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Nonprofit University Buys For-Profit College’s Tech Platform

By Jeffrey R. Young     Jul 9, 2018

The technology platform and curriculum of the company called UniversityNow—which attracted more than $40 million in venture backing and ran an experimental for-profit college—has been sold to the nonprofit National University system, which plans to use the platform to deliver its online courses.

The sale means that the university operated by UniversityNow—Patten University—will soon cease operations. A “transition message” on Patten University’s website notes that it will teach out its current students over the next several months and will allow them to transfer to one National University campus or other colleges that accept credits from Patten. There are now about 800 active students at Patten, who were notified of the change this morning.

Essentially much of what was Patten University will now be rebranded as the online college of one of the National University system’s campuses, John F. Kennedy University.

The purchase is part of National University’s push to try new forms of online education. Last year it announced a new higher-education model it calls “precision education,” though officials say that this project was separate. Both projects involve breaking the college curriculum down into small modules and letting students complete them at their own pace.

National University officials would not disclose the sale price, but Michael Cunningham, National’s system chancellor, said that it was “significantly less than the amount that was invested by the Silicon Valley investors,” and he suggested the university was getting a platform fine-tuned over time. “We acquired all the assets,” he added. “We have around $800-million in cash reserves and endowments, a lot of assets and no debt. The board has been great at investing in new technologies.”

But it was not initially clear what technology platform UniversityNow had left to sell, since in 2015 the company sold its competency-based learning platform to Penn Foster Education Group.

“UniversityNow had the ability to use the platform, but it didn’t own it,” says Ryan Craig, co-founder and managing director of University Ventures, which had an early investment in UniversityNow but no longer holds any stake in the company.

Thomas Stewart, the former president of Patten University and now president of John F. Kennedy Online, said that National University was able to buy the higher-education version of the online platform. “Penn Foster’s version of the license focuses on high school,” he says.

UniversityNow was founded in 2010 by Eugene Wade, an education entrepreneur whose first company sold to Edison Schools in 2001 for $38 million. Wade’s vision, as pitched in a 2011 TED talk, was to provide a low-cost college option for working adults using competency-based education, focusing on letting students learn independently with the help of a facilitator.

But like many competency-based programs, they had trouble explaining that approach to students, says Craig, the former investor in the company.

UniversityNow’s other big idea was to operate without accepting federal financial aid. “They tried an employer-pay model—that didn’t work,” says Craig. “They tried everything except Title IV,” he added, referring to the part of federal law governing student aid. Stewart says that the one thing that the company’s Patten University never got quite right was the price to make the institution sustainable. For the last few years Patten charged $4,000 per year for tuition.

The new online offering by National’s John F. Kennedy University Online will cost students $8,500 per year. That’s about half of what in-person students at the university pay. Students who transfer from Patten will be able to continue paying $4,000 per year.

Wade will continue on as an advisor to projects at John F. Kennedy Online, says Stewart.

Cunningham, the National University system’s chancellor, says that they hope to have a common technology platform for the whole system, which teaches about 35,000 students, by no later than 2020.

Students pay the flat $8,500 a year for tuition, but they can work through the material at their own pace. “Some people will take four years to get a four-year degree, some people will take three years, some people will take five years,” Cunningham said. “Our goal is to build a library of digital content broken down into its smallest possible components.”

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