When Yale announced it last week that it would offer its first fully online degree, the backlash was almost immediate. Students and alumni of of the physician assistant program that Yale will offer online vocally opposed the move, urging the university to reverse the decision and stoking a letter-writing campaign. At a meeting in the wake of the announcement, they warned that offering an online degree would devalue the program, the profession, and the university.
On the student newspaper's article about the move, the most popular comment read simply: "This seems like an unbelievably bad idea."
But the idea received a much more positive response from another group: investors in 2U Inc., the online education company that is partnering with Yale to offer the degree. 2U's stock is up 24% since the announcement, and its market capitalization is now just shy of $1 billion — a rapid rise for a company that had flown relatively under the radar since it went public last April. It is not yet profitable, but revenues have grow steadily , and it expects to turn a profit by 2017.
2U has made a business out of partnering with high-caliber universities, among them Northwestern and the University of North Carolina, to offer online-only degree programs. The Yale announcement carries so much weight with investors, analysts say, because the school lends credibility and prestige to a company that relies heavily on it.
The company's future depends in large part on proving that the programs it offers are worthwhile to students, employers, and investors, overcoming skepticism about the value of an online degree: "It's what keeps me up at night," 2U CEO Chip Paucek told BuzzFeed News.
"The addition of Yale, as an Ivy League school, may change the conversation" about 2U, said Michael Nemeroff, a software analyst with Credit Suisse. "There's a stigma about taking any type of higher education online, but the fact that an Ivy League school is starting to work with 2U is an indication of the quality of what they're doing."
2U offers small class sizes and technology that allows interactive courses to be conducted live online. Its degrees cost exactly as much as they would if you attended on campus. Yale said it would charge $84,000 for its online medical science degree, and says it will be identical to the degree earned by students on its campus.
At the town hall meeting in the wake of Yale's announcement, that claim—which is one of 2U's biggest selling points—was a target of students' criticism, according to two people present. "At the very least, it should be a separate degree," said Chandra Goff, a recent graduate. "But the sentiment was also that it shouldn't go forward at all."
"This is a scar on our credential," said Daniel Cervonka, an alumnus of Yale's physician associate program who attended the meeting. "To offer a Yale degree online is not a good idea… It's devaluing the degree, and it's devaluing the profession." Cervonka is the director of the PA program at the University of Bridgeport.
At a meeting she described as "really tense," Goff said she didn't hear a single student, alumni, or faculty voice that was fully in support of the program. Members of the class of 2017 "said they wouldn't have chosen to come to Yale" had they known about the online degree being introduced, Goff said.
Paucek is well aware of the criticism. He's wary, he said, of being compared to MOOCs, or massively-open online courses, which have faced a backlash for low engagement and poor results — and even more so of being compared to for-profit colleges that, like the University of Phoenix, have been some of the most prominent purveyors of online degrees.
But the rumbling of unrest among Yale students and alumni doesn't bother Paucek.
"It typically starts rough" after universities announce they are launching a degree online through 2U, he said. "People immediately assume that we'll dumb down the degree. You're going to take a lot of criticism initially." Some of the company's biggest initial critics at universities, he said, eventually come to realize the high quality of the programs that 2U is offering.
"The history of online education is filled with way too many companies focused on the wrong thing," Paucek said. "But we believe it's a transformative moment for online ed, and the story we've been telling is becoming more obvious: You can have an incredible outcome if you do online education right."