Outsourcing Online Higher Ed: A Guide for Accreditors

By: Taela Dudley, Stephanie Hall, Alejandra Acosta, and Amy Laitinen – Published June 23, 2021 by The Century Foundation –  Subscribe to the WFMonitor eNewsletter

Online Program Managers (OPMs) have played an increasingly influential role in public and private nonprofit colleges’ curriculum, marketing, and enrollment policy. Further, through revenue share agreements, OPMs and their collegiate partners are often incentivized to enroll students in poor-quality programs. In this report, The Century Foundation and New America list standards that accrediting agencies and policy makers must enforce to regulate institutions’ contractual relationships with OPM firms.

Accrediting Agencies’ Lack of OPM Oversight
In their review of accrediting agencies evaluation policies on OPM contracts, The Century Foundation and New America found that in most cases, agencies provide “little scrutiny on the financial arrangement behind the contract, the governance model under which it operates, or the past successes and failures of the OPM contractor itself.” In addition, some OPM contracts can be extremely risky for institutions’ financial stability. For example, long-term contracts that cede governance to OPMs over 5 or more online programs within one department, bundled services (technology provisions, instructional design, and marketing and recruiting), and affect greater than 25% of an institution’s enrollment should raise red flags for accreditors. However, when evaluating OPM partnerships, accreditors generally take a “laissez-faire” approach. Often, accreditors do not review actual OPM contracts, and rely mainly on qualitative information provided by institutions to verify the viability of a partnership. Furthermore, accreditors are “vague about what information they need to determine an arrangement meets standards, or about how they evaluate the information that is submitted,” which can lead to inconsistent enforcement and oversight, as well as a lack of historical data on the quality of OPM services. 

Recommendations for Accreditors
To better regulate OPM contracts, The Century Foundation and New America recommend the following actions to be taken by accreditors: 

  • Collect data relevant to the institution, provider, and the proposed program and evaluate the past performance. Accreditors should require institutions to provide specific data and information such as, “student outcomes of the provider and of the institution; enrollment growth projections for the new arrangement, compared with overall enrollment trends at the institution and in any other online programs offered by the school; and expected tuition of the program relative to the tuition of other online programs in the field of study.” 
  • Consider marketing materials. Accreditors should regulate high-pressure marketing and recruitment tactics by overseeing “the development of marketing materials – including ad content – and the development, training, and oversight of recruitment staff.” In addition, accreditors must “prohibit language that gives the OPM the power to assume content is approved if they have failed to make contact with institutional representatives or simply because a certain number of days have passed.” 
  • Realistically evaluate growth targets. With their business model centered on revenue sharing agreements, OPM contractors may posit unreasonable enrollment targets to institutions to make a contract appear profitable for both parties. When assessing enrollment targets, accrediting agencies must “evaluate whether they are reasonable and achievable, and whether they will require substantial changes in the institution’s admissions policy to achieve.” 
  • Pressure-test the governance structure proposed for the program. Accreditors “should not approve formal structures, like steering committees, that give the OPM voting authority or decision-making power over program or course offerings, admissions requirements, enrollment targets, or major curricular decisions – particularly at the expense of faculty at the institution.” 
  • Require annual data on the program. Accrediting agencies should require institutions to provide annual data on “the enrollment of each program provided through an OPM (including the difference between actual and projected enrollment and target enrollment, as well as the percentage change in enrollment relative to the previous year); the withdrawal rate, retention rate, and completion rate for the program; and tuition changes in the program.” 

Recommendations for Policy Makers
To better enforce regulations on OPMs The Century Foundation and New America recommends: 

  • Close the loophole for “bundled services” providers. Through 2011 guidance from the Department of Education, institutions and OPMs offering bundled services in addition to marketing and recruiting can ignore rules against incentive compensation practices and agreements. The Biden Administration should “rescind the guidance, and restore the restrictions on incentive compensation practices, to better protect students.” 
  • Mandate stronger reviews of OPMs by accrediting agencies. “Lawmakers should mandate that the development of online programs in coordination with an unaccredited entity like an OPM firm constitutes the type of substantive change that requires reevaluation by accreditors.” Also, congress should “ensure reviews address issues related to finances, governance, and student outcomes, including requiring the substantial consideration of data on actual and projected enrollment; retention, completion, and withdrawal; and tuition pricing trends within each program.” 

The Century Foundation and New America found it commonplace for accrediting agencies to defer to institutions’ qualitative appraisals when approving OPM partnerships. Specifically, lack of oversight of institutions has led to “too little consideration for the appropriate balance of governance, the OPM firm’s history or track record in the space, and the financial and academic viability of the program.” As a result, poor-quality programs continue generating enrollment numbers and students suffer.

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