A study out today from researchers at The Century Foundation (TCF) analyzes a large tranche of previously unreleased contracts between public universities and online program managers (OPMs), revealing that for-profit OPMs have increasing control over nearly every aspect of the design and management of purportedly “public” online higher education courses. In turn, this growing private control—which is often hidden from public view—is jeopardizing the quality of online programs, stripping control from colleges and universities, and putting students at risk of predatory behavior and abuse at the hands of for-profit companies. 

The new study is based on an analysis of 79 contracts between public institutions and third-party OPMs, which TCF obtained through state public records requests and is making publicly available today alongside the report. The newly obtained contracts reinforce the findings of TCF’s landmark 2017 study, The Private Side of Public Higher Education, in which researchers reviewed more than 100 contracts and communicated with over 200 institutions and warned of the dangers of public-private partnerships in online education, particularly as a result of introducing a profit-making incentive structure.  

“Online higher education programs are essentially wolves in sheep’s clothing: while these courses are being offered under the guise of a public institution, in reality they are being run—often from top to bottom—by private, for-profit companies,” said Stephanie Hall, PhD, a fellow at The Century Foundation and co-author of the new study. “This presents real and profound risks—not only for students but also for the institution itself, whose hands are often tied as a result of their contract with an OPM.” 

The report finds that there continues to be two distinct types of university-OPM partnerships: (1) tuition-sharing schemes, in which the school hands over a portion of tuition revenue to the OPM; and (2) fee-for-service schemes, in which the school pays a flat rate for the OPM’s services. Though they are largely indistinguishable to consumers, the two types have distinct implications for the cost and quality of education provided, as revenue sharing agreements expose students and the host institution to much greater risk. Alarmingly, of the relevant contracts TCF analyzed, more than half (53 percent) guaranteed the OPM a share of the school’s tuition revenue. Arrangements typically involved the OPM receiving roughly half of tuition, though it ranged from as high as 80 percent (Ed2Go, The Learning House OPM contracts) to as low as 35 percent (Univ. of Arizona-All Campus OPM contract).

Additional findings from TCF’s analysis of relevant contracts:

  • In 41 percent of contracts, the OPM was tasked with recruiting on the school’s behalf
  • Of contracts with clear length of agreement terms, 56 percent last for five years or more
    • 27 percent of contracts locked in schools with strict exiting terms, e.g. requiring a years-in-advance termination notice and/or automatic renewals
  • In 32 percent of contracts, there were vague and/or no protections on the use of students’ data and information
    • Some contracts appear to give OPMs the ability to profit off of student data
  • In 68 percent of contracts, the OPM was tasked with developing the course; and in 32 percent, the OPM was tasked with also providing instruction

While some of the contracts that TCF analyzed included provisions that allow the school to maintain control over program governance, revenue, and mission, many of the contracts endowed OPMs with enormous and at times comprehensive control over the services offered. For example: 

  • Under the contract between UCLA and Trilogy to run a coding bootcamp through the university’s extension school, UCLA is required to set the tuition price as high as the market will bear, and Trilogy has the right to veto the price set by UCLA. 
  • Under the contract between the University of North Dakota (UND) and Pearson, UND is prevented from making changes to curricula without first appealing to Pearson, who then evaluates the effect of the proposed changes on enrollment
  • Under the contract between Boise State University and Academic Partnerships (AP), Boise State is required to give AP two years’ notice to keep its contract from auto-renewing for another three years. If Boise State manages to end the contract after the five-year term, it must continue paying AP for each student it secured that is still taking online courses

The study comes amid increasing attention to the risks posed by for-profit OPMs. In June, the LA Times reported on the partnership between the University of Southern California (USC) and 2U, an educational company contracted by USC in 2009 to help develop an online master’s program for the university’s well-regarded School of Social Work. USC handed significant control over to 2U, including making the for-profit contractor responsible for the program’s marketing and recruitment, based on a 60 percent revenue share agreement. With 2U overseeing enrollment, the program quadrupled in size between 2010 and 2016. Yet even as students were charged more than $100,000 in tuition, the quality of instruction worsened, and USC ended up losing money on the program. Worse, graduates were left with astronomical debts—the second most of any program in the nation, behind only the for-profit University of Phoenix.  

TCF’s report concludes with steps that public institutions can take when contracting with OPMs to avoid a similar fate as USC’s School of Social Work, as well as a companion piece that includes recommendations for policymakers. These include:

For Schools

  1. Don’t buy bundled services, and instead contract for the specific service(s) needed, as discrete units, at the time they are needed
  2. Don’t bypass your own faculty, and ensure that contracts make it clear that the university maintains the power to determine how an online program is used
  3. Don’t sign lengthy, unbreakable contracts, and instead contract on more flexible, shorter terms, with clauses that allow for early termination as needed 
  4. Don’t “share” your tuition revenue, and instead pay for each service up front
  5. Don’t facilitate aggressive marketing practices, and retain control over recruiting, admissions, and enrollment decisions, as well as the use of students’ data 

For Policymakers 

  1. Require colleges to disclose who is running their online programs and generating advertisements, so that students know exactly where their investments are going
  2. Require online degree programs to display a net price calculator, including non-tuition costs as well as the percentage of students in the program receiving institutional aid 
  3. Require colleges to collect and report expenditure data from OPMs, thus increasing transparency about program management and where tuition dollars are being spent

“While predatory, risky contracts between public institutions and OPMs are unfortunately the norm today, they are not a foregone conclusion,” said Taela Dudley, a TCF associate and co-author of the new study. “There are proven policies and best practices that policymakers can enact and institutions can employ when contracting that will go a long way toward ensuring that colleges and universities retain control over their online courses, safeguard their reputations as stewards of the public trust, and protect the rights of their students.”