Harvard and MIT to Sell edX for $800 Million
Harvard, MIT, and edX announced today that edX, the two institutions’ 2012 joint venture into online education, would be sold to leading educational technology company 2U for $800 million. 2U, a publicly traded company listed on the NASDAQ, with revenues expected to approach $1 billion in 2021, is an online program manager. The company provides digital platforms and marketing and logistical support that allows colleges and universities to offer online instruction but does not itself provide degrees.
As part of the agreement, which is subject to approval by Massachusetts attorney general Maura Healey ’92, 2U will own and plans to operate edX as a public benefit entity, which means that in addition to creating value for shareholders, edX will also provide a specific public benefit—in this case, online courses, some of which can be audited for free. Currently, edX offers more than 3,000 online programs. “With the acquisition,” according to a University statement, “2U’s network will expand to include more than 230 partners, including over 185 nonprofit colleges and universities and 19 of the top 20 ranked universities globally.”
Harvard University provost Alan M. Garber said in an interview that the most important aspect of the match with 2U is that the company will continue edX’s mission. “They have committed to continuing to provide free audit tracks—in other words, free courses—in a wide range of subjects. And there are other provisions of the agreement,” said Garber, “that give us a great deal of comfort” that they will continue to make “great courses available at low or no cost to learners throughout the world.”
The proceeds from the transaction will be used to fund a nonprofit organization led by Harvard and MIT that will be focused on “transforming educational outcomes” and “tackling learning inequities.” The nonprofit—as yet unnamed—will partner with community colleges and other educational institutions that serve under-resourced communities, and with other nonprofit organizations, enterprises, and governments seeking to address inequities in education and the challenges of workforce reskilling in the context of forces such as globalization and technological innovation. “The specifics of what it will do will be worked out over the coming months,” Garber said, “as we consult with faculty at Harvard and MIT and other universities, with partners, and with many other people who are dedicated to improving education.”
This Harvard- and MIT-run nonprofit will also retain ownership of the open source software platform on which edX is built, and will work with 2U to continue to improve it. This means that government users, including countries such as Israel, France, Russia, Jordan, and Saudi Arabia, will continue to be able to take advantage of its rich features. “This was a central consideration,” said Garber. “We wanted to ensure the ongoing vitality of the platform because so many learners around the world are dependent” on it.
Asked how much of the proceeds from the sale would be used as endowment for the new nonprofit, and how much allocated to current use in support of its goals, Garber said that a final decision had not been made, but he expected that “a large component of it will be endowment.”
The sale of edX, which is expected to close within 120 days, does not signal a retreat by Harvard from online education generally. HarvardX will remain part of Harvard and will continue to produce courses that can be offered through edX. (And professors will still be able to choose whether they wish to participate in creating online courses or not.) Garber noted that during the pandemic, much of the teaching at Harvard was conducted remotely. And he said he suspects that “online teaching activities will continue with even greater enthusiasm” in the future.
Globally, he continued, “the pandemic greatly increased the demand for online courses. That does not mean that it will all be online for everyone….Many of us believe that the most effective form of learning for many students will be a combination of excellent online courses with complementary face-to-face instruction.” But the huge increase in demand, and continuing innovations in delivery of online education, suggested that large capital investments would be required to maintain the excellence of edX, Garber continued. In an assessment shared in the Harvard Gazette, he said that edX risked falling behind as for-profit online education providers invested in new platforms and courses. He added that 2U has the resources to carry out edX’s mission of including access to low-cost and free courses for diverse learners with continued innovation and at a greater scale than is readily attainable for a nonprofit.
2U has created online graduate degree programs with numerous leading institutions of higher education including Yale, Syracuse University, Northwestern University, and the University of California, Berkeley. At Harvard, 2U helped launch the nine-month Harvard Business Analytics Program for mid-career professionals, a certificate program which is taught by faculty from Harvard Business School, the School of Engineering and Applied Sciences, and the Graduate School of Arts and Sciences.
There are other good reasons that Harvard might wish to shift its focus to better support the larger mission of addressing educational inequity. In a 2019 article in Science, two researchers used data gathered by edX to show that massive open online courses (MOOCs) are likely not the best way to educate the world’s disadvantaged; most of the many online learners using the platform, they found, already had a college degree. Around the same time, many providers of online education, including edX, began to address the challenge of sustainably providing low-cost online education by starting to charge fees for some courses, particularly those with a synchronous component (sometimes requiring teaching staff) or that were part of a series that led to a certificate or a degree. Given this background, the sale of edX to 2U will allow Harvard and MIT to continue with the mission of reaching diverse global learners, as they envisioned at the outset.
“Our universities founded edX nearly ten years ago to raise the aspirations for online education and make university courses accessible to learners around the world,” said Harvard president Lawrence S. Bacow and MIT president Rafael Reif in a joint statement. “Today’s announcement will carry forward this mission on a whole new scale, connecting many more learners with a wider range of high-quality options for content, credentials, and degrees. With online education rapidly changing, it’s the right moment for this leap of evolution for edX. At the same time, the nonprofit that emerges from this transaction will enable us and our partners to support innovation that enhances learning for all and, we hope, play a catalytic role in closing the learning gap that exists for far too many.”
An official 2U statement describing the transaction is available here.