How did you get to this? In 2011, the U.S. Department of Education issued a “Dear Colleague” letter reshaping the way universities do business. Known as the “Bundled Services Guidance,” the letter created a loophole in the law prohibiting certain risky sales practices by institutions participating in federal student assistance programs. Part of the reauthorization of the Higher Education Act of 1992, this “Incentive Compensation Prohibition” helped eradicate the epidemic of waste, fraud and abuse by for-profit universities in the 1980s. But by 2011, the Ministry of Education wanted to turn back the clock.
The Incentive Compensation Prohibition expressly prohibited educational institutions participating in Title IV Student Assistance Programs from paying:
Payment of commissions, bonuses, or other incentives based, directly or indirectly, on the success of a decision to enroll or secure financial aid or award financial aid to a person or entity engaged in student recruitment or admissions activities; .
The 1992 language made an exception for foreign students living abroad.
In enacting this ban, Congress was addressing one of the most compelling lessons of the commercial feeding frenzy of the 1980s. Creating incentives to pay commissions on student recruitment has predictably led to aggressive sales tactics, recruitment of unqualified students, and increased enrollment while maximizing profits by spending as little as possible on actual student education. It’s a race to the bottom by unscrupulous colleges trying to maximize. At the hearing, a U.S. senator was stunned by horrific stories of commissioned recruiters loitering at unemployment insurance lines and bussing people out of homeless shelters to sign promissory notes. One of his particularly outspoken commercial operators declared to Senate staff: Really, I don’t care about the well-being of these students. ”
In 2011, the department’s fuzzy logic ignored not only the 1992 law, but the very real risk of allowing student recruitment practices to degenerate into used-car salesman-style gimmicks. The 2011 Guidance amended the absolute prohibition on commission payments to allow educational institutions to distribute a portion of their tuition income (essentially a commission on each “sale”) to “unrelated” third parties. or with “independent” third parties.
It stands to reason that the bundled services loophole was not conceived by the sector itself. These entities, today’s OPM, worked with a handful of brand-name agencies to claim loopholes. As Kevin Carey reported, in 2010, when his 2U executives met with President Barack Obama’s secretary of education, Arne Duncan, to lobbi for waivers, he lobbied for nursing at Georgetown University. I was accompanied by the dean. His OPM expertise as an online education enabler has driven institutions to seek out.
The theory behind OPM’s successful sale of the department is that it can cover the prior art costs of moving high-quality academic programs online and provide specialized Internet marketing expertise that traditional institutions lacked. was. This would reduce the risk of traditional institutions entering online education and could provide an antidote to the proliferation of shoddy online programs marketed by operators such as Corinthian Colleges and ITT Tech. Discussion progressed. It’s easy to see that his promotion of OPMs to departments at the time was tempting.
A key element of OPM’s lobbying strategy was to position itself as a technology company rather than a sales and marketing company. But just as Uber used “tech company” cover to circumvent taxi regulations, the value of OPM’s technology has been eroded by new access to legal loopholes. The agency simply assumed that OPM’s greedy appetite for revenue would be controlled by the attention of the reputable agencies employing OPM. As it turns out, it’s not.
There are two issues that became immediately apparent. First, the university was heavily boosted by new corporate partners, and soon he saw the introduction of OPM as an easy way to make money. Second, the ministry failed to monitor and enforce even the minimal safeguards included in the guidance for bundled services. Most notably, it failed to ensure that admission criteria and program content were controlled by an independent institution.
Computer science powerhouse University of California, Berkeley, through its School of Information, offers expensive online master’s degrees in the fascinating and somewhat obscure field of data science (in three flavors: “accelerate, standard, decelerate”). did. 2U without lowering in-state tuition. The dean at the time streamlined the deal as a response to the revenue pressures she faced from the university.Berkeley Extension also slapped the university’s name on 2U’s Trilogy bootcamp product. The product is expertly marketed by the company under the brands of various university partners.
When universities transitioned to online courses during the 2020 Covid-19 shutdown, it became clear that few had OPM partners (who appeared to be experts in just such a transition). Rather, OPM is reserved for the issuance of new and expensive graduate programs, which also happen to be eligible for unlimited federal debt funding. The secret sauce to this lucrative business appears to have been aggressive online marketing, almost as perfected as a shoddy for-profit business.
OPM is also as voracious of its university partners as it is of its prospective students, often receiving more than 60% of its online program tuition income through decades-long contracts. This allows us to use our university partners as a reliable facade for scarce and expensive alumni. offering. These deals, often based on the most optimistic assumptions of increased enrollment, have already proven more than the institutions bargained for. His 115-year history at Concordia University, Oregon came to an abrupt end in 2020 as a direct result of an extractive tuition sharing agreement entered into with OPM. Eastern Gateway Community College in Ohio is being sued by OPM to enforce contracts for services it believes it no longer needs.
Opaque contracts often allow improper (if not illegal) input into strict academic and financial decisions by the OPM, making one client’s program appear like another client’s rejected application. including bad data governance and data ownership practices, such as pitching to third parties. At Purdue University Global, Kaplan, with whom Purdue has his OPM contract for the entire system, has the contractual right to participate on the Advisory Board and make budget, tuition pricing and marketing decisions jointly with the institution. I have. So much for keeping irrelevant third parties at bay with client independent programmatic privileges. And just recently, details of his 2013 deal between Barkley and his 2U have surfaced. The deal will give 2U access to data about rejected applicants and allow it to cross-market to them similar programs it runs in partnership with Southern Methodist University.
In retrospect, what the 2011 “Bundled Services Guidance” produced was a cure worse than a disease. Instead of replacing low-quality, expensive programs delivered by poor for-profit operations with high-quality, low-cost alternatives, they simply imported predatory practices into the traditional higher education sector. Scandal-hit for-profit mega-universities like Zovio (which owned Ashford University) (the type of actors OPM was supposed to help compete with in traditional universities) were branded simply as OPM. No wonder you changed the . The toxic tactics that had already ruined their reputation could still be used. They had to hide the name of the client’s university. As an added bonus, becoming an OPM also protected me from being regulated by the Ministry of Education.
If there’s a silver lining to OPM’s story, it’s that, like all gimmicks, it seems to have run its course. Financial institutions are realizing the folly of lending out their name and credibility for a dollar. The Department of Education is waking up to future costs for all substandard online graduate programs funded through Grad-PLUS loans. OPM’s precarious financial health heightens the urgency for the sector and other regulators to intervene now and manage the situation before it escalates. A good first step would be to rescind the ill-advised 2011 guidance. The second step is to substantially reform federal accountability and quality assurance requirements to align educational institution incentives with the interests of students and taxpayers.
OPM executives and their cheerleaders pitch their business model to institutions as a way to ensure that the elusive dream of doing good while doing good. After 10+ years of work, it’s becoming increasingly clear that they can’t do either for their clients. At a time when higher education is under intense attack by ideological and political critics, the last thing we need is to shamelessly chase phantom dollars with expensive, substandard programs to fuel the fire. is to pour
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