The 1978 cult classic film Invasion of the Body Snatchers opens with the protagonist, Elizabeth, finding a flower she believes is a new species formed from two other plants. The film takes the viewer on Elizabeth’s journey of realizing that this was not the case; instead, she and her friends discover the plant is an invasive creature that takes over the bodies of its human hosts. The first clue lies with Geoffrey, Elizabeth’s boyfriend, who no longer seems to be himself the morning after she brought the strange plant home: normally lighthearted and a bit messy, he was up and dressed before 7AM, cleaning the house, and ignored Elizabeth when she called his name. Elizabeth talked about what she suspected with a close colleague and friend, but struggled to get anyone to take her seriously. Instead, her friend suggested she meet with a psychiatrist he knew. By the time her friends realize Elizabeth was right, it is too late: the plants had invaded, and duplicated, nearly every resident of the city.

The invasive plant in the film is a startlingly appropriate metaphor for a major threat to our colleges and universities: in this case, the plant’s predatory behavior is a referent for the modus operandi of online program managers, or OPMs. TCF has been investigating OPMs for some time now, exposing the danger as well as the prevalence of these invasive and predatory third parties. What we are now investigating, and which we reveal in this report, is the degree to which host universities have been taken over by OPMs.

Taken Over from Within

Last winter, the TCF higher education team started hearing whispers from faculty at some universities who suspected third-party, for-profit contractors—OPMs—were bringing in larger and larger proportions of their school’s overall enrollments, and that the companies were playing a major role in decision making.

OPM involvement in online degree programs mostly flies under the radar of the public eye, because these third parties provide their services under the recognizable brand name of a university.1 The services often include marketing, student recruiting, course design, faculty training, and student support. The comprehensiveness of the takeovers performed by these third-party providers is rapidly increasing, leaving many worried that, in time, there might be very little of the contracting universities left.

To investigate these suspicions, we filed FOIA requests with public institutions we knew had OPM contracts that involved five or more programs (a total of seventeen requests), and where we knew an OPM contract called for the creation of a new steering committee (a total of six requests). The Century Foundation obtained responses to the enrollment data request from ten schools and notes from two colleges’ steering committee meetings; others found no responsive documents or denied our request, citing trade secrets and student confidentiality.

Within the handful of responses we found some bombshells: An OPM brings in around 40 percent of all students at both Southeastern Oklahoma State University and Arkansas State University; and at Lamar University in Texas, over half of the school’s total enrollment is recruited by an OPM.

The data we received shows the extent to which reliance on—and deference to—OPMs has far surpassed the original intention of the legal exception which permits their operation, an exception granted to institutions to allow them to enlist the help of the companies previously known as online enablers.2 While considering these cases where OPMs are bringing in a substantial proportion of an institution’s overall enrollment, an urgent question emerged for us: is what we’ve uncovered indicative of a larger trend?

Within the handful of responses we found some bombshells: An OPM brings in around 40 percent of all students at both Southeastern Oklahoma State University and Arkansas State University; and at Lamar University in Texas, over half of the school’s total enrollment is recruited by an OPM.

Contrary to what might be expected of so lucrative an industry—the estimated investor value of the sector is $5.7 billion—the companies behind the scenes of many online degrees are unlikely to co-brand their initiatives with the universities hosting the degrees.3 Initially, universities may not have felt it was necessary to disclose who their contractors were, especially if the arrangements were meant to help launch a handful of programs or to enable the campus to offer online courses while simultaneously developing the internal capabilities to do so. However, we are now beyond the idea of OPMs as benign “enablers,” since some have all but subsumed universities who aren’t able to resist the promise of supercharged, OPM-driven revenue growth.4 Like the invasive plant from Invasion of the Body Snatchers, OPMs take over quietly and all but invisibly, especially to their prey: the students themselves, and especially lower-income, time-deprived students, who are more likely to seek online options.5

Universities Have Failed to Keep their OPMs at Arm’s Length

Our analyses of the contracts we received paint a rather dire picture.

For example, Southeastern Oklahoma State University has an agreement with the private company Academic Partnerships (AP), which they signed in December 2015 for one MBA program, and with the parties splitting student tuition revenue fifty–fifty.6 The evolution of Southeastern Oklahoma’s contractual relationship with AP is illustrative: one year after the initial arrangement for AP to manage the online MBA, nine additional programs were added; and less than a year later, nineteen more programs were added. By February 2020, AP was managing at least forty-five programs for the university, with an equal split in revenue for every single one of them. Now, nearly 40 percent of Southeastern Oklahoma State’s student body is recruited and managed by AP, according to enrollment data provided by the school.7

Three years later, the contract expanded to 61 programs, and by October 2018 it included seventy programs. AP now brings in over half of Lamar University’s students.

