Oversight Coming for Online Program Providers

Inside Higher Ed

Katherine Knott

February 16, 2023

The Education Department is planning to increase oversight of the outside contractors that colleges and universities use to help run online programs.

The online program management companies, or OPMs, have grown in the last decade, but critics have accused the industry of engaging in aggressive recruiting practices and questioned the legality of the OPMs’ business practices. Supporters of the companies say they have helped expand online offerings in higher education at a time when institutions lacked the capacity to create programs and that further regulation would dampen innovation.

OPMs have faced increasing scrutiny in recent years from congressional Democrats and consumer groups, which have criticized the Education Department’s oversight of the industry. Last year, the Government Accountability Office reviewed the companies and urged more scrutiny from the Education Department, finding that the agency didn’t have enough information to gauge the scale or legality of the companies’ agreements with institutions.

To address that finding, the department said in guidance issued Wednesday that OPMs and any entity that provides recruitment services for a college are considered third-party servicers, subjecting the companies’ contracts with institutions to regular audits. Colleges and universities are required to report details of their agreements to the department by May 1.

“That will provide important transparency into what’s going on,” said Robert Shireman, who worked in the Education Department during the Obama administration and is now a senior fellow at the Century Foundation, a progressive think tank. “The Department of Education and then the rest of us will learn more about the contracts that institutions have, and there will be greater scrutiny and accountability for the OPM contractors if they are involved in recruiting students.”

A key issue for critics and the Education Department is the revenue-sharing agreement between the OPMs and colleges, in which the company receives a share of the programs’ tuition revenue. Federal law prohibits institutions of higher education from providing a commission or bonuses to individuals or entities based on securing enrollment or financial aid.

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