Every day, millions of Americans pursue their degrees from home offices, kitchen tables, and living rooms, studying subjects ranging from English Literature to Advanced Statistics. This transformation in higher education delivery has created unprecedented access to quality education. Yet in 2024, this education revolution faced a significant challenge when the Biden Administration attempted to impose new restrictions on Online Program Managers (OPMs) – the companies that help colleges build and operate critical digital learning platforms.
The Department of Education, under Secretary Miguel Cardona, initiated this regulatory effort through a Dear Colleague letter that would have classified OPMs as “third-party servicers,” subjecting them to additional oversight and audits. This move sparked significant resistance from higher education institutions, leading to multiple implementation delays before the Department ultimately withdrew the guidance later last year.
The attempted crackdown stemmed from a misunderstanding of the revenue-sharing partnerships between colleges and OPMs. These agreements enable OPMs to launch and operate online programs while universities share a portion of tuition revenue – a model that aligns incentives and rewards both program quality and student success. Rather than being problematic, this arrangement has become vital for expanding education access.
The impact of OPMs on higher education is substantial, with approximately one-quarter of institutions partnering with these companies to deliver online courses. For smaller institutions especially, these partnerships provide essential access to the growing online education market. As John Quelch, former Dean of the University of Miami Business School, noted from his experience with their online MBA program, OPMs deliver “critical upfront investment and capacity, the ability to launch accredited programs quickly, an unparalleled online learning experience, and a partner invested in the long-term success of the program.”
The financial reality underscores why these partnerships matter. Launching a new online academic program typically requires over $500,000 in initial investment – a prohibitive sum for many institutions. The risk is considerable: only 30% of new programs attract ten or more students in their first year, and another 30% cease producing graduates within five years. The revenue-sharing model helps institutions navigate these challenges while maintaining academic independence.
Critics’ concerns about online education quality overlook two crucial factors. First, the revenue-sharing model creates a natural alignment of interests – OPMs succeed only when students complete their programs and achieve their education goals. Second, universities retain complete control over their academic programs, including curriculum, admissions standards, faculty hiring, and graduation requirements. This combination of aligned incentives and institutional autonomy has proven effective for both schools and students.
The COVID-19 pandemic highlighted the value of OPM partnerships. While many institutions struggled to transition online in early 2020, those with established OPM relationships maintained educational continuity. This crisis-driven shift has evolved into a lasting change in student preferences, with over half of college students taking online classes in 2022. Industry projections suggest the online education market will grow by more than 20% by 2030.
While the immediate threat to OPM partnerships has receded, the regulatory framework governing these relationships remains uncertain, resting primarily on guidance letters rather than clear statutory authority. As online education continues to evolve, policymakers should establish permanent protections for revenue-sharing agreements between universities and OPMs. Florida’s regulatory approach offers a promising model, balancing market innovation with appropriate oversight – an approach worth implementing nationwide.
