The group of companies known as Online Program Management Providers (OPM) has been helping universities build online degree programs for more than 15 years. And most relied on unusual arrangements in which companies provided financial support to help universities launch programs in exchange for a large portion of tuition revenue.
It's a model that has long raised eyebrows in higher education, but is now under federal oversight. New regulations being considered by the U.S. Department of Education would require OPM to abandon revenue sharing and instead adopt traditional service fees, subscriptions, or other approaches.
As someone who has managed online college programs for many years, I have mixed feelings about the idea of ending this model. And the problem becomes: Are universities ready for a world without his OPM?
First, there are many universities that collaborate with OPM. It's a $4 billion industry, involving about 550 U.S. universities and enrolling about a quarter of students in fully online four-year programs.
But surprisingly, this turned out to be a not very profitable model for companies.
Edtech consultant Phil Hill said in a recent blog post that most revenue-sharing ventures are losing money or barely breaking even. Leaders in the space, such as 2U, Coursera and Keypath, have never made a profit from the business, and Pearson and Wylie sold off their OPM spinoffs in recent months as the business deteriorated.
This is an OPM paradox. Universities profit while companies lose money.
It turns out that these ventures often hoped to make a profit by growing large enough to sell at a premium. A century ago, British economist John Maynard Keynes recognized that what mattered most was not a company's profits, but how the stock exchange rewarded them.
When the university turned to OPM, it should have known it was risky. Thomas Danno, a senior faculty member at New York University, said a few years ago, against his better judgment, when he was about to sign up for OPM, he thought splitting half of his tuition income with the provider would be too much. It's outrageous,” he complained.
“The question was which OPM to work with, not which OPM to work with,” he told me resignedly.
Outsourcing and insourcing
I was one of the people who didn't welcome OPM when it first penetrated higher education institutions and persuaded big-name universities to outsource digital learning. He was worried that OPM would do work that I thought would be more appropriate for faculty and university administrators to tackle.
I was concerned that OPM would compromise the academic integrity of digital education. And even more troubling, I was concerned that it would prevent universities from building the higher education skills they need to drive internal development in the long term.
But then my opposition softened as more universities realized they needed help to enter the digital market. Many companies lacked the skillsets and resources needed to go online, so it made sense to turn to commercial vendors to give them time in higher education to gain the know-how of digital education. Ta.
I had hoped that once I got the hang of it, the university would be able to jump off the training wheels and go online completely on its own.
That's what happened recently when the University of Southern California terminated its long-term contract with 2U, the top full-service provider. USC's cancellation was just one turning point in a chain of dozens of universities fleeing OPM in recent years.
“2U had the technology and the means in the beginning,” Pedro Noguera, dean of the Rossier School of Education at the University of Southern California, told me recently. “But over the years, USC has also gained the ability to provide high-quality online education. It's an arrangement that goes beyond its purpose. Our faculty do all the work, and 2U earns more than its fair share. I earned more than half of my tuition income.”
“We're excited to partner with New York University to help bring the world to the next level,” said Clay Shirky, New York University's vice provost for AI and educational technology. With OPM, your institution gets less change. If you do it yourself, you'll be going through a much longer journey of adapting to online learning. ” Shirky also said, “Corona has given teachers some understanding of what online is. Once teachers have gained experience, the mystery of online has been solved.”
Universities that rely on OPM investments to build, offer, and sell distance programs will not be very happy if the proposed government ruling takes effect. This is because universities need to raise funds quickly on their own. And these days, as we all know, colleges don't have a lot of cash lying around. According to Moody's, “educational institutions that have large numbers of online students and rely on their OPM partners to provide online services are likely to be most impacted by the proposed guidance.”
If OPM goes bankrupt, there will be deep rifts in distance education. At its best, OPM, operating in partnership with institutions such as Georgia Tech, lowers tuition costs and significantly increases enrollment in high-quality online technology master's programs. And OPM has opened up broader possibilities to many institutions that lack the courage or funding to go online on their own.
OPM has partnered with hundreds of universities to enroll tens of thousands of working and other nontraditional students. Many of them might not otherwise have been able to graduate with valuable degrees.
What's included?
The OPM industry is currently quite volatile, and 2U is so volatile that the U.S. government is worried that 2U will soon go bankrupt and students will be stranded. Still, other top companies are doing very well, with Coursera, Keypath, and Academic Partnerships reporting solid results.
To expand their reach and avoid being pigeonholed into a single line of business that may not work out, most large OPMs are diversified and run different product lines. For example, Coursera has an impressive global base of 142 million learners, hundreds of corporate and government online training courses and dozens of non-credit specialized courses, primarily in its library of online services. We offer qualifications.
But it's unclear whether OPM will be able to continue its degree-granting business without a revenue-sharing arrangement.
If universities eliminate OPM, it may become less important for some universities, especially if all tuition remains on campus. Many may already be ready to follow USC's example and go on their own.
And it's even possible that they won't be forced to leave at all. The Department of Education may still succumb to opposition from the academic community and in the distant future rescind the proposed rule that would put OPM out of business at the nation's universities.
Still, OPM doesn't seem to be sitting around waiting for the ax to fall. Some vendors already offer flat fees or other payment options to circumvent proposed government regulations that could prohibit revenue sharing. Universities are not sitting idly by, with some even skipping OPM altogether and starting internal online teams.