OPM Status Quo

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Recent CHLOE 9 survey data indicate that most online learning leaders are adopting a cautious stance toward new regulations impacting the use of Online Program Management companies (OPMs). Given the lack of concrete regulatory changes despite considerable discussion over the past two years, this wait-and-see approach is understandable. The looming threat of new regulations has prompted some institutions to contemplate exiting or renegotiating their OPM contracts. However, other institutions are actively seeking to expand or initiate new partnerships with OPMs.

Most leaders adopting a wait and see approach

The CHLOE 9 survey conducted by Quality Matters, Eduventures, and Educause includes an exploration of online leaders’ perceptions of the recently proposed U.S. regulations for online learning. These regulations include stricter guidelines and reporting requirements for various types of external providers, encompassing a broader definition of Third Party Servicers (TPS) and limitations on revenue-sharing practices. These regulations were explicitly aimed at university-OPM partnerships, although their impact is likely to be more widespread.

When queried about their institution's response to the issue of Third Party Services (TPS), most online leaders indicated that the matter was still under review or that no action had been taken. Only 11% of respondents reported reviewing contracts or taking other measures.

The survey participants represented a diverse group of institutions, including those currently working with OPMs, those that never have, and those that had previous OPM partnerships. Overall, respondents exhibited a predominantly wait-and-see approach toward OPMs. Approximately 60% indicated no plans to modify their relationships or were still deliberating changes. Just over 20% expressed a desire to terminate or exit existing partnerships. Roughly 10% aimed to renegotiate their contracts, while another 10% sought to expand their OPM engagements (the totals add up to more than 100% likely due to rounding).

Lets look deeper at three groupings of schools in their plans around OPM usage.

The joiners

The CHLOE data is  based on a relatively small sample of 324 respondents. Only 68 Chief Online Learning Officers (COLOs) directly addressed the question about OPM relationships, further reducing the sample size. As such, the results should be interpreted as general trends rather than definitive conclusions.

But what we are seeing in the market and from clients aligns with the findings from the CHLOE survey. Conversations with clients and other institutions reveal a growing number of colleges and universities exploring new OPM partnerships or renewing existing ones. Public announcements also support this trend. For example, the University of North Carolina at Chapel Hill recently added a new degree with 2U, while AllCampus announced 15 new programs and university partnerships, including an expansion into on-campus support. Coursera and Clemson University announced a new degree program, and Purdue University signed a new contract with ThriveDX for cybersecurity bootcamps.

Many of these partnerships are of course driven by the expected revenue and enrollment benefits of new online programs. Several represent expansions or renewals of existing relationships (e.g., UNC-Chapel Hill and USC), indicating a level of familiarity with both the OPM model and the partner institution. In some cases, partnerships have been initiated by senior administrators who have moved to new campuses and sought to replicate successful OPM collaborations. Despite the ongoing uncertainty surrounding regulations, new partnerships between OPMs and universities are being forged. 

The leavers

However, there is also evidence that some institutions are seeking to terminate or renegotiate their OPM relationships. One of the most notable recent developments was the Fordham University’s legal filing arguing against 2U’s bankruptcy agree (one that has since been finalized). Phil's post on the topic suggested that this suit may have been an attempt by Fordham to exit their 2U contract through indirect legal means. Anecdotal evidence from clients and industry discussions indicates that some higher education institutions are quietly terminating or modifying their OPM contracts, driven in part by the constant drumbeat of criticism of revenue-sharing OPMs and also by the potential for restrictive regulations which have made senior leaders leery of OPMs.

Other institutions are ending or modifying contracts because of changes in senior leadership, with new COLOs coming in who perhaps don’t have a history of working with an OPM or are not enthusiastic about the model. Other changes have been in the works for a while as institutions recognize the strategic importance of online learning and explore in-house capabilities.

The uncertain ones

Some institutions have expressed concerns about the ongoing criticism of OPMs, revenue sharing practices, and the potential for restrictive legislation, which may be influencing senior leaders' perceptions of OPMs. Moreover, there seems to be a lack of awareness about potential regulatory changes and their implications, especially among individuals below the level of Chief Online Learning Officer or equivalent. This may contribute to the observed uncertainty regarding future actions, as reflected in the CHLOE data.

Beyond the specific regulations enacted in Minnesota and the policy change at the Middle States Commission on Higher Education (MSCHE), no concrete federal regulations have been implemented to limit OPM partnerships. Even in those two cases, the impact of the regulations remains to be seen. At the federal level, the significant rules affecting OPMs are the potential regulations concerning Third-Party Servicers (TPS) and the review of the bundled services exception that underpins OPM-based revenue sharing. As Phil recently noted, no official actions have resulted from these investigations.

Locus of Activity

While federal regulations may not have changed yet, we are beginning to see increased activity by activist groups, suggesting two things:

• Pressure on and public criticism of OPMs and revenue share will intensify.

• Action against OPMs will increasingly expand beyond the federal level.

This shift has already begun, as seen in the passing of restrictions on OPM activity and revenue sharing, as well as broad rules regarding OPMs and Third Party Servicers in the Minnesota and MSCHE examples mentioned earlier. But we are also seeing new venues and methods being used to challenge OPMs and we predict this trend will grow.

• We expect to see more emphasis on state-level policy, similar to the legislation in Minnesota. One early indicator is Arnold Ventures (AV) search for a senior leader to shape state policy in education. AV has lead the coalition of organizations seeking to change policy relating to OPMs and revenue share.

• The impact of the new MSCHE policy on Third Party Servicers will be worth watching, as other accreditors may consider adopting similar rules targeting at OPM partnerships and revenue sharing.

• Legal action against OPM has always been a strategy pursued by activist groups, but the recent lawsuit specifically targeting revenue sharing between the University of Maryland Global Campus and Coursera marks a shift toward a more direct focus on OPMs, rather than the more indirect focus on student harms and debt. We expect more legal action from activist organizations in this direction.

What this means

The CHLOE data and what we see in the market provide us with some insight into the impact of regulatory changes. But it is at best a partial view.

This is important beyond the realm of OPMs. I have argued previously that the major focus in the future for regulatory action is likely to be online learning itself. Will there be the same level of uncertainty as regulations are floated but not actually finalized for a while? Will this have a chilling effect on the growth of online learning and in what ways?  It is something we will be watching over the next couple of years.

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