Online Program Managers: What Are OPMs in Higher Education?
Editor & Writer
Editor & Writer
- Online program managers coordinate and run online degree programs for many colleges and universities.
- It's unclear, however, how pervasive these companies are in higher education.
- Student advocates allege these third-party partnerships may lead to aggressive and misleading recruitment practices.
- The federal government is poised to increase oversight of these partnerships.
OPMs have become a hot topic in higher education policy circles, but for the uninitiated, it can be hard to understand why.
Online program managers — sometimes referred to as online program management companies — exist to provide online education services for more traditional colleges and universities. Essentially, if a state school or local community college wants to offer an online degree or certificate program, they may pay a private company to handle those functions.
The Department of Education (ED) intends to require more transparency into how commonly institutions use these managers.
Currently, schools do not have to disclose if their online programs are managed internally or through an online program manager. Advocates have called for full disclosure, as well as an end to the revenue-sharing agreements schools often sign with these managers.
What Are OPMs?
Online program managers (OPMs) are companies that manage online degree and certificate programs for colleges and universities.
OPMs partner with institutions that want to expand their program offerings online to bring in more students. These companies typically also will recruit students for the new online program in exchange for a percentage of the tuition revenue generated by the program.
All kinds of institutions partner with OPMs, including prestigious institutions like Harvard and Yale, according to HuffPost.
HolonIQ projects the OPM market will reach $7.8 billion by 2025.
As of July 2021, over 550 colleges and universities worked with an OPM to support at least 2,900 education programs, according to an analysis from the Government Accountability Office (GAO). Approximately 90% of the colleges that work with OPMs are public or nonprofit, and the majority (90%) of these institutions are four-year or above, GAO reported.
Pearson, 2U, Kaplan, and Coursera are among the largest and most well-known OPMs.
Controversy Surrounding OPM Partnerships
Advocates have sounded the alarm on OPMs not for their services in providing online degrees and certificates but for their revenue-sharing agreements with institutions.
Some advocates believe it incentivizes OPMs to prioritize student recruitment over quality programs.
"Sharing revenue in exchange for student recruitment brings major risks," Stephanie Hall wrote for The Century Foundation in January 2023. "When OPMs get paid more if they succeed in securing greater enrollments, their operations may focus more heavily on getting the student to enroll, rather than counseling the prospect to the best option for them."
Hall's analysis showed that 2U, a public company, spent over half its revenue on marketing and sales from 2016-2020.
A coalition of 17 advocacy groups penned a letter to ED Secretary Miguel Cardona in June 2022 arguing that OPM partnerships violate the Higher Education Act's ban on "incentive compensation." This prohibits commission-based pay determined by recruiting success for institutions that receive federal financial aid funds.
GAO's report on OPMs states that program managers would normally fall under this ban.
However, a 2011 Dear Colleague letter from ED exempted OPMs from oversight if they bundle services. This means they would not be exempt if they act solely as recruiters.
Some advocates also blame revenue-sharing agreements for sky-high tuition costs. The University of Southern California (USC) came under fire in 2021 after a Wall Street Journal report found the school's online master's degree program for social work — provided by 2U — cost six figures and led to low salaries.
USC students sued the school over its online social work program on May 4, 2023.
Students alleged misrepresentation and false advertising in the suit. The complaint states that USC deceived students by claiming its online program was the "same" academic program as its on-campus program, when in fact USC does not administer the online program.
New OPM Oversight Rules Incoming
ED released a Dear Colleague letter in mid-February that proposes changes to categorize more OPMs as "third-party servicers."
Under this new guidance, the following services would make an OPM a third-party servicer — therefore, forcing them to follow incentive compensation rules:
- Student recruiting and retention
- Providing software products that deal with federal financial aid distribution
- Providing educational content and instruction
The limitation on student recruiting is notable. This has been a central point among those who believed ED needed to increase its oversight of OPMs. The change would conceivably make revenue-sharing agreements between institutions and OPMs illegal if the department were to adopt this rule as is.
Even OPMs that don't recruit students would be subject to change under this rule.
OPMs may instead resort to charging a flat fee for services, rather than making their money through revenue-sharing agreements.
ED originally planned to implement these changes by May 1. It later pushed that effective date back to Sept. 1, 2023.
In mid-April, after receiving more than 1,000 public comments about the proposal, ED once again pushed back the effective date. The department said the rules wouldn’t go into effect until at least six months after it releases the final regulations governing OPMs and third-party servicers.
New reporting guidelines would also go into effect once the rule is official. These will give ED a clearer picture of how common it is for colleges and universities to work with OPMs and how often these program managers offer recruitment services.
Concerns Over New Rules
The February Dear Colleague letter wasn't without pushback.
Some advocates are concerned this guidance is overbroad. In a comment letter to ED, the American Council on Education (ACE) stated that smaller, nonprofit organizations could be pulled into the expanded definition of "third-party servicers."
According to ACE, the following entities would be considered a third–party servicer under this guidance:
- A nonprofit offering student retention services
- A hospital or clinic providing clinical experiences for medical and nursing students
- A local police department helping to compile and analyze campus crime statistics
Third-party servicers are subject to transparency rules and may be audited by ED. This may dissuade some organizations from partnering with an institution.
"Unless the guidance is rescinded or significantly changes, the guidance in the [letter] is likely to result in disruptions and, in some cases, terminations of relationships that provide critically important services for students," ACE wrote.
ED’s April addendum clarified that its final regulations will make clear that some of the above entities would not be impacted by the new rule. That includes clinical opportunities and partnerships with local police departments.
Comments from The Institute for College Access and Success (TICAS) echo ACE's concerns.
"We strongly support efforts by small non-profit organizations — often philanthropically-funded — to provide evidence-based supports that improve college persistence and completion, particularly among low-income and first-generation students," TICAS wrote. "These organizations provide engagement and retention services, but generally do not receive remuneration from institutions."
The April update did not declare whether nonprofits providing student retention services would be impacted by the new regulations. The department simply stated that it would “carefully review public comments” when it considers whether it should narrow the scope of the guidance in this area.
Other organizations worry ED's proposal will impact international student recruitment.
A comment from the American International Recruitment Council states two-thirds of U.S. institutions rely on recruitment agencies to draw in students from outside the U.S. These partnerships have also historically been excluded from incentive-based payment rules.
The Forum on Education Abroad worries ED's proposed changes will deter outside organizations from participating with U.S. institutions offering study abroad programs. Under the new rule, the forum stated, these foreign organizations would be subject to increased scrutiny, which could deter them from participating in study abroad programs altogether.
ED’s April update clarified that contracts involving study abroad programs and recruitment of foreign students would not be impacted by its new third-party servicer rules.