On June 30, Ohio Governor Mike DeWine signed into law House Bill 96, a bill that included a provision to regulate the use of online program managers (OPMs). OPMs are for-profit companies that contract with public and nonprofit colleges to develop and manage their online programs. OPMs help colleges launch new online programs, but OPM arrangements pose risks for students. While Ohio’s bill does not protect against all of the risks OPMs pose, the bill is a step in the right direction.
OPMs Pose Risks for Students
When institutions contract with OPMs, they frequently allow the OPM to create the institution’s online programs, and recruit students into these programs, using the institution’s name and logo to do so. Furthermore, more often than not, these contracts include tuition-sharing agreements in which the institution pays the OPM a cut of tuition revenue for each student they recruit into the program. While the Higher Education Act prohibits colleges from paying a “bounty” to recruiters, guidance issued in 2011 created a loophole allowing colleges to pay OPMs using incentive compensation if the OPM provided recruitment in a “bundle” of other services. Incentive compensation for marketing services—even when bundled with other services—creates risks to students and taxpayers because it incentivizes OPMs to recruit as many students as possible into their online programs in order to maximize their own profits, opening the door to deceptive and abusive recruiting practices.
As a result of incentive compensation, OPMs have engaged in the predatory recruitment of students of color and students from low-income backgrounds; have allegedly used deceptive and misleading marketing strategies to get students to enroll in high-cost, low-value online programs; and have been the subject of high-profile lawsuits, including a class action lawsuit alleging that students were misled to believe that the online programs they were enrolling in would be taught by faculty of the institution rather than employees of the OPM.
Ohio’s Troubled History with OPMs
In 2024, Ohio’s Eastern Gateway Community College (EGCC) collapsed as a result of alleged financial irregularities and complications arising from the colleges’contract with an OPM, Student Resource Center (SRC). After partnering with SRC, the college doubled its enrollment from 20,000 to 40,000 students and reportedly doubled online class size. However, these changes led to concerns about educational quality that led the school’s accreditor, the Higher Learning Commission, to put the school on probation, citing student dissatisfaction with the quality of advising and engagement with adjunct faulty; lack of consistent review of learning outcomes; and low long-term completion rates, among other issues.
These problems arising from the OPM-operated program ultimately culminated in the first closure of a public college in the state of Ohio.
The college also faced an investigation by the U.S. Department of Education for alleged financial misconduct related to its “free” college program for labor union members. The program was investigated for allegedly violating federal aid rules by charging federal Pell grant recipients higher tuition than students without Pell grants and for using Pell grant funds from Pell eligible students to subsidize tuition costs for students who did not qualify for Pell grants. The program also drew local criticism for its rapid expansion and enrollment of thousands of students who were not Ohio residents. These problems arising from the OPM-operated program ultimately culminated in the first closure of a public college in the state of Ohio.
The EGCC disaster alerted Ohio policymakers to some of the dangers posed by institutions’ arrangements with OPMs. As a result, Ohio lawmakers proposed including new OPM regulations in their recent budget bill.
How the Ohio Law Protects Students
Ohio’s new law contains guardrails on OPMs that can help prevent situations like that at EGCC by providing the state with an oversight role and students with protections. The law also provides for significant enhancements in transparency for regulators and students. It requires all colleges to report OPM contracts annually to the Ohio Chancellor of Higher Education. The new law also requires colleges to:
- ensure that the OPM is compliant with relevant program standards and requirements;
- disclose partnerships with the OPM on program websites;
- require the OPM staff identify themselves when providing services to students; and
- prohibit the OPM from controlling or making decisions regarding student financial aid.
The provisions for oversight by the state, transparency for students, and retention of decision making for the institution will protect the students and institutions in Ohio.
Other States Should Follow Ohio’s Lead, but with Stronger Measures
By signing House Bill 96, Ohio becomes the second state, after Minnesota, to enact laws that provide guardrails to protect online students. Ohio’s law has a farther reach than Minnesota’s because it applies to private, public, and career colleges. In contrast, Minnesota’s law applies only to public colleges. However, Ohio’s law, unlike Minnesota’s, leaves one major risk of OPMs unregulated: the use of incentive compensation.
To fully protect students, institutions, and taxpayers from the risks posed by OPMs, states should enact laws that incorporate all of the elements set out in our 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.
Ohio’s experience with EGCC is an apt illustration of the risks of colleges’ arrangements with OPMs. State policymakers in other states should not wait for a disaster of similar proportions to take action to protect students from the risks of OPMs.
