“Essentially, the report said, ‘Department of Education, do your job and provide oversight,’” said Phil Hill, partner and co-founder of MindWires, an education technology consultancy firm. “I’m not sure anyone is saying that they disagree with that. So, you can look at this report and think, there’s not much to it. But I think there are a lot of regulatory changes that people want to push and have been waiting on the GAO report to do. It’s significant, even though the findings didn’t have anything damning.”
OPMs are third-party, for-profit companies that colleges can hire to help run online education programs. These companies provide a range of services, often including recruiting students, according to the GAO report.
To pay OPMs, many colleges opt to share their tuition revenue. OPMs typically get 40% to 60% of every tuition dollar, and some can get up to 80%. These contracts also tend to be lengthy, spanning several years. But when recruiting services are involved, colleges and OPMs fall into a tricky legal territory that requires careful federal oversight—which the GAO found lacking.
“There’s nothing groundbreaking in the GAO report,” said Michelle Dimino, an education senior policy advisor at Third Way, a centrist think tank. “The main takeaway is there are not currently systems in place to actually monitor compliance with the incentive compensation ban.”
That ban refers to the Higher Education Act outlawing incentive compensation for recruiting students as a way to prevent predatory recruiting practices. But a 2011 Dear Colleague letter from ED lets OPMs provide recruiting support through tuition-sharing agreements when such services are “bundled” with other services like curriculum design or marketing.
“So, recruiting alone would not be allowed under a tuition-share, but recruiting plus course design and advising would be under that guidance,” said Dimino. “And so that has allowed OPMs to grow while relying on tuition-sharing as a core part of their business model.”