Lamar University, a member of the Texas State University System, provides another troubling example. The school signed an agreement with AP in August of 2014, for the OPM to manage twenty programs in exchange for forty to 50 percent of student tuition revenue.8 Three years later, the contract expanded to 61 programs, and by October 2018 it included seventy programs. AP now brings in over half of Lamar University’s students, according to enrollment data provided by the school.9 It is fair to say that AP now runs an online graduate school under the Lamar University brand, though the students are likely in the dark about AP’s role in their Lamar degrees.

Additional information provided by Lamar University shows the extent to which AP has embedded itself in the university’s operations and governance. Agendas and notes from meetings between Lamar and AP officials show the establishment of a steering committee made up of four representatives from each entity.10 Weekly calls appear to have been attended most regularly by three participants: an Academic Partnerships managing director, a Lamar University vice president of academic affairs, and a Lamar University assistant director of distance learning. Tuition and fees analyses pepper the agendas. Admission policy changes are also discussed, with AP representatives emphasizing the “revenue impact” of admissions policy in discussions with the Lamar team. The steering committee also addresses enrollment growth, admission and recruitment, and lead generation through AP’s use of Lamar’s alumni lists.

While these items may seem harmless from a project management perspective, they represent the extent to which some OPMs have become partners rather than contractors. They are for-profit entities co-managing a supposedly public institution. That close relationship could violate the current federal guidance that allows these tuition-sharing collaborations in the first place: the exception to the general ban on tuition-sharing is meant to be available only if the partner is independent from the school.11

Eastern Michigan University (EMU) is another institution in an agreement with AP, having entered one in September 2016. In the arrangement, AP manages fifteen programs and receives 50 percent of the associated tuition revenue.12 Enrollment data provided by EMU revealed that 65 percent of their total student enrollment is made up of online-only students.13 The school clarified that of their fully-online students, around nine percent were enrolled in AP-managed programs, because  the institution still offers courses separate from their AP arrangement. The necessity of making such a clarification is a dramatic indicator of the amount of power OPMs are now wielding within many universities.

Louisiana State University Shreveport (LSUS) has had a contract with AP since 2013.14 Their agreement presents a clear intention of OPM-fueled enrollment growth. The initial deal in 2013 had AP managing two online programs and receiving fifty percent of the tuition revenue, with the total payment to AP not to exceed $95,000. One year later, LSUS altered the contract to increase this maximum payment amount to $750,000 with this detailed justification:

…we expect to add additional programs to our online offering portfolio…we anticipate that the enrollment of these programs to generate [sic] significant revenue for LSUS. Since compensation to Academic Partnerships is tied to revenue generated, we request to amend the contract to increase the amount to $750,000, which would follow the initial growth rate of doubling every year.

Over subsequent years, LSUS indeed steadily added more programs under AP’s management. By 2017, AP had launched and was managing thirteen programs, ten of which were at the graduate level. And this strategy has paid off: enrollment data provided by LSUS shows that between 2018 and 2021, graduate enrollment grew 119 percent.15

Though each of the cases highlighted above only involve one OPM company, Academic Partnerships, other OPMs such as Pearson, 2U, and Wiley use similar contracts and may be engaging in similarly invasive partnerships.16 Unfortunately it is difficult to know for sure at this time: data about an OPM’s role, and copies of contracts, are available only from some public colleges subject to state FOIA laws. AP has a heavy presence among public colleges and has therefore emerged most often in our research thus far. The broader trend, which the public is currently unable to see, may involve many more public and private nonprofit universities, as well as third-party providers other than the OPMs mentioned.

Disturbing Emergent Trends

Over the past several years, The Century Foundation has researched and reported in particular on a subset of OPMs that enter into so-called bundled services arrangements.17 In these arrangements, an OPM is paid a share of the tuition revenue from students that enroll in exchange for managing services on the university’s behalf, services which include, among others, student recruitment. If this sounds like a kick-back, bounty, or commission-based sales system, that’s because it is. A federal law known as the incentive compensation ban generally prohibits colleges from using a commision-based enrollment model, but an exception granted to bundled services arrangements has resulted in a stampede through the loophole, making a mockery of the rule.

A federal law known as the incentive compensation ban generally prohibits colleges from using a commision-based enrollment model, but an exception granted to bundled services arrangements has resulted in a stampede through the loophole, making a mockery of the rule.

