About That Congressional Letter

Programming note for premium subscribers: due to the importance of this letter, we are pushing back the weekly Interesting Reads This Week post by a day or two.

Yesterday, we missed an important update by a few hours for our weekly Friday Follow Up article. After posting, we noticed discussion about a congressional letter from Virginia Foxx, Chairwoman of the House Committee on Education and the Workforce, to Secretary of Education Miguel Cardona and the Department of Education (ED). In essence the letter said - we’ve heard that you might mess with the OPM regulations in the waning post-election days of this administration . . . don’t. This was of interest, as we covered this same issue recently, based on the upcoming full rescission of the Third Party Servicers (TPS) expansion guidance. From Phil’s post:

As a reminder, ED announced two regulatory actions in February 2023 with the aim of further regulating Online Program Management (OPM) companies that use a tuition revenue-sharing model.

• Reviewing the 2011 Bundled Services Exception Dear Colleague Letter (DCL, effectively synonymous with guidance) that underpins OPM revenue-sharing models. Removing or restricting this guidance would harm OPMs.

• Creating the 2023 Third Party Servicers (TPS) guidance that would place burdensome reporting and audit requirements on OPM contracts (and most of of EdTech if the original language comes back), and importantly giving a lot of ammunition for ED and its activist allies to target OPMs (think news stories, class action lawsuits, lobbying at the state level). Adding some form of this guidance would harm OPMs.

The core of Foxx’s congressional letter was a succinct warning:

The language in Foxx’s letter is too strong in its interpretation of our post. We clearly called out the information as unconfirmed at this point (something to watch for), which is different than “is about to regulate.” It is possible that Foxx’s staff have heard the same information that we have (or even stronger plans) and used our post as a public reference, or there might be some embellishment involved. But it is fairly clear that Foxx wanted a strong message of don’t do this, we’re watching you and was not interested in nuance.

Further Notes on the Letter

Foxx also quoted several university submissions to the ED during the 2023 public comment period on the two regulatory actions, which emphasize the value and services provided by OPMs in helping institutions launch and expand their online programs.

The fact that the House Committee addressed the possibility of the ED using this lame-duck session to push through a meaningful policy change—one that could likely be rescinded by an incoming administration—is significant. It highlights the lack of trust in the ED by Congress and suggests that at least some members of Congress share our concern that these policies are being driven by a small group of individuals and not any kind of broader consensus.¹

This letter also appears to be part of a strategy from the incoming Trump administration, warning outgoing political appointees to not rock the boat post-election. For example, the Foxx letter has a similar tone and structure to the letter from Representatives Jim Jordan and Barry Loudermilk to Special Counsel Jack Smith. We don’t think the Foxx letter is an isolated issue.

The Initial Reaction

Given the nature of the Foxx letter, we might not learn if the “word on the street” was accurate or not. If ED does take action in defiance of the letter, we will know; but if ED does not take action, it would never say we were going to, but you got us; rather, we’ll see a bland we have not had any plans to take this action.

Members of what we have described as the Arnold Ventures-funded coalition (which the Foxx letter refers to as “fringe advocacy groups”) are not as constrained as ED. Stephanie Hall, formerly of The Century Foundation and currently with Center for American Progress, posted the most complete reaction that we have seen from a member of the AV-funded coalition. Although these points are made by an individual who states in her X bio that the views she shares are her own, these points represent a credible line of argument against the Foxx letter and are worth addressing.

Courseware

Courseware is a loose term, but in general it includes textbook or equivalent course content along with interactive tools and an implied course design. Outside of bootcamp programs, OPMs primarily work with colleges and universities to develop customized content, where college instructors and course designers collaborate with OPM-provided staff rather than relying on pre-made content. Sometimes the OPM provides the additional interactive tools, and sometimes the institution does. We are aware of, and have worked with, clients who have contracts with OPMs that include course materials primarily provided by the OPM itself as part of the agreement. However, these cases are rare and typically involve highly specialized programs, such as those in healthcare.

“folks opposed to updating the oversight of online ed” is a non sequitur. Just because the vast majority of the higher ed community was opposed to ED’s TPS expansion guidance, that does not mean that they oppose any updates to the oversight of online education. Read the public comments - the majority of comments clearly state the need for regulation, just effective and realistic regulations that minimize unintended consequences. For example, consider the updated guidance on Regular and Substantive Interactions and the feedback from WCET, OLC, UPCEA, and Quality Matters.

Timing

It is good to see Hall grant that outgoing administrations should not disrupt education delivery, but we think this point misrepresents Foxx’s point about timing. The last ditch comment refers to the timing of the regulatory changes, i.e., post-election and pre-inauguration. It does not assert that the regulatory action comes out of nowhere.

Contra Hall’s claim that “years of research and reporting have made clear the need,” the research has been both one-sided and flawed. Studies conducted by the AV coalition and occasional academics have focused solely on the purported adverse impacts on students and the specifics of the contracts. While we agree with some findings from this research, it has largely overlooked critical aspects, such as why universities partner with OPMs, the benefits of these collaborations and what is stopping universities starting and growing online programs on their own. Additionally, the research suffers from sloppy and overly broad definition of OPMs. See Hall’s own research that lumped in learning management systems and courseware

Impact on Universities and OPMs

This points mistakenly claims that removing the allowance of revenue-sharing OPM contracts would cause no disruption. If the Bundled Services Exception goes away or is significantly modified, at the very least hundreds of contracts would need to be renegotiated. This is a much bigger task than simply hampering “some marketing and recruitment operations.” And the basis of revenue-sharing agreements is that the OPM provider is funding the early years of an online program. Vendors are not likely to say no big deal, we’ll write off those millions of investment, ignore the long-term contracts, and just charge a fee instead. There will be significant renegotiations at the least, and many contracts will simply end. Without that investment feature of revenue-sharing, many smaller programs will be unaffordable for the institution and be terminated.

Whether you believe the removal of revenue-sharing is good or bad, it is naive to believe there would be no disruption to online programs with the potential changes in question. Which is why it would be a mistake to make these changes in the outgoing administration.

The main On EdTech newsletter is free to share in part or in whole. All we ask is attribution.

Thanks for being a subscriber.

1  For example, see https://onedtech.philhillaa.com/p/fewer-than-1-of-comments-support-tps-expansion-guidance.