Failure to Launch

When Quad Learning launched its American Honors program, the company expected to provide academically talented community college students with an affordable and seamless pathway to transfer to selective universities.

Over the course of five years, the program proved to be financially unsustainable and may have even hurt the academic futures of students who would have gone to a four-year college by encouraging them to attend community college instead, according to a new report from the Community College Research Center at Columbia University’s Teachers College.

“Students who would’ve come to the community college anyway and were starting at the honors program did have higher rates of transfer to a four-year institution and better overall persistence,” said Shanna Smith Jaggars, a co-author of the report and assistant vice provost of research and program assessment in the Office of Student Academic Success at Ohio State University. “But for students who would’ve gone to a four-year college and instead started at a community college because they were swayed by this honors program and transfer pipeline, it didn’t seem as strong of a bargain.”

About one-third of high school graduates who entered American Honors but would have otherwise directly entered a four-year college saved nearly $12,000 per year in tuition and fees in their first two years of college, but they substantially decreased their chances of transferring and graduating with a bachelor's degree within four years, the report said.

Smith Jaggars noted that most community college students, even high-achieving students who would likely be admitted to selective universities as freshmen or as transfer students, ultimately do not transfer to those institutions. This was the problem Quad Learning wanted to solve, she said. A number of factors often prevent high-achieving students from transferring to universities, such as not getting enough financial aid after completing an associate degree or not getting sufficient advice from college counselors about navigating the transfer process.

A 2018 report from the Aspen Institute’s College Excellence Program found that each year more than 50,000 community college students who are prepared to do well at a university don't transfer. And 15,000 of those students have earned at least a 3.7 grade point average and could transfer to selective universities. Ultimately, only 17 percent of degree-seeking community college students transfer to a four-year college and complete their bachelor’s degrees, according to CCRC.

Those students who do transfer tend to enroll at local or regional public universities closest to where they live. But those institutions sometimes have lower graduation rates than selective universities, Smith Jaggars said.

“And the return on your degree is much greater at a selective institution,” she said. “Quad Learning wanted a career pipeline for lower-income and middle-income students to have a chance to get into selective destinations and graduate from them.”

Quad Learning used venture capitalist funding and launched the American Honors program in 2013 after conducting a pilot program the previous year. The plan was to build a network of community college honors programs with collaborative curricula and "intrusive advising" that would give students high-quality associate degrees and allow them to seamlessly transfer to a network of selective universities. The program had enrolled 650 students at seven community colleges by 2014, and Quad Learning had plans to expand to 3,000 students by 2016.

“They thought in order to scale this across the country they would create a common online honors curriculum,” Smith Jaggars said. “That idea seemed simple and elegant, but it never happened.”

Faculty members at the community colleges pushed back on the idea that the for-profit Quad Learning would create the curriculum for the American Honors courses. Some faculty also were opposed to teaching the courses online. Each community college eventually developed its own honors curriculum with assistance from Quad Learning’s American Honors design consultant.

“A start-up backed by venture capital and behaving in much the same way start-ups do, where they move fast and break things, is not the way community colleges and higher education acts,” Smith Jaggars said. “These are two very different cultures, and at the beginning, a lot of faculty were not OK with that.”

Paul Freedman, founder and chief executive officer of Entangled Ventures, an education design agency, said Quad Learning tried to reinvent general education courses, a challenge most public-private higher education partnerships don’t attempt.

“American Honors focused on the core general education experience, and that is the heart of an institution’s academic control,” Freedman said. “Most public-private partnerships have been in vocationally or professional-oriented programs outside of the core general education experience.”

Google and Facebook, for example, have been partnering with colleges across the country for cloud computing certificates or digital marketing programs, he said.

“They’re dealing with professional-oriented faculty members where the clear outcome is getting a job,” Freedman said. Those faculty understand that work-force curricula must be more flexible and open to change, unlike standard general education courses, because the industries they’re training students for are constantly evolving, he said.

Freedman has experience attempting to shake up traditional education models. His Altius Education company once ran Ivy Bridge College in collaboration with nonprofit Tiffin University to offer online, two-year degrees. Accreditor scrutiny eventually led to Tiffin pulling out of the partnership and Ivy Bridge’s collapse.

Even without the involvement of a private company, creating multi-institutional transfer agreements is difficult to tackle, he said, referring to American Honors.

While the more rigorous American Honors courses were great for community colleges, they made the transfer aspect of the program even more difficult for Quad Learning to manage because the company had to negotiate transfer agreements for multiple curricula at multiple colleges.

“Usually community colleges have pretty good articulation agreements with whatever is the close destination university,” Smith Jaggars said. “But outside of that, it’s difficult to have that kind of articulation relationship with colleges that are geographically distant or highly selective, or if they’re only sending a handful of students to a university over the course of a few years.”

Quad Learning officials believed that the selective universities would be more willing to accept transfer credits from even a small community college if the courses were backed by American Honors, Smith Jaggars said. More importantly, the universities could accept 100 American Honors students instead of just one or two from a community college they may not recognize, Smith Jaggars said.

