June 17, 2024

Education For Live

Masters Of Education

UNC system to launch ambitious $97 million ed-tech start-up

9 min read

The University of North Carolina system is leveraging $97 million in pandemic recovery funding to launch a nonprofit ed-tech start-up intended to bolster adult online education in a state with a looming need for more skilled workers.

Project Kitty Hawk is named after the North Carolina beach town the Wright brothers returned to repeatedly before achieving their dream of flight, an apt metaphor for an undertaking that UNC leaders herald as a transformative effort to reach the state’s estimated one million working adults who have some college education but no degree. Sweeping in its ambition, Project Kitty Hawk’s five-year financial plan projects 120 new online program launches and 24,000 net new enrollments across the system’s 16 university campuses by the 2026–27 academic year, according to working papers project leaders shared with Inside Higher Ed.

Half of the state’s workers are eligible for employer education benefits, which UNC system leaders hope to capture by doing a better job of keeping adult learners in the state. As of fall 2019, Liberty and Strayer Universities topped the list of most popular online offerings sought by North Carolina students, more than 60,000 of whom are enrolled in what the working papers called “high-cost, out-of-state programs.” UNC leaders say they want to draw those students into the state system, but in order to succeed, they must better tailor online services and infrastructure to working adults.

Project Kitty Hawk will officially launch after the new year. System leaders plan an equitable revenue share between participating campuses, which will be “well below the rate typically charged by third-party providers.”

By effectively creating its own nonprofit online program manager, UNC is trying to avoid the expense of the profit-driven OPM model for building online education programs. OPMs are increasingly under fire from educators and outside experts who believe the companies’ business models prioritize profits over educational outcomes and learning. Leaders at UNC assert that by forgoing an outside OPM—which they point out can take as much as 60 percent of revenue in exchange for covering up-front costs—Kitty Hawk will be self-sustaining by 2026 and will rely on what the working papers call a “private sector–like approach ​on behalf of a tremendous public good.”

The working papers depict a system with a uniquely ambitious vision for Kitty Hawk, which they say will provide “end-to-end support to help universities rapidly design and take workforce-aligned programs online as well as attract, enroll and support learners through graduation.” Kitty Hawk will rely on “a central technology and service infrastructure” to help UNC campuses reach working adults, in part, the working papers say, because it will be “less expensive than the traditional approach of more buildings, more personnel, and more programs … or [campuses] doing it themselves.”

While a handful of the system’s campus leaders hailed the initiative and said they weren’t worried about losing revenue or students to a competitive new systemwide hub, outside experts said UNC’s plans are at least partly reminiscent of systemwide online efforts elsewhere that struggled to get off the ground, partially because of such competition. They also questioned what they characterized as an overly ambitious goal to enroll 24,000 net new students in 120 programs with only $97 million in seed money across five years.

“Ninety-seven million is a lot, but not when you hear that they’re talking about 120 programs—that’s less than a million dollars a program,” said Phil Hill, an educational technology consultant and blogger. “The OPMs quite often invest several million per program … They might be biting off more than they could chew. They might not realize just how much time and effort and money is needed to really get these programs running.”

Richard Garrett, chief research officer at the higher education advisory firm Eduventures, called the effort “unprecedented.” But he added that while the system’s effort to centralize rather than create 16 separate online models may seem logical, the track record for doing so has not been good elsewhere.

“The culture of higher ed is decentralized, even among state systems,” Garrett said. “There’s a lot of pitfalls ahead … It’s hard to point to system-level initiatives like this in the online sphere that have thrived as opposed to struggled or been diluted … or, in some cases, failed.”

Competition for the Campuses

Administrators at the system’s campuses may see the initiative as competing with successful online programs they’ve already built at their universities, Garrett said.

Just a handful of representatives of the various campuses contacted about the initiative replied. Many of the more than a dozen queried did not return emails and calls seeking comment.

University of North Carolina at Greensboro provost Debbie Storrs’s response was emblematic of the overall reticence to discuss the initiative. Storrs said in a text message that the system was “in the best position to speak about this initiative.”

Allen Guidry, interim vice provost for academic affairs​ at East Carolina University, said via email that his campus has been “working for some time” to reach adult online learners and offers over 100 undergraduate, graduate and certificate programs online. He said that nearly half of ECU’s 28,000 students took at least one online course in fall 2021, and 8,261 took exclusively online courses. About 5,700 of the 8,261 exclusively online learners were 24 or older.

“With our history and success in online learning at ECU, we have certainly watched the development of Project Kitty Hawk with great interest,” Guidry said in his email. “We are eager to explore how this entity could add further value to our efforts to scale online learning at ECU.”

Asked about the potential for competition as institutions vie for students and revenue, Guidry said that because UNC Online now allows students to access resources across the system, “we really have joined hands in our efforts.” UNC Online currently enables students to register for thousands of online courses from the various UNC institutions but is distinct from Kitty Hawk, which will operate as an affiliated nonprofit OPM.

Chancellor Darrell Allison of Fayetteville State University, a historically Black college where about half of the 5,661 undergraduates are 25 or older, said Project Kitty Hawk will be an important addition to the system, which he said must adapt to changing demographic trends.

“We don’t have an option—this is the new reality,” Allison said. He added that the days of counting on recent high school graduates to populate a freshman class “are long gone.”

Only 9 percent of UNC system undergraduates currently learn exclusively online, and just 13 percent are over the age of 25. UNC leaders believe these statistics underscore the need for a more robust adult online offering.

