The University of Florida is discussing changes in its partnership with Pearson Embanet for running the university’s online bachelor’s-degree-granting arm, UF Online, including possible termination of the contract.
Pearson was brought on in the fall of 2013 to handle marketing, recruitment, and student support for UF Online, a $35-million effort spurred by the Florida Legislature. It was considered one of the most ambitious online-education projects to take shape in recent years. But because of low out-of-state enrollment, university administrators this summer began to evaluate the institution’s contract with Pearson — an 11-year agreement, with up to $186 million in revenue for the for-profit company.
The long-term target in UF Online’s business plan calls for about 24,000 enrolled students by 2024, with 43 percent of them coming from outside the state. While UF Online has met many of its goals so far, it has done so with more in-state students, who pay less than Florida residents attending classes on the campus and significantly less than out-of-state online students. UF Online has enrolled 1,647 students for this fall, and 9 percent of them are nonresidents.
Given that the nonresident benchmarks haven’t been met, the university has the right to review the contract and potentially terminate it, said W. Andrew (Andy) McCollough, associate provost for teaching and technology.
Florida administrators are exploring several possibilities for change, including taking at least some of the services that Pearson currently offers and handling them internally, Mr. McCollough said. He wouldn’t predict the likelihood that the contract would be canceled altogether.
If the contract is downsized or terminated, it would mark another blow for Pearson, which deepened its commitment to online education in 2012 with its $650-million purchase of EmbanetCompass, a support service for colleges moving degree programs online.
eCollege, which is also owned by Pearson, had contracted earlier that year with the California State University system to help run its fledgling online bachelor’s-degree program. But in 2013, with only a handful of majors on offer and low student enrollment, Cal State abandoned much of the program’s original design, and Pearson’s role was diminished. An advisory board called the company’s marketing services “not adequate.”
Some faculty members and other observers often question the role of for-profit “enablers,” like Pearson, in colleges’ online-education efforts, given that the companies tend to claim much of the resulting revenue. However, at both Cal State and Florida, there was pressure to get the programs up and running quickly, which increased the need for an outside company to handle administrative tasks while the colleges focused on developing course content.
‘Aggressive’ Timeline
The Florida law that created UF Online, signed in April 2013 by Gov. Rick Scott, a Republican, directed the university to begin operations in January 2014, a timeline that Mr. McCollough called “aggressive.” Still, he emphasized that Florida administrators had met the deadline, with help from Pearson. The university also had an existing contract with Pearson to run online graduate programs, so the partnership for UF Online made sense, he said.
That spring, 565 transfer students completed the semester, and nearly 1,000 students, including freshmen and transfers, enrolled for the fall.
But some experts say there were signs early on that Florida lawmakers, university officials, and Pearson employees might have been too ambitious with enrollment and revenue estimates. Once the state’s start-up money runs out, in 2019, five years after the program’s debut, it is supposed to be self-sustaining, with 13,000 students and $43 million in tuition revenue.
“Sometimes, politicians have these inflated expectations of what can happen,” said Russell Poulin, director of policy and analysis for the Western Interstate Commission for Higher Education. Lawmakers are often “looking at the success had by other institutions” but “don’t understand the work that goes into it,” said Mr. Poulin, who was involved in the planning stages of Western Governors University, an online-only institution.
Another problem: The online higher-education market is becoming more crowded, Mr. Poulin said. For instance, the nearby University of Central Florida is already well ahead of the University of Florida in online education, he said.
“The original assumption that students will come even from out of state and pay top tuition in order to get the UF name on an online degree is clearly proving to not be accurate,” said Phil Hill, a partner at MindWires Consulting, which works with educational institutions.
The university began a controversial effort this year that some saw as a move to increase flagging online enrollment. Florida offered qualified freshman applicants who were not admitted to the on-campus Class of 2019 the chance to complete their first year through UF Online and then become residential students if they met certain requirements. Out of more than 3,000 offers, fewer than 300 students have chosen to enroll in that program, known as Pathway to Campus Enrollment.
UF Online also did not have a dedicated executive director for more than a year. Florida hired Elizabeth (Betty) Capaldi Phillips, a former provost at Arizona State University and a leader in the development of that institution’s successful online program, to lead UF Online. But Ms. Phillips voluntarily left her job after less than three months and returned to Arizona State as a faculty member. The new director, Evangeline T. Cummings, a former Environmental Protection Agency executive, started on July 1.
Still, Mr. McCollough argued, UF Online remains on track toward its ultimate goal: creating high-quality online bachelor’s-degree programs at an affordable cost. A revised or terminated contract with Pearson wouldn’t affect the $35 million coming from the state or the program’s continued progress, he said.
“Maybe we’re moving from infant to adolescent,” Mr. McCollough said. It makes sense, he said, that “we would be looking again at what we forecast in our comprehensive business plan, given what we know now. I don’t doubt that we will make revisions in the forecast and in that plan as we move along.”
