Ed Department Shakes Up OPMs and Third-Party Servicers: This Is Huge

WCET Frontiers

Megan Raymond

February 22, 2023

Did you hear that loud noise last Wednesday? For those in the middle of the country, it was the Kansas City Chiefs victory parade. For those in higher education, the U.S. Department of Education created its own rumblings by releasing new guidance with rules about any contracted services and a series of questions about companies helping institutions with online learning. For some time, we have been expecting a change in guidance regarding Online Program Management (OPM) and the revenue-sharing model used by some of those companies. There has been much interest in assuring student consumer protection in this growing industry and in institutional outsourcing.

Earlier this year, the Department signaled it would hold negotiated rulemaking including “Third-Party Servicers”. We thought OPMs and other contracts would be covered in that process. Instead, the Department issued broad guidance on a wide range of “Third-Party Servicers”. It also announced that it was seeking input on nine questions about OPMs, especially around the OPM revenue-sharing model and its “bundled services exemption.”

The Announcement Has Impact Throughout the Institution

We did not expect the large-scale change in guidance regarding almost any service for which an institution might contract. In the PhilonEdTech blog post review of the release, Phil Hill opined:

“Basically, if a vendor provides software and services enabling in almost any way an academic program eligible for Title IV financial aid, that vendor may be considered a TPS with all of the increased regulations.”

This could have an impact on contracts for OPMs, tutoring services, retention tracking, student analytics, adaptive learning, learning management systems, contracted instructional design, and (surprisingly) even contracting for financial aid consulting. This regulatory guidance will reach into every corner of an institution. And there were some surprising elements including the exclusion of the use of foreign contractors and the inclusion of services offered to an institution by its own higher education system.

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