With rapid growth in online learning, colleges often partner with for-profit companies known as online program managers (OPMs) to develop and provide online programs. This guide provides an overview of what OPMs do; the risks they raise for students, faculty, schools, and taxpayers; and how the U.S. Department of Education can address these risks through regulation.
What are OPMs and what do they do?
Why should people be concerned about OPMs?
- OPMs that enter tuition-sharing agreements are incentivized to aggressively recruit students and increase enrollment to boost their profits.
- This financial incentive can lead to predatory recruiting practices by OPMs. In some cases, OPMs have: engaged in deceptive and abusive recruiting practices; promoted high-cost, low-value programs; or recruited students who do not meet enrollment requirements.
- Tuition-sharing can also lead to increased tuition costs for students.
OPMs raise risks for students, faculty, schools, and taxpayers.
OPMs raise risks for students:
OPMs raise risks for faculty:
OPMs raise risks for schools:
OPMs raise risks for taxpayers:
How can the U.S. Department of Education address OPMs’ risks to students, faculty, schools, and taxpayers?
The Department can rescind the 2011 Bundled Services Guidance:
- The Department of Education is considering closing a loophole that allows OPMs to receive incentive compensation for recruitment services.
- The Higher Education Act prohibits institutions from providing incentive compensation, or a “bounty” to recruiters, based on the number of students recruited. However, recent Department of Education guidance created an exception in this ban for OPMs providing recruitment as part of a package of services.
- Closing this loophole would eliminate the financial incentives that lead to predatory practices.
- Closing the loophole would not prevent schools from contracting with OPMs. Schools would be able to continue contracting out recruiting services to an OPM on a fee-for-service basis.
The Department can extend the third-party servicer (TPS) requirements to OPMs:
- The Department of Education recently issued guidance to clarify that OPMs are third-party servicers subject to the department’s TPS requirements. However, the department received significant feedback following the announcement and has delayed the effective date of the guidance letter.
- Third-party servicers are entities that provide student recruitment, educational content and instruction, and other specified services to Title IV institutions. Entities that administer “any aspect” of an institution’s participation in the Title IV programs fall within the scope of the department’s TPS oversight authority.
- Extending the TPS requirements to OPMs would mean that institutions would have to report on their arrangements with OPMs to the Department of Education. It would also mean that OPMs would be subject to annual audits, and that OPMs and institutions would share joint and several liability to the department for misconduct.