What has become apparent in our ongoing analysis of contractual arrangements is that some institutions, while they may have partnered with an OPM in order to launch a program or two and, in doing so, offer working adults an alternative to online for-profit colleges, have rapidly increased the number of programs and enrollments managed by a third party over the past decade. An additional concern is that in many full-service contracts, the OPM is granted formal decision-making power over key educational decisions, becoming a partner in controlling curriculum development, enrollment targets, and budget decisions.18 In other cases, OPMs’ decision-making power is not explicit, but the college’s reliance on OPM-driven revenue, or the unrealistic conditions for terminating the contract, produce a relationship in which the OPM wields real power.

Removing Invasive OPMs, before It’s Too Late

In the 1978 version of Invasion of the Body Snatchers, the city of San Francisco is completely taken over by what the film’s fans call “pod people.” They are parasitic, invasive beings that control the shell of the bodies they have taken over. Even Elizabeth and all but one of her friends’ bodies have been snatched by the end, in spite of exhaustive efforts to avoid being taken over by the pod people. One by one, Elizabeth’s friends are taken and in their new form, one tells her, “The function of life is survival.” Similarly, when universities are starved for revenue, that is the mission they shift to–survival–and they will outsource themselves under the illusion that it will help them avoid a certain death. In reality, outsourcing on a grand scale turns universities into shells of their former selves and the way they serve students follows suit.

Thankfully, colleges and universities need not succumb when thinking about their own survival; there is still time to rid institutions of their parasitic contractors and to set boundaries to keep invasive OPMs at bay.

The film does not end on an optimistic note; the last of Elizabeth’s friends who had avoided becoming a pod person is found out and is sure to be forced to join the ranks. Thankfully, colleges and universities need not succumb when thinking about their own survival; there is still time to rid institutions of their parasitic contractors and to set boundaries to keep invasive OPMs at bay.

It took a massive amount of effort for Elizabeth and her friends to avoid being snatched, and yet they eventually succumbed. Similarly, the COVID-19 pandemic has made it harder for colleges to resist turning to OPMs. Policymakers and regulators must pull out all the stops, immediately, to both repair and prevent more damage to institutional integrity. The place to begin is with a review of both the ban on incentive compensation and the 2011 subregulatory guidance which provides some exceptions to that ban, limited to cases where the university and OPM are unaffiliated and operate independently.19

Prior to 2011, under-enforcement of the incentive compensation ban led many for-profit colleges to pay their student recruiters on a commission basis, which created the incentive to do whatever was necessary to get a prospect enrolled.20 These financial incentives led many for-profit education companies astray, and led many students into academic and financial ruin, no matter the original intentions of these companies’ founders.21 OPMs have these same incentives when they are hired by universities to recruit students and are paid on a revenue-sharing basis. In the interest of students and prospective students, the federal ban on incentive compensation should be maintained and fully enforced. This means revoking the exception to the ban in cases where a university has signed a bundled services arrangement with an OPM.

Furthermore, to protect students and prevent further damage to the integrity of public and nonprofit institutions, the U.S. Department of Education should rescind the guidance that established the bundled services exception.22 As a first step in doing so, the Department of Education should diagnose the extent of the problem by asking institutions to report their reliance on OPMs for bringing in enrollments and revenue, as well as the level of OPM involvement in school or program governance. Where are the institutions that will need the most help wrestling control back from their OPMs?

The Students Must Come First

Institutions that rely on an outside contractor to bring in a substantial proportion of total enrollment, or that allow the contractor to join in decision-making, have essentially signed an agreement with a joint operator: in these cases, the universities have been all but subsumed by their OPMs. Universities should answer to and serve students. Unfortunately, an addiction to limitless enrollment growth and the allure of making up for revenue and enrollment shortfalls on the backs of online students stands in the way. For students’ sake, the U.S. Department of Education has an obligation to do what’s necessary to keep for-profit companies from commandeering the nation’s public and nonprofit colleges.

