University of Florida plans post-Pearson future for UF Online
The University of Florida cancelled its 11-year contract with Pearson last week, less than two years into the deal, and is now working to incorporate the UF Online programme it was creating with Pearson into its core university operations. Inside Higher Ed reports the collapse of the university’s partnership with Pearson was due to unrealistic expectations and results, given the incredibly ambitious plans for UF Online's launch and growth. UF Online missed enrolment goals for out-of-state students, who had to pay more than four times as much as in-state students, causing a revenue gap and a reason for the university to cancel its contract with Pearson.

The collapse of the partnership between Pearson and the University of Florida is the latest example of a mismatch between expectations and results, online education experts say.

The university said as recently as last month that it wished to renegotiate the terms of its agreement with Pearson, a mammoth 11-year deal that could have netted the company as much as $186 million to bring UF's degree programs online (though Pearson officials dispute the size of that sum). This week, less than two years after the deal was signed, the university announced it would cancel the contract.

Come December, the university will “integrate UF Online more fully into core university operations,” according to an email that Evangeline J. Tsibris Cummings, assistant provost and director of UF Online, sent to university deans last week. The news was first reported by Politico Florida.

UF Online is now in a transitional phase as the university assumes responsibility for services such as admissions, advising and recruitment, and outsources others, such as marketing. In light of those changes, the university will “revisit” UF Online's original business plan and formulate a new strategic plan for the venture, according to Cummings’s email.

In an interview with Inside Higher Ed, Cummings said the changes demonstrate the university’s commitment to online education. Handling student support services in-house will also improve communication across the campus, she said.

“The future is bright for UF Online,” Cummings said. “We remain committed to online academic excellence.”

But the announcement has online education experts questioning the decision-making process behind UF Online and many of the parties involved, including the Parthenon Group, whose $300,000 study in 2012 recommended that the state expand its online education efforts; the Florida Legislature, which pushed the university to do so quickly and inexpensively; Pearson, for seeing another high-profile deal fall through; and the university itself.

“This represents a confluence of issues,” Max Woolf, a principal analyst at the higher education consulting and research firm Eduventures, said in an email. “The challenge of unrealistic goals set by the state legislature for out-of-state enrollments, the overpromising from Pearson to meet these desired outcomes and the agreement from the university that this was a reasonable and rational goal.”

The Parthenon Group, now known as Parthenon-EY, did not respond to a request for comment. Neither did the Florida Board of Governors, the state university system’s governing body. A spokesperson for Governor Rick Scott referred questions to the university.

Florida is the latest institution to bet big on fully online education, only to see the plans change dramatically shortly thereafter. Similar storylines have played out at California State University, the University of California, Howard University, Rutgers University and other institutions. While no two conflicts are identical, many revolve around results failing to live up to expectations. At Florida, for example, the university and Pearson overestimated their ability to recruit out-of-state students.

UF Online has moved at a breakneck pace since being announced in 2013, and Pearson’s exit is only the latest twist. The university had seven months to get UF Online up and running to meet a legislature-imposed launch deadline of January 2014. Its inaugural director then resigned after two months, leaving the position vacant for more than a year. In the meantime, the university faced opposition from some faculty members, who declined to create online degrees, and struggled to recruit first-time-in-college students.

In addition to enforcing a tight deadline, the legislature also restricted UF Online’s ability to generate tuition revenue. By law, UF Online can charge in-state students only 75 percent of what residential students pay for tuition. For out-of-state students, however, “tuition may be set at market rates.” That means Florida residents pay $129.18 a credit hour, while nonresidents pay $552.62, or more than four times as much.

Out-of-state students have largely stayed away from UF Online, causing the university to badly miss its enrollment projections for that group. UF Online had hoped to enroll 315 out-of-state students during the 2014-15 academic year, but attracted only 90, according to a presentation to the Board of Governors.

UF Online reacted by admitting more in-state students -- 1,229, compared to the projected 990 -- but did not close the revenue gap. Although it topped its projected total enrollment by 15 students, UF Online’s tuition revenue came in $170,000 under target. Out-of-state students were supposed to supply 59 percent of UF Online’s revenue. Instead, they generated 9 percent.

“The lesson to be learned for the [online program management] providers is that even long-term contracts are not safe if you cannot execute on what you have promised,” Woolf wrote. “The lesson for the institutions is to set expectations at the outset with the OPM provider that are reasonable and rational rather than have to face a situation where no one is satisfied with the outcomes of the partnership and you have to unwind a contract within the first three years.”

UF Online Going Forward

Cummings, who became director on July 1, described the tuition rate and launch requirements as “challenges,” not “barriers.”

“The program is growing, and a big interest of mine is making sure that we are on a path to sustainable growth,” Cummings said. “As we grow, we have important decisions to make to ensure that we’re in it for the long term.”

The lackluster out-of-state student enrollment numbers did at least give the university an out. “Because [Pearson] missed that metric, we determined that a full termination made sense for us,” Cummings said.

Cummings also spoke appreciatively of Pearson’s role in launching UF Online. “Pearson is a proud partner of our history,” she said. “The fact that we are who we are is in part due to Pearson support.”

In a statement released Wednesday, Pearson acknowledged the challenges of launching UF Online but also pointed to some of its accomplishments. In addition to an 84 percent year-over-year increase in enrollments, the company also cited the $3.4 million online students saved by paying no more than 75 percent of on-campus tuition rates.

“Pearson is proud to offer programs that make higher education more accessible and affordable for students,” a spokesperson for the company said. “Pearson's online program management services have been successful at a number of colleges and universities across the U.S. We have learned a great deal from the UF partnership that can be applied to helping both Pearson and other university customers improve their delivery of online options for students.”

Since UF Online missed its out-of-state enrollment target, the university will not have to pay Pearson a fee to terminate the contract, Cummings said. The university may yet purchase some “posttermination activities and assets” from the company, but Cummings declined to go into detail, citing ongoing negotiations.

The university still faces significant expenses in order to provide the same level of service as Pearson, however. At its peak, Pearson had about 35 employees working on the Florida partnership, a spokesperson for the company said.

The university plans to address that issue by consolidating in some areas and expanding in others, Cummings said. UF Online marketing will be merged into the university’s “overall branding wheelhouse,” handled by the marketing agency 160over90. Student advisers will take on additional duties. The university will also hire more staffers, including about five people to focus on recruitment, she said.

Another perk of partnering with Pearson was the company’s library of course materials and tutoring services, which students could get access to free. Once the contract is terminated, those perks disappear. Cummings said individual departments and faculty members will be free to assign course materials, meaning students could see an increase in technology fees.

The university plans to tackle those and other issues in its revised business and strategic plans, expected some time early next year.

“It’s a good thing that [UF Online] is merging into the support structure for the university, because ultimately this is part of the University of Florida’s future,” Cummings said. “I’m not concerned with a loss of identity. Rather, this is the University of Florida saying online is at the core of what it does.”