OpenAI inks deals with colleges, seizing early lead in education market

(Bloomberg/Brody Ford and Liam Knox) — OpenAI has established a beachhead at many US colleges, overcoming university administrators’ wariness of artificial intelligence and giving ChatGPT a headstart on becoming the go-to assistant for the next generation of workers.

The company has sold more than 700,000 ChatGPT licenses to about 35 public universities for use by students and faculty, according to purchase orders reviewed by Bloomberg. By contrast, Microsoft Corp., which typically bundles its Copilot assistant with existing software, has experienced more measured uptake of its AI tool at these schools — and faculty are more likely to use it than students.

ChatGPT adoption on campus has happened quickly. Students and faculty used it more than 14 million times in September, according to data from 20 campuses that have signed contracts with OpenAI. On average, each user called on ChatGPT 176 times that month for help with such tasks as writing, research and data analysis.

Private schools aren’t subject to public records laws, so their purchases of AI licenses aren’t readily available, meaning the true number of university contracts is probably much higher. Globally, OpenAI has sold “well over a million” licenses to colleges, according to a company spokesperson. A Microsoft spokesperson said many universities are using a range of the company’s AI products.

The tech industry has long hawked cut-price software and hardware to students in hopes of turning them into lifetime customers. Apple Inc. offers educational discounts and rolls out a back-to-school offer each year to further entice buyers. Google’s Chromebook laptops and free apps helped it win campus converts.

Now OpenAI is playing a similar game in artificial intelligence. Microsoft’s Copilot and Google’s increasingly well-regarded Gemini could potentially catch up. But for now OpenAI has snatched an early lead by leveraging ChatGPT’s popularity and discounting heavily — mirroring traction the world’s leading AI startup has built with office workers and consumers.

Schools willing to purchase bulk access to ChatGPT are paying a few dollars per user per month, according to the contracts reviewed by Bloomberg. That’s a substantial savings compared with the $20 per month OpenAI typically charges for a smaller number of educational users. For corporate users, ChatGPT can cost as much as $60 per month.

Arizona State University, one of the country’s largest schools by enrollment, agreed in September to buy access to ChatGPT for all of its students and faculty. Almost 10,000 students and 6,400 employees at the school took advantage of the new licenses through late November, according to a spokesperson.

Several other major universities have taken the same approach. In autumn 2024, the California State University system decided it needed to make AI available to its entire student and staff body — about 500,000 people — to ensure access even to those who couldn’t afford it themselves. Administrators evaluated a number of tools and found ChatGPT to be by far the cheapest and most familiar to students, said Chief Information Officer Ed Clark. The system, which includes schools like San Diego State University, agreed to pay OpenAI $15 million per year.

Initially, administrators were interested in Microsoft’s Copilot, since it worked with apps like Word that the schools already used, Clark said. But Microsoft quoted them a significantly higher price than what they ended up paying OpenAI — $30 per user per month for Copilot versus effectively $2.50 per month for ChatGPT. Many universities using Copilot — such as the University of Georgia and the University of Washington — are paying about $30 per user per month, according to the documents reviewed by Bloomberg.

Campus Offensive

Less than two years ago, many college administrators took a dim view of artificial intelligence. Now, universities are among AI’s biggest institutional customers. How did they learn to stop worrying and love ChatGPT?

Educators were among the first people to grapple with the implications of generative AI because the technology was such an obvious helpmate for college students. ChatGPT quickly became ubiquitous on campus, with students using the chatbot for basic research, writing — and, yes,  cheating. Fearing an outbreak of plagiarism, some schools banned or restricted ChatGPT, prompting students to use it surreptitiously.

But many school administrators have arrived at a wary acceptance and are now seeking to set ground rules for how teachers and students use artificial intelligence. “We don’t think there’s going to be an option in the future to opt out,” said Anne Jones, vice provost for undergraduate education at Arizona State. “Employers expect and need a labor force that knows how to work with these tools.”

The tech industry, meanwhile, is making a concerted effort to persuade schools of AI’s benefits. OpenAI has hired education-focused salespeople and  poached a top executive from Coursera, an online learning platform that often partners with universities. “College students in particular are some of our heaviest users,” said Leah Belsky, the former Coursera employee who is now vice president of education at OpenAI.

Ahead of finals in Spring 2025, OpenAI made ChatGPT free for students and launched a major advertising push. It has also hired student ambassadors to drive adoption of the tool in the California State University system. “More of the educational ecosystem is realizing that AI is here to stay,” said Belsky. Her pitch to universities is that officially adopting AI will allow it to be used in a way that helps learning, job readiness and teaching. By contrast, when AI is used as an “answer machine,” it can stunt learning, she says.

