Recently, the U.S. Department of Education (ED) has indicated a shift toward heightened oversight of Online Program Management (OPM) companies, particularly regarding their revenue-sharing agreements with colleges. This potential regulatory shift could affect how educational institutions collaborate with OPMs to provide online programs. Here, we’ll explore what changes are underway, why they matter, and how colleges and universities might adapt to these developments.
What’s Happening?
In May 2023, the Department of Education announced plans to revise policies around “third-party services,” a category that includes OPMs. These companies typically offer services like recruitment, marketing, and course design to colleges, with revenue-sharing agreements often based on online program enrollment. However, concerns have been raised that these models may lead to aggressive recruitment practices and link public funding to private gains.
The proposed regulatory adjustments could restrict or eliminate revenue-sharing models, potentially requiring OPMs to reconfigure their business practices. Lawmakers and advocacy groups argue that these partnerships may contribute to student debt and, in some cases, involve questionable marketing approaches. Increased scrutiny has led to calls for reform, focusing on minimizing risks for students.
Why It Matters for Educational Institutions
OPMs have played a significant role in supporting colleges, especially smaller institutions, by facilitating the launch of online programs without significant upfront infrastructure investment. For many schools, these partnerships have helped manage the financial demands of developing online education. Additionally, OPMs often provide services like enrollment management and career counseling, which can support student satisfaction and retention, with some OPM-supported programs reporting retention rates as high as 80-90%.
However, these partnerships may also bring financial and reputational risks. Colleges in revenue-sharing agreements could face challenges if their OPM partner’s practices are scrutinized. Schools relying heavily on OPMs may need to reexamine their contracts or adapt quickly to comply with the new regulatory environment. Additionally, as revenue-sharing models come under increased regulation, schools may need to explore alternative approaches to manage the costs associated with online program expansion.
This oversight also reflects a broader trend of increased regulatory attention to for-profit elements within higher education. Colleges closely aligned with OPMs may experience additional regulatory requirements that could impact their financial aid eligibility and accreditation status.
How Colleges Should Adapt Their Marketing Programs
With OPMs potentially shifting away from traditional revenue-sharing arrangements, this may be an ideal moment for institutions to review their partnerships and strategies for expanding online programs. Schools might explore partnerships with agencies that provide more flexible, transparent service models.
Here are some strategies institutions can consider:
- Review Existing Partnerships: Schools currently working with OPMs may want to assess their agreements and consider how potential regulatory changes could affect these contracts. Checking for clauses that allow renegotiation or termination in light of regulatory changes could be beneficial.
- Explore Alternative Solutions: Instead of relying exclusively on OPMs, schools may consider partnering with agencies that provide specific services, allowing more control over operations and eliminating some risks linked to revenue-sharing models.
- Focus on Student Outcomes: With a focus on student protections in upcoming regulations, institutions can prioritize programs that deliver high value to students. Working with agencies that emphasize ethical recruitment, program quality, and measurable outcomes can support these goals without the complexities of OPM contracts.
- Communicate with Stakeholders: Transparency with students, faculty, and other stakeholders can help institutions build trust as they navigate regulatory changes. Open communication about steps to align with new guidelines can also protect the institution’s reputation.
Moving Forward in a Changing Landscape
The Education Department’s planned changes mark a significant shift in oversight for online programs and third-party partnerships in higher education, paralleling earlier regulatory shifts within the for-profit sector. For institutions, this is a key moment to reassess the scalability of their online programs. By exploring alternative partnership models and focusing on transparency and student outcomes, schools may be better positioned to navigate this evolving landscape.
As the sector continues to change, institutions that focus on partnerships aligned with growth and ethical standards may find themselves well-equipped to adapt and succeed in the future.
