on edX. Around 400,000 learners took courses on the platform each day and that year edX issued 2.1 million certificates to those who passed its courses.
So, in June 2021, the academic world was stunned when 2U announced it was buying most of edX’s assets, including the brand, website, and marketplace. 2U, a Lanham, Maryland for-profit company, provides the technology and services to nonprofit universities to enable the online delivery of degree programs.
While attending edX online courses was free, students had to pay a fee if they wished to get graded and receive a certificate. It appears most students were reluctant to pay fees because the certification, for passing the short programs, did little to improve their job or income prospects.
Agarwal, the Chief Executive, got edX to develop modular programs enabling students to earn a Micro-Bachelor or Micro-Masters’ degree in a few weeks. His semester-long course on circuits, for instance, was split into three independent modules. “Such a system unbundles education into Lego-like blocks, which have two key properties: each block offers a skills outcome and industry-recognized credential, and the blocks stack up into flexible pathways leading to career credentials and full degrees.”
While at edX, Agarwal also relied on insights from cognitive and learning science to develop active learning experiences. “There is no sitting down and watching a lecture for an hour” he told an interviewer for a 2U blog post. “Learning content is broken up into manageable chunks, such as a short video followed by knowledge checks or a peer-reviewed open response question. This method of learning something new and applying it immediately improves knowledge retention–and learner outcomes.”
But, even with the micro degrees and education innovations, edX continued to lose money. In its fiscal year that ended June 30, 2020, edX reported an operating loss of $17 million on $85 million in revenues. MIT and Harvard reportedly sought to cut their losses by selling edX to 2U.
The $800 million in cash received from the sale will fund a nonprofit that will continue under the leadership of the two universities, though not focused exclusively on online learning. The nonprofit will support “work focused on improving educational outcomes, reducing inequities in education, and continuing to advance next generation learning experiences and platforms, including but not limited to, Open edX,” a statement by 2U noted. Agarwal is not running the new nonprofit; he was named a technical adviser to the Open edX project.
Several academics pulled their courses from edX, opposing its sale to a for-profit company. Some of 2U’s educational partners, using its online teaching platform, have been criticized for pushing students heavily into debt.
At MIT, Krishna Rajagopal resigned as the dean of digital learning due to “serious continuing reservations about the path forward for edX that MIT has announced,” he reportedly told colleagues. Many of his colleagues have created a new non-profit alternative platform to distribute their courses online. Rajagopal graduated from Queen’s University, Canada, in 1988 and completed his PhD at Princeton in 1993. After stints at Harvard and Caltech he joined the MIT faculty in 1997.
Agarwal grew up in Mangalore, India. In 1977, he graduated from the St. Aloysius High School in the small coastal town. “I witnessed the global education gap firsthand,” he told a 2U blog post interviewer. “I was fortunate enough to be able to attend IIT Madras, one of India’s top universities, which opened up incredible opportunities for me and set me on my career path. However, this type of access and opportunity was, and still is, limited to too few.”
In 1982, he earned a degree in Electrical and Electronics Engineering from the Indian Institute of Technology; and in 1987, a Ph.D. in Electrical Engineering and Computer Science from Stanford University.
Following the purchase transaction, Agarwal joined 2U as its Chief Open Education Officer; however he was not appointed to the company’s board. 2U is the parent company, with edX operating as its global online learning platform and primary brand for products and services. EdX “will immediately expand learner access to affordable, career-relevant online education,” a statement by 2U noted.
The combined company, now provides technology and support to more than 230 partners—including universities and Google, IBM and other corporate partners—and offers more than 3,500 online learning courses to over 40 million learners, including free courses, executive education, boot camps, and undergraduate and graduate degrees.
EdX would not have been sold to 2U without its co-founder and Chief Executive Officer Christopher (Chip) Paucek “suggesting the radical idea that 2U would agree to a set of mission commitments that embodied edX’s non-profit DNA,” Agarwal told a 2U blog post interviewer.
In 2021, Paucek earned $17 million in salary and stock awards. 2U had an operating loss of $167 million on $946 million in revenues during the year. Over the past three years, 2U has granted $233 m in equity compensation, mostly to its senior executives.
2U’s stock, which has a market value of $860 million, has collapsed nearly 90% from its 2018 high. To fund its edX acquisition, 2U borrowed $475 million due in 2024 at high interest rates; currently estimated to be over 8%.
2U will operate edX as a public benefit company – with a focus on achieving one or more public benefits in addition to serving its shareholders - but only for five years. 2U has pledged $1 million to support the production of 10 new free courses in Essential Human Skills for the Virtual Age.
Agarwal is optimistic about the future of 2U. He told the 2U interviewer, “I believe education is a human right–everyone should have access to it like the air we breathe…I truly believe edX and 2U will have a lasting impact on the future of education.”
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