Harvard University and the Massachusetts Institute of Technology have struck a deal to sell their massive online education platform, edX, to the education technology company 2U, which they said will help edX continue the record growth it has experienced during the pandemic.
2U, a publicly traded company, will acquire nearly all of edX’s assets for $800 million in cash, the universities and the company announced Tuesday. The proceeds will be used to create a new nonprofit, overseen by the two universities, whose mission will be to address educational inequities and reimagine the future of learning, the schools said.
Harvard president Lawrence Bacow and MIT president Rafael Reif said the agreement was not struck because of a need for revenue, but because edX has grown to a point where it needs to evolve to a new level.
“What the pandemic has done is it has helped us realize that this not only has the potential but the need to grow even faster than it is growing right now, so this is an opportunity for us,” Bacow said on a Zoom call Monday evening with reporters ahead of the announcement.
The deal comes nearly a decade after the two entities launched what was then a revolutionary venture aimed at changing the way education was delivered in order to reach far more learners.
EdX has grown to serve more than 39 million learners, most of whom live outside the United States. The platform offers courses from MIT and Harvard, as well as from other universities, and courses designed by companies for their workers and unique certificates including a “MicroMasters.”
In joining with 2U, the edX platform will gain the expertise of a company with deep experience in online learning. 2U works with more than 80 universities around the world to create digital courses. The company offers about 500 online programs with undergraduate and graduate degrees and professional certificates.
“The pandemic not only accelerated the adoption of online learning but also set higher education institutions much more firmly down a path of a digital future,” said 2U cofounder and chief executive Christopher Paucek.
Paucek said business has never been stronger at both 2U, which he said recently delivered its best quarter ever, and edX, which saw 10 times more new registered learners and a fifteenfold increase in course enrollments over the past year.
“I would argue this is early innings in the digital transformation of higher education,” he said.
Once combined, the entities will offer more than 3,500 digital programs, reach 50 million learners around the world, and serve more than 230 partner universities and companies.
“What COVID showed was just the incredible amount of energy and excitement around online learning, and the incredible investment in ed tech,” said Anant Agarwal, founder and chief executive of edX and an MIT professor.
2U plans to retain all current edX employees who do not join the nonprofit. Agarwal’s role is still being determined, he said.
2U plans to ensure that participating colleges and universities can continue under their standing agreements with edX, and they will still use the edX name.
The nonprofit that Harvard and MIT plan to create will be used to collaborate with educational institutions, governments, and other organizations to develop new approaches to teaching and learning, the schools said.
It will have a particular focus on reducing inequities in education by expanding opportunities to historically underserved communities and learners of all ages, they said. Details of the projects the nonprofit will undertake are still being determined, he said.
“If anything the last year and a half has taught us throughout this pandemic is that there is still a huge digital divide,” Bacow said.
The acquisition has been approved by the boards of 2U, edX, MIT and Harvard, the entities said. It is expected to close within the next four months and is subject to regulatory and governmental approvals.
According to a set of slides presented to 2U investors on Tuesday, edX generated $84.7 million in fiscal year 2020 and saw an operating loss of $17.4 million. 2U executives told investors the deal is expected to harness the “marketing engine” of 2U with the well-known brand and course marketplace of edX.
Kevin Carey, vice president for education policy and knowledge management at New America who has written extensively about online education, said the nonprofit edX operates in a space that has become dominated by for-profit companies who have expanded the money-making potential of online education.
“There is just a ton of money, if you can get these programs to a certain size,” he said. “While giving away your great classes for free sounds altruistic, no one wants to do that.”