Another Student Loan Scam Involving Prestigious Universities this time

I took this article and broke it into different parts. If it does not make sense, blame me and not the Insider author. This is a different topic but along the lines of student loans which Alan Collinge of Student Loan Justice has been fighting. Republicans support these companies. Democrats are pushing back. Fomer students are holding the five and six digit debt. And no one has fixed the damn problem allowing OPMs to do this. DeJa’Vu just like the for-profit schools.

Online College Class Providers Screwing Over Students, Adding to Debt Crisis, business, Ayelet Sheffey

The new predators in higher education – An Introduction

The growing influence of OPMs is not just raising alarm among students and advocacy groups. Congressional lawmakers have begun to take notice of the more exploitative parts of the industry. In January 2022, Democratic Senators. Elizabeth Warren, Tina Smith, and Sherrod Brown sent a letter to the CEOs of the eight biggest OPMs seeking updated data about the contracts they serve(d) and the outcomes of their programs. Writing . . .

“We continue to have concerns about the impact of OPM partnerships on rising student debt loads. We write (Letter) to seek an update on your management of online degree programs for colleges and
universities that accept federal financial aid.”

In a response to the lawmakers that 2U (OPM) shared with the author, the company defended its practices and said its “contracts don’t have incentives for our partners to charge higher tuition” and that “lower tuition prices benefit both students and 2U.” Pearson, another OPM also received the letter, stated  at the time it “welcomes the opportunity to engage with policymakers and officials about the benefits of online degree programs.” The OPM Academic Partnerships similarly said it would “continue our differentiated strategy focused on regional public universities across the country and continue our open dialog with all stakeholders.”

A few months after the lawmakers sent their letter, the Government Accountability Office published a report on the rise of OPMs. Its conclusion:

The government needs to be regulating them a lot more. The GAO said that despite the Education Department expecting independent auditors to review arrangements between OPMs and schools, the oversight investigations often overlooked the money spent on recruiting and marketing to students — a critical piece of the industry.

The Education Department agreed with the GAO’s recommendations to clarify the information colleges needed to provide to auditors about OPM arrangements. In February, it announced it would be asking for public feedback on whether to change the 2011 guidance that led to the OPM free-for-all, but so far, efforts have been stymied by the slow wheels of bureaucracy, pushback from the industry, and opposition from Republican lawmakers. This pushback is similar to what was experienced with student loans.

GOP Rep. Virginia Foxx, the chair of the House education committee, argued in a recent opinion piece that changing the OPM rules would hurt students and raise costs. Universities large and small leverage outside providers to improve their overhead efficiency, she wrote.

“But as written, the new guidance will increase regulatory burdens, stifle innovation, balloon administrative compliance costs and reduce access to education, particularly for nontraditional learners.”

Despite the resistance, advocates maintain that reforms are long overdue. Student Borrower Protection Center said the Education Department had been “asleep at the wheel” when it came to regulating OPMs. It called on the Consumer Financial Protection Bureau to step in and prevent students from taking on massive debt loads for low-value programs.

Democratic Rep. Rosa DeLauro said in a recent opinion piece that OPMs were “the new predators in higher education.” And without bolstered regulation, they won’t go away — especially as remote learning persists. “There’s a lot of risk to students and a lot of risks to taxpayers with these kinds of programs,” she added.

If OPMs’ revenue wasn’t so strongly linked to the number of students who enrolled, the predatory behavior would likely see a steep decline, advocates such as Ament and McCann say.

“What the 2011 guidance has done is let this industry grow really big, really fast. Schools have not had to put a lot of thought into how they are establishing their programs. They can outsource them pretty quickly, pretty cheaply. They can let another company take care of it. And there just hasn’t been as much consideration given to what the long-term consequences of doing that are.”

There is the word “outsource” again. Americans needed a pandemic to understanding what outsourcing domestically and overseas means for something as simple as facemasks of various efficiencies. Education Institutes are following a similar pattern of willful ignorance. Are flawed student loans so far in the past, that Americans have forgotten there is no escape from student loans?


