The OPM impact on admissions and unlimited growth is problematic in part because recruiting college students is expensive. According to a 2015 report issued by BMO Capital Markets, a private investment firm, nonprofit schools (including public schools) spend an average of $38.53 for a lead—just for the name and information of someone who may be interested in attending their school. It costs more than $380 to turn that lead into an application and more than $2,200 for every student who actually enrolls. The only way to recover that expense, especially for an OPM that’s fronted those costs, is to find more students to admit who can write checks, get grants, or take loans. And by sharing in tuition revenue, once recruiting expenses have been recovered, absent classroom limitations, there’s a profit motive to keep recruiting.
In context, it may be difficult to condemn college leaders for approving programs that cost the schools almost nothing to start and could bring in millions of new dollars, especially while their budgets have been languishing. And schools should be education providers, not tech companies. From the school’s perspective, the new revenue from online efforts—even 50 percent or 30 percent of it—is found money. In a promotional video from Academic Partnerships, one of the big five OPM companies, Jim Spaniolo, the former president of the University of Texas at Arlington, says exactly that about the tuition money his school shared: “These are new dollars. These are new students … Because we were able to reach so many more students, there are financial benefits and advantages of that.”
That sentiment was echoed by Todd Hitchcock, the senior VP for online learning services at Pearson, another one of the big five OPM companies. “Schools are looking to online to drive revenue for other parts of the school,” he said. Hitchcock said Pearson currently has partnerships with 42 different schools and hundreds of online programs for which it provides a range of services including their “core services of marketing, enrollment, and retention.”
“The shared success model”—the term Hitchcock uses to describe tuition-sharing—“is a good model for schools, students, and companies like Pearson,” he said. It’s the tuition-sharing OPM approach, according to Hitchcock, that allows schools to combine the best academics with the best technology and provide students with a “high touch, white-glove service” for online students. A spokeswoman of Pearson also emphasized the distinction between the OPM model at nonprofit schools and those at for-profit ones. (A representative of 2U declined to comment, while Academic Partnerships, Bisk, and Wiley Education Solutions didn’t respond to interview requests.)
The University of Texas at Arlington declined to comment on its arrangement with Academic Partnerships or how much tuition money the school sent them. Florida International University and Arizona State, which have tution-sharing agreements with Academic Partnerships and Pearson, respectively, didn’t respond to requests for comment. But another public school, Lamar University, in Texas, did. Brian K. Sattler, a school spokesman, told me that his school’s contact with Academic Partnerships allows the company to keep between 30 percent and 50 percent of student tuition and that in the 2015 fiscal year, Lamar paid Academic Partnerships $12,024,565 for marketing, student recruitment, and retention programs.