Think Tank Warns Institutions About Outsourcing Online Courses
By Joelle Fredman, NASFAA Staff Reporter
As colleges continue to enter into contracts with private, for-profit companies for help expanding their online courses — otherwise known as online program managers (OPMs) — a progressive-leaning think tank released a report warning schools of the downsides of this type of outsourcing, such as providing a financial incentive for such companies to recruit and enroll students, which the group cautioned could cause legal headaches for institutions.
The report, which was released Thursday by The Century Foundation (TCF), included a list of “five key ‘don’ts’ for colleges” when it comes to partnering with OPMs, “based on examples from our contract analysis and the hard lessons some universities have learned in expanding their online offerings.” TCF analyzed 41 contracts between private and public colleges and universities and OPMs for their analysis.
“[I]n return for some superficial convenience, public universities in every corner of the United States had been putting their for-profit contractors in the driver’s seat in nearly every respect, including financial considerations,” the authors wrote. “... If schools act quickly and effectively, they can make a lot of progress in curtailing this crisis, protecting their students and themselves in the process.”
One “don’t” on TCF’s list was the practice of “sharing” tuition revenue with OPMs. While the group wrote that it has seen that universities have become more skeptical recently about these types of contracts and paying for bundled services, more than half the agreements it analyzed were of this nature, and 41% also allowed the OPM to recruit students. TCF instead urged institutions to enter into fee-for-payment contracts, and wrote that there may even be legal ramifications of tuition-sharing contracts and bundled services. For example, the Higher Education Act (HEA) prohibits institutions receiving federal financial aid from making any “incentive payment based directly or indirectly on success in securing enrollments or financial aid to any persons or entities engaged in any student recruiting.” While the Department of Education (ED) has issued guidance that bundled service contracts do not violate this provision, TCF wrote that “the validity of that guidance has not been legally tested.”
“At some point, a student or competing college that is harmed by one of these deals will likely take that issue to court, dragging in both the school and the contractor,” TCF wrote. “... Tuition revenue-linked payment schemes create incentives for predatory behavior and mask the real work, and cost, of providing online education opportunities. Fee-for-service partnerships make it very clear who is doing what and for what amount of money in return.”
The group also suggested in its report that institutions partnering with OPMs should not bypass their own faculty on decisions related to things such as the course curriculum, sign lengthy contracts, or allow for “aggressive recruiting.”
Publication Date: 9/16/2019
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