So what is an OPM? OPMs are On-line Program Management (OPM) providers. They are a growing segment of service providers working with colleges and universities globally to take new academic programs online. OPMs offer a suite of services either as a package or on a fee-for-service basis. These services include market research, student recruitment and enrollment, course design and technology platforms, student retention, and placement of students in employment or training opportunities. This is done for known colleges and universities who are being lazy in monitoring these programs.

These are not the fly by-night so-called commercial universities. I am beginning to think they are no different. Follow the link in this paragraph to learn more.

The Root of the Problem

John Katzman was in the OPM trenches for years. In 2008, he cofounded the OPM company 2U and grew it into one of the biggest online-course providers in the country. In its early years, Katzman felt confident the company was having a positive influence on the higher-education industry. When he started creating partnerships, Katzman said his goal was to bring in “well-qualified students” and ensure they would succeed in the programs.

“I’m going to go find USC or Georgetown, or any of our early partners, the best students I could.”

A third-party provider to those schools, 2U signed a contract to offer services such as recruiting and technology to boost online enrollment. In 2011 the landscape for OPMs changed.

The Education Department upended the industry with an under-the-radar tweak to the rules governing OPMs. In 1992, the government barred college recruiters from making profits and receiving bonuses based on the number of students they succeeded in enrolling. Instead, they were paid a flat fee no matter how many people they signed up.

The new guidance, however, created a loophole allowing colleges to use OPMs for “bundled services” that included recruiting, marketing, and course development. Since recruiting was only a piece of what OPMs were offering, schools were now allowed to share a percentage of their tuition revenue. The change distorted the motivations of many OPMs:

Since they got a cut of every tuition dollar, it made more sense to sign up as many students as possible to increase enrollment — and their profits. So the next time you wonder why tuition is so high, ask how much is being paid to the OPMs or non-affiliated recruiters. The policy changed the emphasis on recruiting.

Clare McCann, a former senior policy advisor with the Education Department and a higher-education fellow at Arnold Ventures, said to the author . . . because the online programs were so new, it was “not widely understood what kinds of problems this would bring.” But as the OPM industry exploded, the issues became clear. McCann said . . .

“The schools see it as a way to not have to put up capital up front. The OPM basically fronts the money to start the program and then takes a cut of the tuition revenue. But because they’re outsourcing those recruitment activities to the OPM, there is a strong incentive for the OPM to engage in aggressive recruitment.”

What you are seeing is Universities going down the same path as for-profit schools except through third parties. Hey money talks . . .

It proved quite the incentive: OPMs generated $5.7 billion in revenue in 2020. Increasing from $1.3 billion in 2015. Some industry analysts estimate that by 2025, schools will fork over $13.3 billion annually to OPMs.

And students will pay and incur more debt.

As the industry grew and the incentives changed, Katzman said, the quality of the programs began to suffer. OPMs started aggressively recruiting students by emailing and calling them multiple times a week  according to the Government Accountability Office. The most common service colleges used OPMs for was marketing online programs. OPMs put more of their money toward programs that weren’t as selective because it allowed them to cast a wider net, recruit more students, and make more money. And a lot of OPMs started to offer “high-cost and high-risk” courses that set students up for uncertain job prospects, like Favell said she experienced, but brought in big profits for the providers.

Katzman: The feeling was: ‘Which program generates the largest profit? Because that’s where we should put our marketing dollar.

The same raw deals for OPM Students as the Student Loans, Alan Collinge of Student Loan Justice discusses constantly.

As the industry grew, scandals grew right along with it. Beyond Favell’s lawsuit, USC’s online social-work and teaching programs have long been ensnared in a legal mess. The Los Angeles Times reported in 2019 the university was looking for a way to boost enrollment and revenue without investing in more on-campus housing and in-person resources.

