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Are OPMs The New Predatory For-Profit Colleges?

Proponents believe online education is the future of higher education, providing ease of access, more flexible learning wherever, and the opportunity to engage students they are. The pandemic has shown that many universities can pivot to online education when needed, but creating effective, fully online programs is still hard. Perhaps that is why many online programs at public universities are run by private corporations known as Online Program Managers (OPMs). Worryingly, these private companies bear many of the predatory hallmarks—aggressive recruiting and targeting minoritized students—we saw in for-profit colleges like Corinthian and ITT Tech, both of which collapsed after years of hoovering up as many federal dollars as possible, harming tens of thousands of students in the process.

What are OPMs, and why do they exist?

As online education expanded over the past twenty years, particularly at for-profit schools, public universities, eager to compete by expanding their online classes, chose to pursue contracts with OPMs rather than expanding internal capacity. at least partly because they were convinced that doing so was less financially risky. That strategy has unfortunately created more risk for students and, in the long run, more risk for institutions.

The idea is that OPMs provide the tech platforms that help students engage with and access online education, and universities provide the courses and content. But, the courses are designed and run by the OPMs as well, with the contracting university mainly providing its brand to attract students. If an OPM ceases to provide the platform for online courses, students could be left without a course to attend overnight.

What makes an OPM predatory?

New research from professors at the University of California Merced draws attention to the size and scope of online education provided through and by OPMs. Public universities enroll almost two million students through online programs, with up to eighty percent of non-profit colleges that deliver online education using OPM services. Accurate estimates of total enrollment in OPM-run courses are hard to come by because schools are reluctant to advertise that an OPM is running a course. This all adds up to an industry worth somewhere between $4 and $7 billion a year.

“OPMs backed by private equity seem to engage in more of the problematic practices we describe in the paper. That is, they are more likely to target marginalized students, extract revenue from universities, expand services with a university, and hold universities captive with problematic contracts,” said Dr. Laura Hamilton, one of the report’s authors. Many OPM agreements also include revenue sharing, incentivizing OPMs to enroll as many students as possible. This dependence on OPMs presents unique risks to students.

What happens if an OPM goes out of business?

There are well-established protections for students if a college goes out of business. OPMs are not institutions, so if one closes suddenly, there would be no teach-out, which often happens when a college closes to ensure remaining students can complete their degrees. There would be no closed school discharge of student loans, a mechanism for relief where students who borrow to attend a school that shuts down before they graduate can apply to have their loans forgiven. It would also be much harder for the Department of Education to provide support and relief to tens of thousands of students spread out among a large number of institutions.

A major OPM suddenly going out of business is not an academic question; One of the largest OPMs 2U is in a poor financial state, as a blog post by Ben Kaufman at the Student Borrower Protection Center (SBPC) made clear last week. If 2U were to fail, somewhere between sixty and eighty-five thousand students would be impacted—a more accurate enrollment estimate is hard to find because 2U to avoid publishing how many students are deliberately enrolled in its program. The company’s latest transparency report includes total student enrollment over 20 years, but fails to disclose current enrollment. This best estimate of current enrollment presents a huge risk for students, institutions, and taxpayers. 65,000 students are almost as many as they were enrolled at Corinthian College at its height. The federal government is now forgiving close to $6 billion in student loans for former Corinthian students.

OPMs represent the latest front in higher education accountability. OPMs will continue to proliferate so long as there is money to be made and lax oversight of how they operate. It is high time ED pays more attention to the unique risks they pose to students.

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