May 5, 2022
Colleges can use third-party online program managers to help run their online education programs. These managers often recruit students, in addition to providing other services.
Many online managers are paid a share of tuition revenue—an arrangement the Department of Education allows only if safeguards against prohibited incentive payments are in place. For example, online managers must provide multiple services and not be paid separately for recruiting. These arrangements are subject to annual audits.
But colleges and auditors lack clear instructions from Education, making it hard to detect violations. Our recommendations address this issue.
What GAO Found
At least 550 colleges worked with an online program manager (OPM) to support at least 2,900 education programs (e.g., certificate and degree programs) as of July 2021, according to the most recently available market research data. However, the exact number of OPM arrangements is unknown, due to a lack of comprehensive data, and there could be more of these OPM arrangements. Available market research data show that the number of new arrangements between colleges and OPMs is growing. There were at least 20 new arrangements between colleges and OPMs in 2010, and by 2020 the number had grown to at least 165. About 90 percent of the colleges with OPM arrangements are public or nonprofit colleges. GAO found that OPMs commonly recruit students for colleges, making these arrangements subject to the Department of Education’s oversight and the Higher Education Act’s ban on incentive compensation—which was designed to prevent abusive recruiting practices.