Are tuition-share agreements between colleges and OPMs on solid legal footing?
June 18, 2021
When Coursera went public earlier this year, it was riding a wave of enthusiasm for online education brought on by the coronavirus pandemic. The company — which offers more than 4,600 standalone online courses, two dozen degree programs and other credentials — told potential investors that users were flocking to its platform during the health crisis.
One segment of the business was doing particularly well. Since 2015, the company has partnered with colleges to help them launch and run online degree programs hosted on the Coursera platform, including by recruiting students. In exchange, the company receives a portion of their tuition revenue.
The number of students enrolled in one of Coursera’s degree programs swelled from 6,200 at the end of 2019 to nearly 12,000 a year later. But Coursera issued a warning to investors when filing for its initial public offering: That part of its business is on unstable legal footing.
U.S. law prohibits colleges that receive federal financial aid from giving commissions, bonuses or other types of incentive-based compensation to companies or individuals that recruit and enroll students into their programs.