Higher Ed Partnerships Summit March 5-6
Phil Hill
February 13, 2024
That’s a provocative title, and I feel I need to explain our perspective. I do not believe that the Online Program Management (OPM) market is gone or even that tuition revenue-sharing agreements are dead. We recently shared in two premium posts that while OPM usage represents a minority of online education writ large in the US (15 – 19% of 4-year institutions with OPM contracts and 22 – 28% of students enrolled in fully-online programs at 4-year institutions), a large majority (~80%) of those OPM contracts are based on revenue-sharing models. Leaders at higher education institutions continue to choose revenue-sharing arrangements more often than fee-for-service. Our experience aligns with the data – there remains significant interest in rev share OPM deals.
At the same time, it is undeniable that the OPM market is in a chaotic period with entirely new dynamics. Regulatory activism that includes third-party servicer (TPS) expansion guidance and potential changes or elimination of the bundled services exception remains an existential risk, at least to revenue sharing options. We are also dealing with the end of the free money era where near-zero interest rates led to investments in growth over profits for roughly a decade. When combined with changing enrollment trends, the financial picture has not just changed; it has reversed itself with profits over growth demands. Witness the financial crisis at 2U/edX that we have covered recently. From this perspective, we believe we are in a new era for higher education partnerships – including but not limited to OPM usage.
