Ivory Tower In The Cloud

Long the domain of seedy degree mills peddling debt-laden vocational training, online education is now a priority, and a profit center, at top-tier universities thanks to innovators like 2U Inc.

- Antoine Gara

In 2014, when Douglas Shackelford was named dean of UNC’s Kenan-Flagler Business School, his most important strategic initiative was clear. UNC was a top-tier public university, but its Bschool, barely in the top 20, was on a mission to greatly expand its enrollment on the cheap.

“Our traditional revenue sources were changing, and not in a good direction,” says Shackelford, 60.

So UNC forged ahead with a little known company called 2U, based in Lanham, Maryland. In exchange for 60% of future tuition revenues, 2U would invest $5 million to $10 million building out UNC’s software and marketing capabilities, scour the globe for online applicants and, importantly, leave the admissions decisions and teaching to Chapel Hill.

The results have been impressive: Seven years after it launched its program with 2U, UNC is the largest online M.B.A. provider, with 938 students, most of whom pay full tuition. Only half as many are enrolled in the full-time residential program.

“We’ve doubled our student body without adding any buildings in Chapel Hill,” says Shackelford, noting that tuition for MBA@UNC costs $124,000. In fact, online revenue has nearly tripled to $14 million, while faculty head count has held steady, and operating income has gone from a $1.4 million loss to a $5 million profit.

Known as an online-program manager, or OPM, 2U is the United States’ leading provider of software for universities seeking to quickly expand enrollment digitally. Its cloud-based content-management platform allows students and staffers to seamlessly connect to universities’ existing systems, handling everything from loading lectures and hosting intimate discussion groups to troubleshooting technical glitches.