California, It’s Time to Regulate Your Online Program Managers

Public and nonprofit colleges across the country are partnering with for-profit companies known as online program managers (OPMs) to create and operate online college programs—but these arrangements can put students at risk. Programs operated by OPMs can have inflated tuition costs, aggressive and deceptive marketing tactics, and poor program quality and value. Despite these risks, colleges’ arrangements with OPMs are not regulated by the federal government.

In the absence of federal regulations, states have begun to take action to regulate OPMs. Both Minnesota and Ohio, for example, have passed laws to regulate their institutions’ relationships with OPMs. As of yet, however, California has not moved to regulate OPMs, even though a review by The Century Foundation found that OPM operations are common in California and have been the subject of numerous lawsuits.

Given this checkered history, the time is right for California to join the ranks of states taking action to regulate OPMs. This commentary will review the scope of the OPM problem nationwide and in California, present findings from a survey of colleges in the state, and present recommendations on how the state can better protect students enrolling in online programs run by OPMs.

The Scale of the OPM Problem Nationwide

As of July 2021, at least 550 colleges in the United States had OPM partnerships. However, the exact number of OPM contracts with colleges is unknown. Although the federal government pours millions of dollars of federal financial aid into these programs, there is no reporting requirement or federal database tracking these partnerships, and institutions have no obligation to publicly disclose them. That means that the U.S. Department of Education does not know which programs are operated by OPMs, or how many students receive federal grants and loans to attend OPM-operated programs.

Not all OPM partnerships look the same. Some institutions offer programs entirely managed by OPMs, while others contract OPMs to offer individual courses, Massive Open Online Courses (MOOCs), or non-credit bootcamps. OPMs arrangements are growing: from 2010 to 2020, the number of new OPM agreements exploded from twenty to at least 165.

While OPM-operated programs bear the imprimatur of the college they represent, these online offerings are not the same as the institution’s brick-and-mortar programs. Many OPM contracts include tuition-sharing arrangements that mean the OPM will receive higher compensation for recruiting a greater number of students for the program. This creates an incentive for aggressive and even deceptive recruiting tactics and can also inflate tuition. Online programs also enroll more low-income students and students of color than brick-and-mortar programs, creating disproportionate risk for these students to face predatory recruitment practices. Some contracts also give OPMs control over curriculum and course design decisions. This limits faculty autonomy and can put program quality at risk. Institutions are also at risk due to expensive, longterm arrangements with OPMs.

California’s Recent Troubles with OPMs

California recently has seen several lawsuits involving OPMs. In 2022, the University of Southern California and OPM 2U faced a lawsuit for allegedly using misleading practices to recruit students into online programs. In 2023, a class-action lawsuit was filed against Caltech and the OPM Simplilearn, alleging deceptive marketing practices for their online programs and violations of California consumer protection laws; the case was recently settled, and Caltech is moving to end its partnership with Simplilearn. In addition, in 2024, the University of California (UC) system came under scrutiny through a state audit of their use of OPMs. The audit found a need for greater transparency and oversight of OPMs.

The June 2024 state audit of the University of California (UC) system offers insight into the UC system institutions’ contracts with OPMs. In a review of fifty-one UC contracts with OPMs, the audit found that the institutions failed to disclose key information to students about OPM arrangements, such information that online programs were taught by OPM employees, rather than professors affiliated with the UC system. It also found that in some cases, recruitment materials for OPM co-branded programs may have misled potential students about the “industry value” of the programs. The audit recommended increased transparency so that students clearly understand when a program is operated by an OPM.

While the audit considered OPM use within the UC system, OPM use by the rest of California’s higher education institutions remains largely unexamined. California’s higher education system is robust: it accounts for 12 percent of all full-time equivalent (FTE) college enrollment in the United States. The state is also home to the largest public four-year system in the country, the California State Universities (CSUs), which enrolls over 500,000 students across twenty-three campuses. CSU has a significant number of online enrollments—in fall 2024 alone, more than 800,000 course enrollments in the CSU system were online. Private nonprofit colleges confer about 20 percent of the state’s degrees.

A Survey of OPM Arrangements in California Reveals Many Problems

To better understand the prevalence of OPM arrangements in California, The Century Foundation examined OPM use at eighty-nine four-year colleges in the state. The California sample¹ consists of twenty-three CSU campuses and sixty-six private institutions, including both nonprofit and for-profit schools. First, we reviewed the websites of fourteen major OPMs² to identify their listed partners. Second, we reviewed the websites of these California institutions to determine whether any public information disclosed OPM partnerships. We considered a partnership to be confirmed if it was listed on either the OPM’s website or the institution’s website.

This data collection process likely underestimates the true extent of OPM partnerships. Since institutions are not currently required to publicly disclose any third-party servicers, many partnerships may go unlisted. Our process parallels the data limitations experienced by prospective students.

Out of the eighty-nine institutions surveyed, we confirmed OPM partnerships at twenty-five, approximately 28 percent of the sample. Of these confirmed partnerships, twelve were with public colleges (all CSUs), and thirteen were with private nonprofit institutions. Among private colleges, 2U, AllCampus, and edX were the most commonly identified partners. Among public institutions, the most frequently identified OPM was Ed2go. Half of all CSU campuses had confirmed OPM partnerships; all of them involved Ed2go.

We found that across all sectors, disclosure of OPM partnerships was frequently asymmetrical: OPMs prominently advertise their collaborations with institutions, yet those institutions often fail to provide comparable transparency.

