GAO Takes Moderate Stance on Online Program Providers

Inside Higher Ed

Doug Lederman

May 6, 2022

A long-awaited federal review of companies that many colleges contract with to help design and manage their online academic programs was anticipated—by those who favored such a move as well as those who did not—to potentially undermine the legality of the revenue-sharing agreements that underlie some of those deals.

The report released Thursday by the Government Accountability Office, after a year and a half of study, suggests that some of those arrangements with online program management (OPM) companies may run afoul of federal law that prohibits student recruiters being compensated based on their success in recruiting students, as some congressional Democrats and consumer groups strongly assert.

But the GAO report largely affirms the view that revenue-sharing arrangements are legal as long as a company or other provider “bundles” recruiting help with other services such as instructional design or student support (as laid out in 2011 guidance from the Obama administration). The agency focuses on urging the Education Department to require more and clearer information from colleges about the extent and nature of these outsourcing agreements, to help auditors and others analyzing the deals better understand whether or not the companies and their recruiters are being compensated based on how many students they recruit. (It’s important to note here that some online program management firms have abandoned or de-emphasized their use of revenue-sharing arrangements, charging fees for direct services instead.)

“To protect students from predatory recruiting practices, it is important for [the Education Department] to ensure that OPMs that provide recruiting services for colleges, as well as OPM recruiting staff, do not receive incentives based on their success enrolling students,” the GAO said in its report. “Without clearer instructions to auditors and colleges about the information on OPM arrangements that must be assessed during compliance audits and program reviews, there is a risk that Education will not have the information it needs to detect incentive compensation violations.”

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