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Online Program Management Companies: A For-Profit Pocket Within Higher Ed

How OPMs slip by regulations — and what can be done about it.

Overhead view of college student's desk with lamp and laptop.
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Even before the effects of the pandemic on higher education, online program management (OPM) companies have been flourishing. OPMs are for-profit vendors hired by nonprofit (and for-profit) universities to help convert in-person courses/​programs to online courses/​programs as well as to recruit and admit students to them. For schools, they have been a way to boost enrollment and revenue.

As an outsourced contractor, OPMs often provide universities a suite of services” that can run from recruiting and admitting students, marketing and advertising online programs, advising faculty and students on technology use, to course and curriculum design.

Through a policy loophole, OPMs are also often paid per enrolled student, which can incentivize aggressive recruitment over other aspects of converting courses from in-person to online.

While it is common for universities to hire outside vendors, in nearly all cases, the vendors provide services that the university does not specialize in. Janitorial companies, booksellers, and catering are common outsourced services that do not provide the core mission of the institution: teaching and learning. Online program management companies, however, do have their hands in teaching and learning specifically. The question then becomes, how much are OPMs involved in the core services of a university, and how should that be regulated?

AV sat down with Kevin Kinser, department head of education policy studies, and John Cheslock, professor of education policy studies, both at Penn State College of Education, to talk about the gray area where OPMs operate, and how they intersect with policy.

Arnold Ventures

You wrote one of the first big research papers on online program management companies (OPMs). Give us the highlights — what are they? Why should people care?

Headshot of John Cheslock
John Cheslock

Much of the research published so far on online program management companies has been either advocacy for them as a helpful resources for universities who do not have the time or technology expertise to move their courses online, or criticism against them. We took a much wider perspective so as to examine what questions we might ask with regards to policy around OPMs. 

Higher education institutions are increasingly outsourcing a wide variety of services related to online coursework to online program management (OPM) firms, and we’re seeing that OPMs often end up managing the school’s online programs to quite varying degrees. 

Because the suite of services” OPMs provide are central to the core operations of these educational programs (curriculum and course design), this form of outsourcing raises new issues for policymakers and accreditors. For-profit entities are shaping the educational content at universities. How should they be regulated? Efforts to craft sound policy are often confounded by the complexity of OPMs. 

To advance policy discussions, in our paper we provided a clear definition of OPMs, outlined the reasons why higher education institutions partner (or do not partner) with OPM firms, described the existing firms present in the OPM market, and considered the possibilities and perils or regulating the OPM landscape. (Here’s a link to the paper as well as to a slide presentation on it.)

Arnold Ventures

Recently, the Government Accountability Office came out with a report on OPMs. Did the report resonate with your research? What stood out to you in it?

Headshot of John Cheslock
John Cheslock

Three things stood out to us. First, the report highlighted the need for the U.S. Department of Education to have reporting requirements for OPMs, recognizing that the outsourcing of a bundle of services that often includes educational components via OPMs is significant, and that outsourcing does not get captured by monitoring currently in place in higher education. Right now OPMs are treated like other vendors, such as catering and cleaning services, but the work they provide is inherent to the core of an educational institution, and they are not regulated the way other learning environments are.

Second, the report recognized the significance of student recruiting as a major part of the OPM portfolio of services. In particular, it looked at the effect of incentive compensation on the quality of work provided by OPMs. Incentive compensation means that OPMs are paid not by project but by student, incentivizing them to concentrate efforts on enrolling as many students as possible, which is ostensibly not their major role.

Third, it noted gaps in information about OPMs because of the reliance on self-reporting by universities. Because OPMs are treated like other outside vendors in higher education, there is very little information released about them, except as universities would like to. Their contracts with OPMs are not often released, so it is unclear what specific services the OPMs are providing.

In general, the recommendations provided by GAO are pretty basic, yet surprisingly still very much needed.

Arnold Ventures

Was anything missed? Anything you would add?

Headshot of Kevin Kinser
Kevin Kinser

The GAO focused heavily on whether OPMs should be subject to an incentive compensation ban, and little attention was placed on other items. 

For example, they did not look at how OPM outsourcing can potentially cover an extensive range of activities and services, a range so wide that it that might raise questions about who is actually in control of the educational program. Attention should also be paid to what (rather than how much) can be outsourced for an institution to remain eligible for Title IV federal funding. 

Right now, OPMs have to make sure that less than 50% of their work qualifies as instruction.” However, we identified loose definitions of instruction” that assume an in-person model of faculty-to-student interaction; the full scope of designing and offering an online course is a lot more than just formal contact between an instructor and student. It includes course design, materials presentation, syllabus, grading, and more. These aspects of teaching and learning do not count for the 50% limit of instruction for OPMs.

We also missed a discussion about how outsourcing programs to for-profit entities blurs the boundaries between public, not-for-profit and for-profit institutions (i.e., some OPM-supported programs in a public, nonprofit institutions are essentially operated as subsidiaries of a for-profit entity). This suggests that distinctions connected to for-profit status that are in audit requirements (as noted in the report) may not have the accountability impact that was intended by policymakers. 

What we are seeing is an evolution of the for-profit model in this OPM realm for higher education. Many OPMs began as for-profit institutions; when they became OPMs, they were able to elude the regulations currently in place for for-profit institutions — even as they are still operating as a for-profit, and even as they are providing some core educational services. So when policy makers talk about wanting greater scrutiny for for-profit educational institutions, they should also include for-profit OPMs.

Arnold Ventures

What do you think the Education Department should do next with regards to OPMs?

Headshot of Kevin Kinser
Kevin Kinser

There are few things that come to mind. The Education Department needs to formally define OPMs under policy, so that universities know what they need to report. The line between OPMs and other forms online education-related outsourcing is not clear. OPM work currently can be masked behind labels such as technology support services,” or not reported because institutions do not contract with the OPM for direct instruction of students, thus potentially avoiding external oversight.

In addition, policymakers should revisit the bundled services exemption. This exemption allows for OPMs to be paid per student (also called tuition-sharing or enrollment incentivization) as long as they are providing a large suite of services. Is this exemption having desired impact — limiting negative incentives for enrollment above all other activities? This places the focus on tuition-sharing without attending to issues raised by the OPM model itself (which may or may not use tuition-sharing financing).

It would be wise also to review distinctions between for-profit, not-for-profit and public institutions. With institutions increasingly developing curricular partnerships that involve for-profit companies, there may be a need to look at for-profit status at the program level rather than the institutional level.

Currently, it is difficult to know if a specific program is connected to an OPM, or to know which institutions have partnered with specific OPM companies. It would be helpful to have information that must be publicly disclosed by institutions about their outsourced programs, and for OPMs to identify which institutions and programs they are working with.

Arnold Ventures

Bottom line — are OPMs good, bad or indifferent? What should students, policymakers, and the public keep in mind about them?

Headshot of John Cheslock
John Cheslock

There is nothing inherently bad about OPMs, but they should be scrutinized as educational providers in partnership with existing eligible institutions. They engage in sensitive communication with prospective students on behalf of higher education institutions and perform key activities pertaining to instruction, the central activity within higher education. When OPM partnerships go badly, the consequences can be greater for students and society than when other forms of outsourcing do so. 


Arnold Ventures funds projects to understand problems and identify policy solutions.