Microsoft, meanwhile, has sponsored research studies on how AI is already being used in education. Schools that use the company’s software already have access to the basic tier of its AI chatbot for free, and the company recently announced a price cut for academic institutions — from about $30 per month to $18 per month — for the premium version. “Microsoft has partnered with universities for decades to support their evolving academic, research, and operational needs through trusted technology and innovation,” the spokesperson said.

Federal and state policymakers have also begun offering incentives to schools to formally adopt AI programs. Earlier this month the Trump administration announced new federal grant priorities for higher education, among them a $50 million pool to support initiatives that expand access to AI and use the technology to “enhance teaching, learning and student success.”

Even as they embrace AI, some schools remain wary and are rushing to study its potential impact on education. In March, Netflix Inc. Chairman Reed Hastings gave $50 million to Bowdoin College to dig into the tools’ effects on teaching and learning.

The technology’s ability to help students learn is still unproven, said Eric Chown, a Bowdoin professor of digital and computational studies who was asked to head up that effort. AI could reduce the drudgery of administrative work such as managing calendars and creating syllabuses, but doesn’t appear to be as effective when it comes to actual teaching, he said. Chown worries that colleges are rushing to cut deals with OpenAI not so much because they’ve figured out how AI can improve education, but because they fear being left behind.

Many schools are rolling out the tools slowly while testing their effectiveness. The University of Nebraska at Omaha surveyed a few hundred staff in spring 2025 as it began buying ChatGPT licenses. It found that 92% of the teachers, librarians and students surveyed said they’d recommend the tool to others at the university, with most saying it was saving them between one and five hours a week. Writing and brainstorming were the most commonly cited uses for the tool, though about a quarter of respondents used it for such tasks as lesson planning and tutoring students, according to the results. As of September, the school had about 800 active users.

Adoption can vary greatly. At the University of Illinois at Urbana-Champaign, about 200 members of the faculty are active on the school’s ChatGPT licenses. Of them, a small number of power users make up the majority of usage. One policy researcher called on the tool 742 times in September — about 34 times per day, assuming a standard workweek. Meanwhile, most users called on the tool less than 10 times all month. (The university also pays for about 600 Microsoft Copilot licenses.)

Mairéad Martin, the university’s chief information officer, said it’s not unusual for there to be “early adopter superusers.” But she said reticence from many faculty is one reason the school is taking things slowly. The university has forfeited the substantial discounts that come with large-scale licensing deals in order to reassure staff that administrators take lingering concerns over the technology, including plagiarism and data security, seriously.

How long OpenAI will retain its campus lead depends in part on how aggressively Google and Microsoft respond. In an effort to retain its grip on the education market, Google is offering the pro version of its Gemini AI assistant free for a year to any college student. It also offers an entirely free tier of its AI assistant, which Miami-Dade County Public Schools — one of the largest in the country — has rolled out for 100,000 students. (The district has also spent $150,000 to buy 400 licenses to Google’s pro AI tier, which is often aimed at instructors, according to documents.) Google has touted adoption of its AI technology at colleges, including  Boise State University.

Microsoft’s software is prevalent at corporations, and the company has persuaded many of them to adopt Copilot and other AI tools that it has baked into productivity apps like Word, Excel and Teams. Thanks in part to Google, Microsoft has less of an advantage in education. Many schools surveyed by Bloomberg are buying a limited number of Copilot licenses, largely for faculty, but haven’t seen broad student adoption.

Texas State University is a major Microsoft customer, paying the company about $1 million per year. The school already gets bundled access to the basic tier of Microsoft’s Copilot tool for all students and faculty. Adoption is decent —  about 69,000 unique devices connected to Copilot on University Wi-Fi in a one month period around November, according to a document seen by Bloomberg.

But even with no formal contract, ChatGPT use was twice as high as that of Copilot, the document shows. Use of Google’s Gemini also exceeded Copilot slightly. The university is now negotiating with Google to buy more of its premium AI tools, Chief Information Officer Matt Hall said in an interview.

OpenAI expresses confidence that it has already won over college students. “There are many universities that have access to Gemini and Microsoft and other AI tools and then bring us in,” OpenAI’s Belsky said. “Because at the end of the day, the tech that the students most prefer is ChatGPT.”

–With assistance from Shirin Ghaffary.

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