Center for Technology and Innovation

Depar⁠t⁠men⁠t⁠ of Educa⁠t⁠⁠i⁠on ⁠i⁠s Leav⁠i⁠ng S⁠t⁠uden⁠t⁠s and Innova⁠t⁠ors ⁠i⁠n Regula⁠t⁠ory L⁠i⁠mbo

By: Dr. Edward Longe / 2024

Dr. Edward Longe


Center for Technology and Innovation


April 23, 2024

Last year, the Department of Education, led by Secretary Miguel Cordona, released a Dear Colleague letter that flew under the radar of most Americans but could reshape how colleges and universities across the country deliver online courses for millions of students. Initially withdrawn due to widespread backlash, the Department is expected to pick up where it left off within the next several months.

The new guidance, if implemented, could disrupt “the contractual arrangements between colleges and universities and Online Program Managers (OPMs)—the vendors that help colleges build and operate digital platforms for online courses” by giving the federal government greater oversight into contracts between providers and educational institutions. 

To build, maintain, and deliver online courses, OPMs and educational institutions often enter into mutually beneficial revenue-sharing agreements in which an OPM launches and runs online programs for colleges and universities. In return, colleges and universities provide OPMs with a portion of tuition, avoiding onerous one-time fees and rewarding course quality and student completion rates.. The Government Accountability Office (GAO) estimated that in 2021 “at least 550 colleges worked with an online program manager to support at least 2,900 education programs.” The GAO, however, admits that “the exact number of OPM arrangements is unknown due to a lack of comprehensive data.” 

By 2030, the OPM market could be worth over $11 billion.

As OPMs have become more prominent players in American education, concern has grown, particularly among the left, that they are preying on students for profit. Shortly before the Department of Education announced its plans to regulate these agreements, Representative Rosa DeLauro (D-CT-03) argued that “OPMs mislead students, drive up costs, and leave student borrowers with a low-value education, excessive debt, and low-paying jobs after graduation.”

Despite the Department of Education seeming committed to implementing increased oversight of OPMs, and after months of stakeholder engagement and public testimony, there has been little movement over the past few months to implement these rules. Usually, the lack of movement on harmful proposals would be positive, but silence has created regulatory ambiguity where providers and institutions aren’t sure what the future holds and are reluctant to enter into contracts that deliver critical services for students. 

After over a year of regulatory limbo, the Department of Education must make a decision and provide the regulatory certainty institutions and providers need to deliver high-quality online programs to students. 

In attempting to oversee contracts between providers and institutions, the Department of Education is ignoring the cost-saving benefits of these agreements, especially for colleges and universities with smaller budgets. As William J. Bennet, Secretary of Education under Ronald Reagan, notes, “creating an online program requires a lot of investment, as does marketing it,” and an OPM “offloads the front-end burden, which can be imperative for colleges that lack the multibillion-dollar endowments of larger household name universities.” 

Smaller colleges and universities would face two choices if the Department of Education implements its guidelines. They would have to completely withdraw these online offerings, denying students a diverse range of popular online courses, or they would be forced to fund these courses themselves, further straining already stretched budgets and leading to cuts elsewhere. In a worst-case scenario, online courses could become a luxury reserved for America’s wealthiest institutions. 

In either situation, students suffer at the hands of Washington bureaucrats. 
After a year of regulatory limbo, it’s well past time for the Department of Education to decide whether it wants to implement rules that will unnecessarily harm students, educational institutions, and OPMs or leave an ecosystem alone that generates significant benefits for all three. While the best-case scenario would be that the Department of Education listens to the numerous stakeholders who criticized the plans and withdraws the proposals altogether, the next best thing they can do would be to provide clarity and certainty to all parties clamoring for it.