The Department of Education should do a better job monitoring the relationship between Colleges and Online Program Managers (OPM) to ensure that there is compliance with the ban on “incentive compensation” from the Higher Education Act, according to a report released by the Government Accountability Office (GAO). What does that mean?

During the COVID-19 pandemic, there was a large shift to online learning, and many Universities weren’t prepared for it. Many OPMs, which were already a billion dollar industry, worked with colleges and universities to take their programs online. In effect, Online Program Managers are  outsourcers of edtech labor, be it course design, IT support, or marketing. Some universities already had relationships with OPMs and some decided that it was time that they developed one. If you’ve taken a college course in the past decade you’ve probably used something like Blackboard, 2U, or Academic Partnerships to do things like turn in assignments, access the syllabus, watch recordings from a class, or talk to students on a classroom discussion board. There have even been some instances of these OPMs offering a full degree in partnership with a nonprofit university, like Coursera offering degrees from Arizona State University, University of Illinois, and a few others. This can become further complicated when an OPM becomes a publicly traded company, like Coursera did in 2021.

Now while the OPM industry has faced criticism as a capitalist takeover of higher ed or around the expense of masters degrees, none of that is what this report targets. Instead it is looking at the same thing Elizabeth Warren did in January 2020. Many OPMs do a lot of heavy lifting for the online program of major universities, and then take a share of the revenue from the students who chose to attend those programs. If you get a Masters in CS through the Coursera/ASU partnership, it is not clear how much of your $15k goes to Coursera and how much goes to ASU. In fact, the “percentage” doesn’t matter so much as whether it is a percentage (whether Coursera will make more money the more students it enrolls) or a flat fee (ASU pays Coursera some amount of money to administer this program no matter how many students there are and then keeps all of the $15k you pay for your diploma).

In 1992 the Higher Education Act was amended specifically to state that Universities with students who receive government grants are not allowed to have an incentive pay structure to recruit students. They can’t pay university marketing employees based on how many students they recruit and they can’t pay outside companies based on the number of students they recruit. The goal here is to try to protect students from certain kinds of abuse, but also to make sure that the federal government’s money isn’t going to a shady institution looking to maximize the amount of federal dollars it takes in. You might remember when Obama put in new rules around for-profit colleges receiving government grant dollars in 2014. This had nothing to do with “incentive compensation” and everything to do with graduates who didn’t have meaningful job prospects, but the lever that Obama used would be the same that would be used if the Department of Education decided to crack down on revenue sharing; turning off the grant dollars. Colleges, or possibly just the specific programs, which are in violation of the 1992 amendment might see some restrictions on federal financial aid.

Unrelated side note, Betsy Devos reversed Obama’s 2014 decision, so anyone can get that money again.

So at the end of the day, the GAO is concerned about the fact that revenue sharing agreements might be the way a lot of OPMs are making money, something that could lead students to be recruited in aggressive ways, and wants the Department of Education to take a more active role in monitoring the relationships that OPMs have with Universities.

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