Private Colleges’ OPM Arrangements Often Lack Transparency

Our review of private institutions reveals that OPM partnerships are often not clearly disclosed to students. For example, Pepperdine University offers at least seven online degree programs through 2U. However, Pepperdine’s program websites do not explain 2U’s role. In fact, the only information provided about the partnership is a small hyperlink in the footer (see Figure 1), “About 2U,” which links to a page that does not explain 2U’s role in program design, delivery, or recruitment (see Figure 2).

Figure 1. Example of Pepperdine’s Website Footer

Figure 2. Pepperdine’s 2U Description

Another example of limited disclosure is California Lutheran University, which partners with OPM AllCampus to offer at least eleven online programs. While the programs’ website states that it is “managed by AllCampus,” it provides no information about the OPM’s role in operating the online programs (see Figure 3).

Figure 3. Example of Cal Lutheran’s Website Footer

Not all institutions totally mask the role OPMs play in managing online programs. Loyola Marymount University’s law school, for example, provides a partial disclosure informing site visitors that OPM Risepoint “maintains [their] website on behalf of Loyola Law School” while affirming the school retains control over curriculum, admissions, and instruction. Even this disclosure, however, is buried in the website footer (see Figure 4).

Figure 4. Example of LMU Law School Website Footer

CSU Institutions’ Transparency Is Inconsistent

While some CSU institutions disclose their OPM partnerships, there are inconsistencies in disclosure practices across campuses, even within the same system.

About half of all CSU institutions disclosed arrangements with OPM Ed2go. A previous TCF report found that some Ed2go contracts included provisions that could cause risks to institutions, such as indefinite term lengths and clauses that allow the OPM to terminate contracts and demand payment if the college didn’t offer enough Ed2go courses. The CSU campuses we scanned offered an average of 187 courses exclusively through Ed2go.

Without formal guidance from the CSU system, campuses vary widely in how transparently they disclose their OPM partnerships. Some CSU campuses make no mention of their Ed2go partnerships at all. CSU Bakersfield, for example, states they “offer a wide range of highly interactive courses that you can take entirely over the Internet. All of our courses are led by expert instructors, many of whom are nationally known authors. Our online courses are affordable, fun, fast, convenient, and geared just for you.” (See Figure 5.)

Figure 5. Example of CSU Bakersfield’s Lack of Disclosure

Others, like CSU Fullerton, at least acknowledge the courses are offered “in partnership with ed2go.” (See Figure 6.) Only one CSU, Cal Poly Pomona, provided a clear and complete disclosure: “These programs are in partnership with a third-party provider and are not taught by California State Polytechnic University, Pomona (CPP) nor College of Professional & Global Education (CPGE) faculty. The courses are not offered for academic credit and are not degree eligible.” (See Figure 7.) While Cal Poly Pomona sets a strong example of transparency, no standard currently requires other CSU campuses to follow suit.

Figure 6. Example of CSU Fullerton Partial Disclosure

Figure 7. Example of Cal Poly Pomona OPM Disclaimer

Without consistent disclosure standards, students face confusion and uncertainty about who is delivering their education and the nature of their programs.

Key Takeaways

Roughly one in four surveyed institutions in California had confirmed OPM partnerships. Given the limitations of publicly available information and the lack of required disclosure, this is almost certainly an underestimate. Disclosure of these partnerships is often one-sided: some OPMs prominently advertise their college partnerships, while the institutions themselves frequently fail to disclose these relationships to students. The degree of transparency also varies widely from campus to campus, revealing the consequences of having no state law or systemwide policy on OPM partnerships. Our findings highlight the need for state regulation to ensure minimum standards of transparency and protect students and taxpayers from the risks posed by OPMs.

Recommendations

California should take action to protect students from risky online partnerships. Greater accountability and transparency requirements are essential to make sure that online education serves students, not corporations.

California lawmakers should create and pass legislation regulating OPMs. The law should incorporate all of the elements set out in The Century Foundation’s blueprint for state regulation of OPMs. These elements include:

• making the law apply universally to all colleges,
• banning incentive compensation when marketing and recruitment are involved,
• requiring institutional reporting of OPM agreements,
• protecting institutional authority over all key decision making,
• preventing misrepresentation by requiring disclosure of the OPM-institution relationship,
• protecting faculty intellectual property, and
• providing for enforcement procedures for schools that fail to comply with state OPM legislation.

In the meantime, California public systems (UC and CSU) should:

• Adopt systemwide contracting and transparency guidelines. State university systems should require campuses to follow clear rules around OPM contracting and reporting, as recommended in the UC state audit.
• Require campuses to disclose third-party involvement. Systems should require campuses to clearly communicate OPM involvement in marketing, program delivery, and instruction. This information should appear on program pages, admissions materials, and enrollment documents.
• Evaluate and share program outcomes. Institutions should track and report on OPM-managed program metrics including completion rates, satisfaction, and employment outcomes and make these data readily available to prospective students.

Appendix: California Institutions with Identified OPM Partnerships

1. The survey included doctoral universities, master’s universities, and baccalaureate colleges, while excluding special-focus institutions such as arts and seminary schools. University of California campuses were excluded given that they have already been examined in the state audit. See data table in appendix.
2. These included: 2U, edX, Ed2go, AllCampus, Risepoint (formerly Academic Partnerships), Coursera, Noodle, Bisk, Keypath Education, ThriveDX (formerly HackerU), Apollidon, Pearson, Orbis Education, and Emerge Education.

Tags: tuition costs, california, opm