Notes

  1. Stephanie Hall, “Three Things Policymakers Can Do to Protect Online Students,” The Century Foundation, September 12, 2019, https://tcf.org/content/commentary/three-things-policymakers-can-protect-online-students/; Stephanie Hall & Taela Dudley, “Dear Colleges: Take Control of Your Online Courses,” The Century Foundation, September 12, 2019, https://tcf.org/content/report/dear-colleges-take-control-online-courses/.
  2. Robert Shireman, “The Sketchy Legal Ground for Online Revenue Sharing,” Inside Higher Ed, October 30, 2019, https://www.insidehighered.com/digital-learning/views/2019/10/30/shaky-legal-ground-revenue-sharing-agreements-student-recruitment.
  3. Holon IQ, Global OPM and OPX Market to Reach $13.3B by 2025, March3, 2021, https://www.holoniq.com/notes/global-opm-and-opx-market-to-reach-13.3b-by-2025/; Margaret Mattes, “The Private Side of Public Higher Education,” The Century Foundation, August 7, 2017, https://tcf.org/content/report/private-side-public-higher-education/
  4. Paul Fain, “Brand New Online Heavies,” Inside Higher Ed, October 10, 2012, https://www.insidehighered.com/news/2012/10/10/nonprofit-colleges-spark-new-competition-online-study-finds; Taela Dudley, “How Colleges Can Get Online Education Right,” The Century Foundation, March 31, 2020, https://tcf.org/content/report/colleges-can-get-online-education-right/.
  5. Stephanie Hall, “The Students Funneled Into For-Profit Colleges,” The Century Foundation, May 11, 2021, https://tcf.org/content/report/students-funneled-profit-colleges/.
  6. Contract between Southeastern Oklahoma State University and Academic Partnerships, https://drive.google.com/drive/folders/1JhL9WYpN6GaoQUIyAimLd_Njj8Gkj09z.
  7. Enrollment data obtained from Southeastern Oklahoma State University via public records request, for more details on this data please contact the author, https://docs.google.com/spreadsheets/d/146p84iPxDs50MZuVsvecEt4L47eKnpeZ83KBSNweGb4/edit?usp=sharing. ​​
  8. Contract between Lamar University and Academic Partnerships, https://drive.google.com/drive/folders/1sEO9IzeG-5_WoUKaLMbxWc3pJfVQF88l.
  9. Enrollment data obtained from Lamar University via public records request, https://drive.google.com/drive/folders/1sEO9IzeG-5_WoUKaLMbxWc3pJfVQF88l.
  10. Records from the Lamar University – Academic Partnerships steering committee obtained via public records request, https://drive.google.com/drive/folders/1pNZjvSBmfBBq564PBvWPrDp-50Jkpx-D.
  11. Robert Shireman, “The Sketchy Legal Ground for Online Revenue Sharing,” Inside Higher Ed, October 30, 2019, https://www.insidehighered.com/digital-learning/views/2019/10/30/shaky-legal-ground-revenue-sharing-agreements-student-recruitment.
  12. Contract between Eastern Michigan University and Academic Partnerships, https://drive.google.com/file/d/1D7ChmFr2Lj9wDSukkM60HXcb9r0KE7Sa/view.
  13. Enrollment data obtained from Eastern Michigan University via public records request, https://drive.google.com/file/d/1dGjoS7bxoeTi_PS1U40Fd5nNvT-7X8gq/view?usp=sharing.
  14. Contract between Louisiana State University Shreveport and Academic Partnerships, https://s3-us-west-2.amazonaws.com/production.tcf.org/assets/OPM_contracts2/Louisiana+State+University+Shreveport+%26+Academic+Partnerships.pdf.
  15. Enrollment data obtained from Louisiana State University Shreveport via public records request, https://drive.google.com/drive/folders/1J6-gwuu4OUxRAwjEKK7sJMbzXJdeFKIc?usp=sharing.
  16. For a complete inventory of contracts between public institutions and third-party companies obtained by The Century Foundation, see: https://docs.google.com/spreadsheets/d/1qckopXXj3K6NCKvClO3cxG7TlnSlRBaa5PmHGr1bVDg/edit?usp=sharing.
  17. Stephanie Hall & Taela Dudley, “Dear Colleges: Take Control of Your Online Courses,” The Century Foundation, September 12, 2019, https://tcf.org/content/report/dear-colleges-take-control-online-courses/.
  18. Taela Dudley, Stephanie Hall, Alejandra Acosta, & Amy Laitnen, “Outsourcing Online Higher Ed: A Guide for Accreditors,” The Century Foundation, June 28, 2021, https://tcf.org/content/report/outsourcing-online-higher-ed-guide-accreditors/.
  19. U.S. Department of Education, Program Integrity Questions and Answers–Incentive Compensation, https://www2.ed.gov/policy/highered/reg/hearulemaking/2009/compensation.html; U.S. Department of Education, Dear College Letter issued March 17, 2011: Implementation of Program Integrity Regulations, https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2011-03-17/gen-11-05-subject-implementation-program-integrity-regulations.
  20. Stephanie Hall, “The Students Funneled Into For-Profit Colleges,” The Century Foundation, May 11, 2021, https://tcf.org/content/report/students-funneled-profit-colleges/.
  21. The Century Foundation, The Cycle of Scandal at For-Profit Colleges, https://tcf.org/topics/education/the-cycle-of-scandal-at-for-profit-colleges/.
  22. U.S. Department of Education, Dear College Letter issued March 17, 2011: Implementation of Program Integrity Regulations, https://fsapartners.ed.gov/knowledge-center/library/dear-colleague-letters/2011-03-17/gen-11-05-subject-implementation-program-integrity-regulations.

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