The House Appropriations Committee is Coming for OPMs

A couple months ago we reported that the Government Accountability Office wanted the Dept. of Education to monitor tuition sharing agreements between universities and Online Program Managers. Now the House Appropriations Committee released a 623 page report attached to the funding bill for the Dept. of Labor, Health and Human Services, Education, and related agencies. If you want to read the whole section, it starts on page 276.

The committee specifically referenced the GAO’s report and identified some of the issues related to incentive compensation schemes, including “governing bodies that give the OPM a … regular role in decision making” and “OPM control over marketing and recruiting, in the name of the school”. They are concerned about the waste of taxpayer dollars in the Federal student aid programs, ensuring protections for students, and the role that OPMs are playing in graduate student debt.

This section in particular comes down hard on OPMs, an industry which has seen a tremendous amount of growth during the pandemic, and a paragraph down wants to create an “automatic, formalized process” that lets students recoup money from universities that commit wrongdoings, but also the OPMs. The committee wants the Dept. of Ed to determine when “liabilities should be shared jointly between the institution and the OPM”. They then specifically call out that a lot of OPM growth was on the back of investor assumptions “of loose regulation or non-existent oversight”.

These are strong words for the OPM industry, but in spite of that, 2U, one of the only publicly traded companies that functions as an OPM (although they do many things in addition to that) actually saw their stock price rise in the week after the report came out, so it would seem that investors aren’t too concerned.