So it turned to OPMs. After it hired 2U, enrollment in the social-work program surged from 900 in 2010 to 3,500 in 2016. Under the contract, 2U would get 60% of the program’s tuition revenue in exchange for developing the course curriculum, marketing it to prospective students, and operating the online infrastructure.

Thanks to the perverse incentives of the industry, former students of the online programs told The Wall Street Journal 2U recruited far more students than it was equipped to give a quality education too. Charging over $100,000 for a program the students said they did not pay off and probably could not pay off immediately. A 2U spokesperson told me that USC maintains “exclusive control” over the program, including setting tuition and administering financial aid.

The social work lawsuit also claims that USC misrepresented its partnership with 2U and that the OPM “intentionally” targeted people of color. And enticing them into massive student- debt loads they could not afford to pay off. The suit claims USC’s use of the US News report to recruit students into the online teaching program was misleading. The ranking was based on in-person offerings only.

The OPM said following the lawsuit’s filing, “we categorically deny the baseless and frivolous allegations made against our company in the lawsuit, and we will defend ourselves vigorously against these unfounded claims.”

USC said that it disagreed with the claims brought up in the lawsuit, and the case is pending.

And One Student’s Experience

Iola Favell wanted to go back to school to get her master’s degree in teaching.

Favell is a first-generation college student from California, and according to documents filed in a recent lawsuit, she felt it was important to earn her degree from a prestigious school.

When she reviewed US News & World Report’s “2021 Best Education Schools” list, one program caught her eye, the University of Southern California’s Rossier School of Education. It seemed like the perfect fit. USC was in her home state, its online option offered the flexibility of remote learning, and it was ranked No. 12 on the list. 

She applied and was accepted to the online program in 2020. But when she graduated in May 2021, Favell took home more than just a degree. She was also stuck with a $100,000 student-Loan debt load. Just over a year after she got her degree, Favell and two other students who attended Rossier filed a lawsuit against USC with the help of the borrower-protection group Student Defense and Tycko and Zavareei LLP, a public interest private law firm. They accused the program of providing misleading information that pushed them into paying for a program which was not what it was claimed to be.

The lawsuit said . . .

“Iona Favell incurred significant debt and out-of-pocket expense relying on USC Rossier’s position in the US News ranking. She regrets her decision to attend USC Rossier because of the false rankings information. She would not have attended had USC Rossier been ranked in a lower position given the high price tag of the school and/or would not have paid nearly as much.”

USC denied the claims in the lawsuit.

The crux of the issue was USC Rossier’s partnership with an online-program-management company. OPMs partner with schools to build out online classes, providing everything from technical support and software to. In some instances, providing a curriculum that would typically be taught by university faculty. In exchange for expanding course offerings and recruiting students, OPMs receive a big chunk of the tuition revenue from the online programs, which usually cost the same as in-person schooling. The OPM model was a great deal for schools as online learning surged earlier in the pandemic: Fewer students wanted to take classes in person, and OPMs were there to do all the legwork to boost enrollment in virtual course offerings, which helped generate much-needed tuition revenue.

The OPM model may seem like an easy win for colleges, but for many students, the courses are more of a raw deal. The companies’ aggressive recruitment tactics suck in as many students as possible by promising convenience and a well-paying job after graduation. Instead, many students find themselves shouldering a huge debt load from a program that was a pale imitation of the in-person learning experience. While it’s not always the case, many experts and grads told me that OPMs were offering online students a worse education for a sky-high price. If this does not sound like the for-profit schools bilking 18-year olds with false

Eric Rothschild, Student Defense’s litigation director, said in a statement . . .

“These programs can increase access to higher ed. Too many students have been defrauded by the misleading marketing of companies whose profits depend on enrolling as many students as possible at all costs.” 

Sound familiar?

2022.01.14 Follow up letter to Online Program Managers, (OPMs)_.pdf,, Senators

Taking Universities Beyond Online Learning Management, 2U, What is it?

Student Loan Justice Organization, Alan Collinge, Can also be found on Facebook.