Tags: online learning, Student protections, online college
Ohio Takes Action to Protect Students by Placing Guardrails on Online Program Managers
On June 30, Ohio Governor Mike DeWine signed into law House Bill 96, a bill that included a provision to regulate the use of online program managers (OPMs). OPMs are for-profit companies that contract with public and nonprofit colleges to develop and manage their online programs. OPMs help colleges launch new online programs, but OPM arrangements pose risks for students. While Ohio’s bill does not protect against all of the risks OPMs pose, the bill is a step in the right direction.
OPMs Pose Risks for Students
When institutions contract with OPMs, they frequently allow the OPM to create the institution’s online programs, and recruit students into these programs, using the institution’s name and logo to do so. Furthermore, more often than not, these contracts include tuition-sharing agreements in which the institution pays the OPM a cut of tuition revenue for each student they recruit into the program. While the Higher Education Act prohibits colleges from paying a “bounty” to recruiters, guidance issued in 2011 created a loophole allowing colleges to pay OPMs using incentive compensation if the OPM provided recruitment in a “bundle” of other services. Incentive compensation for marketing services—even when bundled with other services—creates risks to students and taxpayers because it incentivizes OPMs to recruit as many students as possible into their online programs in order to maximize their own profits, opening the door to deceptive and abusive recruiting practices.
As a result of incentive compensation, OPMs have engaged in the predatory recruitment of students of color and students from low-income backgrounds; have allegedly used deceptive and misleading marketing strategies to get students to enroll in high-cost, low-value online programs; and have been the subject of high-profile lawsuits, including a class action lawsuit alleging that students were misled to believe that the online programs they were enrolling in would be taught by faculty of the institution rather than employees of the OPM.
Ohio’s Troubled History with OPMs
In 2024, Ohio’s Eastern Gateway Community College (EGCC) collapsed as a result of alleged financial irregularities and complications arising from the colleges’contract with an OPM, Student Resource Center (SRC). After partnering with SRC, the college doubled its enrollment from 20,000 to 40,000 students and reportedly doubled online class size. However, these changes led to concerns about educational quality that led the school’s accreditor, the Higher Learning Commission, to put the school on probation, citing student dissatisfaction with the quality of advising and engagement with adjunct faulty; lack of consistent review of learning outcomes; and low long-term completion rates, among other issues.
The college also faced an investigation by the U.S. Department of Education for alleged financial misconduct related to its “free” college program for labor union members. The program was investigated for allegedly violating federal aid rules by charging federal Pell grant recipients higher tuition than students without Pell grants and for using Pell grant funds from Pell eligible students to subsidize tuition costs for students who did not qualify for Pell grants. The program also drew local criticism for its rapid expansion and enrollment of thousands of students who were not Ohio residents. These problems arising from the OPM-operated program ultimately culminated in the first closure of a public college in the state of Ohio.
The EGCC disaster alerted Ohio policymakers to some of the dangers posed by institutions’ arrangements with OPMs. As a result, Ohio lawmakers proposed including new OPM regulations in their recent budget bill.
How the Ohio Law Protects Students
Ohio’s new law contains guardrails on OPMs that can help prevent situations like that at EGCC by providing the state with an oversight role and students with protections. The law also provides for significant enhancements in transparency for regulators and students. It requires all colleges to report OPM contracts annually to the Ohio Chancellor of Higher Education. The new law also requires colleges to:
The provisions for oversight by the state, transparency for students, and retention of decision making for the institution will protect the students and institutions in Ohio.
Other States Should Follow Ohio’s Lead, but with Stronger Measures
By signing House Bill 96, Ohio becomes the second state, after Minnesota, to enact laws that provide guardrails to protect online students. Ohio’s law has a farther reach than Minnesota’s because it applies to private, public, and career colleges. In contrast, Minnesota’s law applies only to public colleges. However, Ohio’s law, unlike Minnesota’s, leaves one major risk of OPMs unregulated: the use of incentive compensation.
To fully protect students, institutions, and taxpayers from the risks posed by OPMs, states should enact laws that incorporate all of the elements set out in our blueprint for state regulation of OPMs. These elements include:
Ohio’s experience with EGCC is an apt illustration of the risks of colleges’ arrangements with OPMs. State policymakers in other states should not wait for a disaster of similar proportions to take action to protect students from the risks of OPMs.
Tags: online learning, Student protections, online college