Friday Follow Up

Team OPM Chicken not-so-Little and a researcher's view of the actual online report

Phil Hill
October 11, 2024

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We are sharing the first few posts from our new series, Friday Follow Up, with all subscribers (free and premium) as we work out the format. Well, it’s a new series in terms of consistent delivery on Fridays. And we will focus mostly on news events of the past week plus updates based on previous newsletter coverage in this series. Morgan’s Interesting Reads This Week, delivered on Saturdays, will continue to be focused on broader lessons from reports, surveys, and other nuggets that get caught in her fertile mind, with a lot of dot connecting.

Initial Take on OPM Report

This week Validated Insights released a market analysis report on Online Program Management (OPM) usage. This work is led by Brady Colby, who previously released data through his company 32Edu, and then through an exclusive partnership with HolonIQ. Most people viewed the report through the lens of an Inside Higher Ed article titled “Has the OPM Market Already Imploded?”

I have had several people ask for my take. The short answer is that there are some valuable parts of the report, which is not surprising given Colby’s long work in this area, including the market map.

Accordingly, I appreciate the distinction between “strictly defined” and “broadly defined” in terms of financial activity (M&A, investment), although the rest of the report could have used the same distinctions.

And the overall picture of adoptions and contract endings is valuable. For example, seeing the increase in contract completions, which I suspect indicates that it’s been 10 years (which is the typical contract length) since a big ramp-up in the OPM market

I do not subscribe to the strategic analysis, for two reasons.

The regulatory section conflated the Bundled Services Exception guidance that underpins tuition revenue sharing with the Third Party Services expansion guidance that is a data-gathering and oversight play by the US Department of Ed. The report mistakenly lumped them together as the Third Party Services Exception.
There is a difference between market financials and market demand, and I do not see market demand for OPMs, including rev share models, going away. I was just at two conferences this week - P3Edu and WCET - and there continues to be demand for this market.

But wait, Phil, you were quoted as saying the market was on life support. True, last year I was interviewed by IHE and made that quote, but I was talking about company financials. The looming 2U bankruptcy, the sale of Pearson’s OPM business to Boundless Learning with mass layoffs, the sale of Wiley to Academic Partnerships to create Risepoint, etc. 2U exited bankruptcy and has a much cleaner balance sheet and new ownership / leadership (in the process of CEO change). I expect Boundless to come out publicly with a new strategy in the next month or two. Risepoint is consolidating operations. None of this is to say that they’re on easy street, but the corporate financials are better today than last year.

And market demand has actually increased from last year, per P3Edu and the Chronicle of Higher Education (and referenced in the Validated Insights report).

Not as high as pre-pandemic or during the 2021-22 market irrational exuberance stage, but increasing. And this strongly aligns with what I’m hearing at conferences and in the market.

Universities need to have better oversight of OPM contracts, and they need better risk management that includes out clauses for partnerships. And OPM companies need to break even and be more selective in which programs to support. And contracts need lower revenue-sharing percentages and options for shorter contract lengths. Great lessons from the market. But none of this indicates the “end of the road for a once-thriving sector.” It’s a changing market with new financial conditions, and yes, continued regulatory risks.

Asking the Wrong Questions.

Morgan and I seem to have struck a chord with our Wednesday post on the supposed Third Way research report on online learning. We’ve had valuable feedback, and I wanted to share some thoughts on the research itself from Al Essa, who is a long-time educational researcher working at MIT, MnSCU, Desire2Learn, McGraw-Hill, Macmillan, and Carnegie Mellon. Emphasis added on a key point.

Topline: IMHO the data doesn’t support the conclusions of the study. While I am not an expert on the specific technique employed by the authors, I do know a little about research design. The authors employ causal inferencing, which I like. However, the methodology is overly complex and, therefore, there are myriad ways in which the study could go wrong.

Their starting point is to compare two groups: Group A (only enrolled in online programs, with no in-person courses); Group B (has at least some in-person courses, even if the also take online courses.)

The second complexity is that Group B is quite heterogeneous, ranging from students took a single face-to-face course to those who took almost all their courses face-to-face, with only a few online. This can lead to: blurring of treatment effects, potential for misclassification, different levels of online exposure, and unclear counterfactual. Imagine a drug trial treatment group with an entire spectrum of exposure to the drug, in this case exposure to face-to-face.

I can list many such complexities in the research design. My recommendation to the authors would be to go back to the drawing board and start with a simple design and iterate. And be wary of epicycles.

Another way to view this Group B heterogeneity is that the U Florida researchers were asking the wrong question. They wanted to isolate fully-online students and determine outcomes, ignoring all of the complexity that the higher ed world is not a binary choice between traditional and online.

Expect Al to have a separate blog post looking at the research in more depth early next week.

Furthermore (and adding to Al Essa’s commentary), the data used do not allow a determination of which students had a choice between a fully-online program or one with face-to-face classes. Some students have that choice, but some don’t - the only option for higher education comes from fully-online programs. The research mixes these together. The text of the research report acknowledges this case, but the research methods and conclusions mashes it all together. Peter Shea’s comments describe this point very well.

Imagine if you are a full-time, on campus student. You are fully dedicated to going to school and being a “student”. Now imagine you have a full time job and a family and want to get ahead. You decide the way to do this is to go back to school, only you can’t afford to quit your job and go to school fulltime. So you take online courses which are flexible and convenient. It takes a bit longer to finish your degree, and maybe you have to drop the whole idea if work or your family gets into a crisis. So, in the aggregate, if you compare the two populations you get a skewed picture (oh my god, fully employed, older students taking a full load of online courses don’t do as well as kids living on campus, without another job and kids of their own – shocking!). So, the right way to look at this is not to ask, are fully online, fully employed, older students failing to keep up with their on campus counterparts, but are they getting ahead of students who never even try? You miss 100% of the shots you don’t take, and online learning is giving these non-traditional students a shot. And many of them are earning valuable credentials that are allowing them to get ahead. Don’t get me wrong, I agree that many of the for profits institutions have acted in predatory ways in the past. But this study and its conclusions don’t actually provide evidence in support of the recommendations it makes.

We love having such great readers and appreciate their comments.

Other Stuff Coming

It’s been a whirlwind of a week attending P3Edu then WCET and then a short vacation. I expect to cover more of the conferences next week, including some thoughts from my fireside chat with new 2U executive chairman Brian Napack. Until next week . . .

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