There has been heavy criticism of OPM. But what about OPE?

When Marc Austin was tasked with launching Augusta University’s online program, he knew he had a lot of work ahead of him: He was hired after a survey showed that students and faculty were interested in an online program run in-house, rather than by an outside company. But Austin was a one-man team.

“There was no way someone starting from scratch could develop all the OPM competencies,” said Austin, dean and associate vice provost of Augusta University Online.

The university turned to educational technology company Archer Education for help with strategic marketing of AU and enrollment management — but the ultimate goal was to close the deal as quickly as possible.

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“Every university wants to build engines of growth, and they’re starting to gain confidence in doing it themselves rather than relying on third parties,” Austin said. “It’s basically building a playbook.”

Augusta has been part of a shift away from the age-old OPM model that was once seen as the potential savior of higher education. The shift was driven partly by industry needs, partly by changing attitudes among universities toward OPM, and partly by state legislation and pending federal regulations that are cracking down on their traditional model.

When higher education executives typically talk about OPM, they think of industry giants like 2U, Wiley, Pearson (now known as Boundless Learning), as opposed to large universities that launch their own programs, like Arizona State University and the University of Southern California.

But a growing subset of online programming services (OPE) companies is sometimes overlooked. Described by some as the “anti-OPM,” these companies outsource services like instructional design and help colleges build the infrastructure to eventually run online programming themselves—as the old saying goes, “teach a man to fish.”

John Katzman, founder of 2U, was one of the first to create OPE with the launch of Noodle Partners in 2010. In a 2018 interview, Inside higher educationsaid his mission was to “destroy the OPM industry.”

“The program requires curriculum design, marketing, recruitment, funding, technology and support services; we are simply happy to help the school build capacity rather than rely solely on outside vendors,” Katzman said.

OPEs—which currently include Archer, Collegius Education, Carnegie, and Education Dynamics—have found a niche in a market that is increasingly turning away from traditional OPMs.

“Every institution has to make a decision about its ability to enroll students in online programs: ‘Do I build capacity internally, do I partner with it, do I lease it, do I acquire it?’” said Gates Bryant, a partner in the strategic consulting practice of Tyton Partners. “And the decision to build/buy/collaborate is one that every institution has to make and is making in the current environment.”

Some institutions will always gravitate toward larger OPMs. With their legacy comes the value proposition of broader reach and larger budgets that can be used to market to more potential students, according to Wally Boston, general partner at private equity firm Green Street Impact Partners, which focuses on education and workforce technology companies.

They also have a built-in safety net, as OPMs pay upfront costs to start the program. Once launched, the program typically splits tuition revenues in half between the OPM and the institution. This revenue-sharing model is highly controversial and has drawn the ire of higher education officials and lawmakers who say it encourages providers to use aggressive, unfair recruiting techniques to attract more students.

“If I were a school, I would be very wary of signing a revenue-share agreement, given how much attention it gets, but it’s a lower-risk model because it shifts the risk to OPM,” Boston said. “They’re signing these agreements with their eyes open. And in my opinion, there are very few schools that are willing to spend money on marketing to get hundreds or thousands of enrollments.”

Some industry experts, including Bryant and Archer CEO Brian Hartnack, believe there may be room in the market for both OPM and OPE. Hartnack was quick to say he is not “anti-OPM.”

The real advantage of the older model is that companies “come in, invest heavily in getting programs up and running and growing them,” he said. “When an institution feels like it’s not being served or there’s a lack of transparency or control — that can mean they say, ‘We have to find the capital ourselves because this isn’t sustainable; we’re not getting smarter.’”

Some opponents of traditional OPMs believe OPE alternatives “pose less risk to consumers and institutions,” said Bob Shireman, a senior fellow at the Century Foundation who has long criticized what he called the predatory nature of OPMs.

OPMs have also begun to offer a broader range of fee-for-service services, allowing universities to pay a flat rate for specific services.

“There are OPMs that have clearly seen a potential threat or even the threat of a threat and have acted on it,” said Chris Gardiner, a senior analyst at Eduventures, a research and consulting firm.

So-called anti-OPM firms use a similar model, but AU’s Austin said a key difference is their ultimate goal of helping institutions become self-sufficient.

“There was a very clear understanding that we were pursuing this lease-build strategy,” he said, adding that exit provisions were built into the Archer agreement. “This was always a partnership designed to allow us to start with a staggered exit from the project. With traditional OPM, you wouldn’t be able to transition to a new project after a year, which is what we did.”

Regardless of what type of entity you ultimately decide to choose, Bryant advises paying more attention than ever to your contracts—whether they’re annual agreements with OPE or decades-long partnerships with OPM.

“One of the pieces of advice we give to institutions is that when they make a build/buy decision, regardless of where they are located, they need to have the ability within the institution to monitor and proactively manage the health of their partnerships,” he said. “In light of shorter contracts and increased competition, institutions need to take a much more proactive approach to measuring the health of their vendor partners than they have in the past.”

Impact of pending regulations

The world of OPM has been in the national spotlight over the past year, with federal regulators looking at new restrictions on both the revenue-sharing model (under what they call incentive compensation) and on third-party services, the companies — including OPM — that many colleges hire to administer online courses, financial aid programs and more.

The Education Department announced earlier this month that new rules on third-party providers will go through a lengthy rulemaking process to change them. Those changes won’t be finalized until 2025. And that will happen, observers say, only if Democrats win the presidential election in November.

The new revenue-sharing guidelines will be released “no earlier than the end of this year,” according to a statement from the department. The department could radically change the OPM model, effectively banning revenue-sharing and forcing colleges to use a fee-for-service model.

Because the rules have not yet been finalized, it is largely unknown how, or if, they might affect OPE.

“I see there will continue to be an emphasis on (the need for) fee-for-service, ‘teach them to fish’ models, both at companies like Archer and Noodle and at consulting groups that advise institutions,” Gardiner said. At the same time, “I just know there are institutions that need that revenue-sharing model, sometimes to make ends meet.”