[sgpl]

I think the biggest reason why the price is so high (beyond the brand, and the fact that the government policy results in everyone getting whatever loan amount they want) is because they're contractually required to share a huge chunk of that money with 2U (the same company that bought EDx's assets).

The article mentions that the old contract stated that about 60% of revenue gets shared with 2U but then there was a revision to the contract so it's not clear what the current figure is but even if they lowered it to 40-55%, that's still a huge chunk of change for basically running ads to target students into the funnel. It's actually sickening that the contract extends to 2030.

So USC is only getting $115,000 * .4 = $46,000 which while still high is substantially lower and sounds like a reasonable amount to offer the degree at. I'm not sure why they haven't built out an internal function since and tried to get out of the contract.

For the peak year of graduation mentioned (2017, 1500 students), 2U's take at the 60% figure is ginormous. $115k * 1500 students * 0.6. = $103.5 million.

Anyway there's so much wrong with what's happening here.

EDIT: I just re-read the article, it seems like the 1500 figure is a combination of in-person and online graduates for the year 2017. Still the premise holds true: a 60% take rate is excessive.

[bklyn11201]

The vast majority of elite institutions are completely unwilling to take the risks to capture 100% of the online revenue pie:

a) They are unwilling to spend lots of money on upfront content development costs without knowing future revenue.

b) They are unwilling to hire a bunch of temporary workers to help spin up new content and then re-allocate them.

c) They are unwilling to adopt (aggressive) modern marketing techniques.

d) They are unwilling to cold call.

e) They are unwilling to maintain call centers.

f) They are unwilling to spend millions on FB and Goog ads even if it has positive ROI.

[vgeek]

All of these are true except for d and e. I get multiple calls per week some weeks asking for donations from various deparments, having never donated to my college and demonstrated no willingness to do so. If they can panhandle from alumni, why not call prospective students? Too low of an ROI or are they just playing hard to get?

[bklyn11201]

I believe the difference is that institutions are using scholarship students to warm call alumni for donations vs. online program managers using large, paid call centers. I think it's just a different magnitude of marketing.

Non-profits in general are using more and more professional calling services. Maybe they keep the easy (warm) calls in-house and then outsource all the more difficult calls to an outside service.