For more than 15 years, a group of companies known as online program management (OPM) providers have helped universities create online degree programs. And most of them have relied on an unusual arrangement: Companies provide financial backing to help universities launch programs in exchange for a large share of tuition revenue.
It's a model that has long drawn attention in higher education, and now it's under the scrutiny of federal agencies. New regulations tech-innovation/2023/12/13/how-education-department-could-change-opm-industry” target=”_blank” rel=”noopener nofollow”>under consideration at the US Department of Education. would require OPMs to forgo revenue sharing and instead adopt more conventional fee-for-service, subscription or other approaches.
As a long-time administrator of online programs at universities, I have mixed feelings about the idea of shutting down the model. And the question comes down to this: are universities prepared for a world without OPM?
On the one hand, the number of universities that have worked with OPM is large. It is a $4 billion industry, with about 550 American universities partnering with them and about a quarter of students in fully online 4-year programs enrolled in them.
But it turns out, to my surprise, that it has not been a very profitable model for companies.
According to educational technology consultant Phil Hill in a recent blog post, most revenue sharing companies have either lost money or barely broken even. Industry leaders including 2U, Coursera and Keypath never made a profit from the activity, and Pearson and Wiley sold their OPM subsidiaries in recent months when the going got tough.
It's an OPM paradox: when companies lose money, universities make it.
It turns out that these companies often hoped to make money by growing enough to sell at a premium. A century ago, British economist John Maynard Keynes recognized that what matters most is not a company's bottom line, but how the stock market rewards it.
When universities turned to OPMs, they must have known it was risky. Sharing half of your tuition revenue with your provider is “scandalous,” NYU faculty member Thomas D'Aunno complained years ago, just as he was enrolling in an OPM against better judgment. of the.
“The question was which OPM we were going to work with,” he told me with resignation, “not if we were going to work with one.”
Outsourcing vs. insourcing
When OPMs first infiltrated higher education, convincing well-known universities to outsource digital learning, I was among those who did not welcome them, fearing that they would do the work I considered most appropriate for professors and administrators. university students.
I was concerned that OPMs would undermine academic integrity in digital education. Even more worryingly, he feared they would prevent universities from developing the higher education skills needed to drive long-term internal development.
However, my objection was later softened when I recognized that many universities needed help entering the digital market. Since many lacked the skills and resources to do what was necessary to move online, it made sense to turn to commercial providers so that higher education had time to gain knowledge in digital education.
He hoped that once they mastered it, universities would be able to jump off their training wheels and go online completely on their own.
That's what happened recently at the University of Southern California when tech-innovation/teaching-learning/2023/11/09/2u-usc-sharply-curtail-much-scrutinized-online” target=”_blank” rel=”noopener nofollow”>canceled his long-term contract with 2U, a leading full-service provider. USC's cancellation was just one turn in a cascade of dozens of universities fleeing OPMs in recent years.
“In the beginning, 2U had the technology and the means,” Pedro Noguera, dean of the USC Rossier School of Education, told me recently. “But over the years, USC also gained the ability to offer high-quality online education. It's a deal that outlived its purpose. Our faculty were doing all the work and 2U was receiving more than its fair share, pocketing more than half of the tuition revenue.”
As Clay Shirky, vice provost for ai and technology in education at New York University, told me: “A full-service OPM buys you a set of competencies. If you opt for an OPM, you will get fewer changes at your own institution. If you do it yourself, you will take the long way around and adapt to online learning.” Shirky also reminded me that “COVID gave teachers a taste of what it means to be online. When teachers gained experience, online was demystified.”
Universities that rely on OPM investments to build, deliver and market remote programs will not be very happy if the proposed government decisions go into effect, as they will require them to quickly raise capital on their own. And nowadays, as everyone knows, universities don't have tons of cash lying around. According to Moody's“Institutions that have a significant number of online students and rely on OPM partners to provide online services will likely be most affected by the proposed guidance.”
If OPMs fail, a deep cut will be felt in remote education. At their best, OPMs, operating in partnership with institutions like Georgia tech, have helped reduce tuition and markedly increase enrollment in high-quality online technical master's degrees. And OPMs opened up broader possibilities for many institutions that lacked the courage or money to go online on their own.
In partnership with hundreds of universities, OPMs enrolled tens of thousands of working and other nontraditional students, many of whom would otherwise never have graduated with a prized degree.
What does the store have?
The OPM industry is pretty shaky right now, with 2U so precarious that the US government is worried it will go under soon. leaving students stranded. Still, other major companies are doing quite well, including Coursera, Keypath, and Academic Partnerships. reporting solid results.
To expand their reach and avoid being saddled with a single line of business that may not pan out, most large OPMs have diversified and operate a mix of product lines. Coursera, For exampleWith its staggering global base of 142 million students largely in its library of online offerings, it offers hundreds of corporate and government online training courses, as well as dozens of non-credit professional certificates.
But it is unclear whether OPMs can continue their business of granting degrees without revenue-sharing agreements.
If OPMs disappear at universities, there is a chance they will no longer be crucial at some colleges and universities, especially when every tuition dollar remains on campus. Following USC's lead, many may already be ready to move forward on their own.
And there is even the slimmest chance that they won't be forced to leave at all. The Department of Education may still bow to academic opposition and, in the distant future, waive proposed rules to put OPMs out of business at the nation's universities.
Still, it seems the OPMs aren't sitting around waiting for the ax to fall. To escape proposed government regulations that could prohibit revenue sharing, some providers already offer fixed rates and other payment options. Universities are not sitting idly by either, with some creating internal online teams, bypassing OPMs entirely.