System planning documents show the statewide growth rate for 18- to 24-year-olds is forecast to be 8 percent through 2029 and just 1 percent from 2029 to 2039, a radical slowdown that system leaders say is in part fueling their work.

UNC system president Peters Hans said he is determined to win back adult online learners who now turn to outside online education providers, many of whom he called “bad actors.”

“I think about those adults and the chance for them to get ahead in their jobs, or perhaps start a new career, [and] what a difference we can make towards hitting our state’s ambitious educational attainment goals,” Hans said. “We set the goal of two million more North Carolinians with high-quality credentials by 2030, and we see [Project Kitty Hawk] playing a critical role.”

Hans added that while some of the system’s universities already offer online programs targeted to adult learners, the current offerings do not engage them “nearly to the extent I think that we could and should be.”

He said Kitty Hawk classes will be high quality and more than “basically Zoom classes.” He hailed his senior vice president for strategy and policy, Andrew Kelly, who helped create the blueprint for Kitty Hawk after meeting and speaking with other system leaders and educational technology experts across the country about lessons learned from prior efforts. 

The plan “was to create an OPM-like nonprofit,” Kelly said, “thereby enabling our universities to build more of those undergraduate programs that can really serve those 25-plus working adults.”

He added that Kitty Hawk’s nonprofit status will give new programs “more latitude” to merely break even.

But even if programs are allowed to break even, UNC has a tough road ahead, said Iris Palmer, a deputy director with the education policy program at the center-left think tank New America who has studied other state university systems’ online education models. Palmer said her research has focused on adult learners and the difficulties many have faced. 

How Others Have Targeted Adult Students Online

Many state systems and individual universities have long viewed adult students as an important population to cultivate and have created or expanded online programs to appeal to the demographic. Strategies for building these programs have varied, with some systems electing to take over an existing university to lay a foundation for their efforts and others building a new internal unit, as UNC is doing. Still others have created entirely new institutions, as the California Community Colleges opted to do with their Calbright College effort.

Purdue University, the University of Arizona and the University of Arkansas and University of Massachusetts systems are among the most notable examples of institutions that have bought existing online programs. The model typically requires relying on external—and expensive—OPMs. These attempts to co-opt existing online universities are broadly seen as risky and have at times been riven with controversy.

Purdue’s acquisition of the for-profit Kaplan University, for example, spurred an outcry from faculty members who worried about lower educational quality and blurred lines between the university and its online counterpart, Purdue University Global. While many of these new efforts are still too nascent to judge, institutions have faced tough questions about how they intend to achieve their vision for massive new online efforts without sacrificing quality or introducing a troubling profit motive to nonprofit state systems.

An important precursor to the UNC effort can be found at the University of Missouri, which in March united the online programs offered by its four system universities under one umbrella, Missouri Online. The new online platform debuted with 260 degree and certificate programs, and officials promised an additional 22 programs by next year. System leaders spearheading the Missouri effort said the consolidation would increase collaboration and efficiency, though whether that prediction will prove true remains to be seen.

The California Community Colleges’ Calbright initiative has posted clearer results—and they are disheartening. Calbright was launched in late 2019 to great fanfare, but it is now under threat of being closed, with a recent state audit finding the online-only institution graduated merely 12 of more than 900 enrolled students in its first year. Calbright leadership was blasted by auditors for making poor strategic choices even when armed with a staggering $175 million in state funding promised through June 2025.

Palmer said her research findings make clear why programs like Calbright have struggled: adult learners often strain to learn online, particularly given the competing pressures they face at work and home. She said faculty mentorship and significant engagement with professors has proven to be vital for these students. Palmer worries that an online-only model could be challenging for UNC, since it is difficult for all but the most self-directed students to stay motivated when learning exclusively online.

Kelly said student success coaches are central to the Kitty Hawk model and that he foresees in-person support to complement the online instruction once the pandemic ends.

Project Kitty Hawk leaders say campuses will be able to opt out of participating, and they made clear they view their organization as a source of support for individual institutions. But competition dynamics are nonetheless a problem embedded in these efforts, Palmer said. With Kitty Hawk anticipating 24,000 new enrollees in five years—which Palmer said in an email is “very ambitious”—the 16 university campuses inevitably will be vying for the same students and revenue.

“Once you start to have centralized online programming,” Palmer said, “it can be seen as competition; it can be seen as the beginning of some kind of regulation, or throttling, of the online programs that are offered at each individual campus. It’s a very difficult thing to pull off.”

UNC leaders seemed to anticipate Palmer’s line of reasoning; the working papers assert that the organization will not support any institution’s plans for new programs without an attempt to “validate market demand.”

“New program opportunities can originate from Kitty Hawk’s own market intelligence function, emerge from the universities, or be solicited directly from employers and education benefit providers,” the documents say. 

Kelly emphasized the autonomy individual campuses will have to execute programs. He said the individual institutions will award degrees, offer the instruction and make assessments.

Hill reviewed the working papers and said he came away with the impression that the system hasn’t yet “done the hard work” of consensus building.

“They make a compelling argument why we need to invest internally, as in UNC system capabilities,” Hill said. “But it raises the question … ‘Are we building up capabilities just within this Kitty Hawk initiative? Or are we going to do it as a way of making each of the … campuses better?’ And I don’t think they’ve figured it out.”

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