Instead, Quad Learning found that their advisers were helping students understand which of their college courses met the requirements of the universities students wanted to attend, she said.

“It was much more of a retail operation and a lot more time intensive, much more so than Quad Learning anticipated,” Smith Jaggars said.

One positive aspect of the American Honors program was the specific advising students received.

It’s not unusual for community colleges to have one adviser serve nearly 1,000 students, Smith Jaggars said. In the American Honors program, the ratio was one adviser to about 100 students, and the advisers met with each assigned student at least once a semester.

“It’s a model most community colleges can’t afford on their own,” she said.

Quad Learning also had difficulties securing admission and transfer agreements with selective universities. The company eventually signed more than 70 transfer agreements with four-year colleges, including some “highly selective universities,” according to the report.

Even when those transfer agreements were completed, students still were not “guaranteed” admission.

“If students completed their associate degree with an American Honors designation, they would be well qualified for admission to [Michigan State University] and would almost certainly be accepted -- but by no means was MSU guaranteeing this,” according to the report.

Quad Learning also failed to understand the on-the-ground realities of transfer for many students, Smith Jaggars said.

“Just because you build program maps and align curriculum doesn’t mean student mobility is a slam dunk,” said Josh Wyner, executive director of the Aspen program. Students may not have planned financially for at least four years of college, or they might not be prepared to leave their families and travel out of state or across the country.

“These are big decisions people need to make, and those are the life decisions that will make or break the capacity of community college students to transfer,” he said.

Aspen is a part of the American Talent Initiative, an alliance of about 120 four-year institutions that consistently graduate 70 percent or more of their students in six years and have partnered to enroll and graduate 50,000 low- and moderate-income students, including transfers, by 2025.

Smith Jaggars said that had the American Honors program continued, it could have served as a pipeline of students for the institutions taking part in the talent initiative.

A Clash of Business Cultures

Quad Learning built the American Honors program using a tuition model that ultimately made money, but not as much as was needed to keep the operation running, Smith Jaggars said.

Although tuition prices varied under the honors program, the rates were typically 50 percent higher than standard tuition rates at the community colleges but still lower than the costs at nearby four-year institutions. Quad Learning and the community colleges each got a share of the total tuition cost.

Ultimately, Quad Learning didn’t have enough enrollment to meet the profits of the business model they created.

“If they were able to operate under a nonprofit model, they could have pursued it, but at the offset, they had unrealistic expectations of how much they were going to make,” Smith Jaggars said.

Quad Learning needed to enroll groups of new students who wouldn’t otherwise have attended community college but were persuaded to do so by the American Honors program. But the program routinely failed to meet enrollment goals, according to the report.

“Corporate pressures on [Quad Learning] staff to meet enrollment goals became increasingly intense, some college stakeholders felt the program’s admissions standards are becoming more lax … In 2017, challenges meeting domestic student enrollment goals prompted QL to increasingly move into the international student market to recruit [American Honors] students,” according to the report.

The company shifted to pursuing international students, who pay more in tuition, as a revenue strategy, but that proved to be a difficult endeavor as well.

Smith Jaggars said the CCRC researchers didn’t have any insight into Quad Learning's budgets but believe what may have “doomed” the company was its goal to maintain a socially conscious model for domestic students while reconciling the need to make high profits and give investors a significant return on their investment.

“If they had been funded through a model where investors just wanted to be paid back or socially conscious investors who believe in this program and hope they get their money back and that’s it, they could’ve done that,” she said.

Eventually Quad dropped the American Honors program for domestic students, and the program was sold to Wellspring International Education last year. Wellspring helps colleges recruit and enroll international students.

“A source close to the deal described it as a distress sale, worth ‘a small fraction’ of what Quad Learning had raised,” according to the report.

Smith Jaggars said there are lessons future public-private partnerships can learn from Quad Learning's experience.

Companies should first understand the student customer base and what motivates them to enroll in any college, she said.

“Another takeaway for companies is that the move fast, break things approach is not the best partnership approach,” Smith Jaggars said. “You need to realize it takes time to develop trust and make it clear you have only good intentions and that scaling something up super fast is probably not doable.”

Nonetheless, the American Honors program was not completely dissolved. Some community colleges maintained their own honors programs. Ivy Tech Community College in Indiana, for example, now has an Ivy Honors program that has transfer agreements with more than 60 four-year colleges and universities.

"Most of the community colleges were fine with Quad Learning dissolving," Smith Jaggars said. "They felt Quad Learning had helped them start something they felt was a good model for their students, and they planned to continue it in some form or another after Quad was gone."

Eventually, there wasn’t much incentive for colleges to hand over a quarter of their tuition and fees to the company once they saw they could replicate the program on their own, she said.

“The colleges learned a lot and received a lot of support and connection with their counterparts at other community colleges,” she said. “They were happy they had done it over all.”