Tag: OPMs

  • OPMs, Student Loan Servicers, Deregulation, Robocolleges, AI, and the Collapse of Accountability

    OPMs, Student Loan Servicers, Deregulation, Robocolleges, AI, and the Collapse of Accountability

    Across the United States, higher education is undergoing a dramatic and dangerous transformation. Corporate contractors, private equity firms, automated learning systems, and predatory loan servicers increasingly dictate how the system operates—while regulators remain absent and the media rarely reports the scale of the crisis. The result is a university system that serves investors and advertisers far more effectively than it serves students.

    This evolution reflects a broader pattern documented by Harriet A. Washington, Alondra Nelson, Elisabeth Rosenthal, and Rebecca Skloot: institutions extracting value from vulnerable populations under the guise of public service. Today, many universities—especially those driven by online expansion—operate as financial instruments more than educational institutions.

    The OPM Machine and Private Equity Consolidation

    Online Program Managers (OPMs) remain central to this shift. Companies like Academic Partnerships—now Risepoint—and the restructured remnants of Wiley’s OPM division continue expanding into public universities hungry for tuition revenue. Revenue-sharing deals, often hidden from the public, let these companies keep up to 60% of tuition in exchange for aggressive online recruitment and mass-production of courses.

    Much of this expansion is fueled by private equity, including Vistria Group, Apollo Global Management, and others that have poured billions into online contractors, publishing houses, test prep firms, and for-profit colleges. Their model prioritizes rapid enrollment growth, relentless marketing, and cost-cutting—regardless of educational quality.

    Hyper-Deregulation and the Dismantling of ED

    Under the Trump Administration, the federal government dismantled core student protections—Gainful Employment, Borrower Defense, incentive-compensation safeguards, and accreditation oversight. This “hyper-deregulation” created enormous loopholes that OPMs and for-profit companies exploited immediately.

    Today, the Department of Education itself is being dismantled, leaving oversight fragmented, understaffed, and in some cases non-functional. With the cat away, the mice will play: predatory companies are accelerating recruitment and acquisition strategies faster than regulators can respond.

    Servicers, Contractors, and Tech Platforms Feeding on Borrowers

    A constellation of companies profit from the student loan system regardless of borrower outcomes:

    • Maximus (AidVantage), which manages huge portfolios of federal student loans under opaque contracts.

    • Navient, a longtime servicer repeatedly accused of steering borrowers into costly options.

    • Sallie Mae, the original student loan giant, still profiting from private loans to risky borrowers.

    • Chegg, which transitioned from textbook rental to an AI-driven homework-and-test assistance platform, driving new forms of academic dependency.

    Each benefits from weak oversight and an increasingly automated, fragmented educational landscape.

    Robocolleges, Robostudents, Roboworkers: The AI Cascade

    AI has magnified the crisis. Universities, under financial pressure, increasingly rely on automated instruction, chatbot advising, and algorithmic grading—what can be called robocolleges. Students, overwhelmed and unsupported, turn to AI tools for essays, homework, and exams—creating robostudents whose learning is outsourced to software rather than internalized.

    Meanwhile, employers—especially those influenced by PE-backed workforce platforms—prioritize automation, making human workers interchangeable components in roboworker environments. This raises existential questions about whether higher education prepares people for stable futures or simply feeds them into unstable, algorithm-driven labor markets.

    FAFSA Meltdowns, Fraud, and Academic Cheating

    The collapse of the new FAFSA system, combined with widespread fraudulent applications, has destabilized enrollment nationwide. Colleges desperate for students have turned to risky recruitment pipelines that enable identity fraud, ghost students, and financial manipulation of aid systems.

    Academic cheating, now industrialized through generative AI and contract-cheating platforms, further erodes the integrity of degrees while institutions look away to protect revenue.

    Advertising and the Manufacture of “College Mania”

    For decades, advertising has propped up the myth that a college degree—any degree, from any institution—guarantees social mobility. Universities, OPMs, lenders, test-prep companies, and ed-tech platforms spend billions on marketing annually. This relentless messaging drives families to take on debt and enroll in programs regardless of cost or quality.

    College mania is not organic—it is manufactured. Advertising convinces the public to ignore warning signs that would be obvious in any other consumer market.

    A Media Coverage Vacuum

    Despite the scale of the crisis, mainstream media offers shockingly little coverage. Investigative journalism units have shrunk, education reporters are overstretched, and major outlets rely heavily on university advertising revenue. The result is a structural conflict of interest: the same companies responsible for predatory practices often fund the media organizations tasked with reporting on them.

    When scandals surface—FAFSA failures, servicer misconduct, OPM exploitation—they often disappear within a day’s news cycle. The public remains unaware of how deeply corporate interests now shape higher education.

    The Emerging Picture

    The U.S. higher education system is no longer simply under strain—it is undergoing a corporate and technological takeover. Private equity owns the pipelines. OPMs run the online infrastructure. Tech companies moderate academic integrity. Servicers profit whether borrowers succeed or fail. Advertisers manufacture demand. Regulators are missing. The media is silent.

    In contrast, many other countries maintain strong limits on privatization, enforce strict quality standards, and protect students as consumers. As Washington and Rosenthal argue, exploitation persists not because it is inevitable but because institutions allow—and profit from—it.

    Unless the U.S. restores meaningful oversight, reins in private equity, ends predatory revenue-sharing models, rebuilds the Department of Education, and demands transparency across all contractors, the system will continue to deteriorate. And students, especially those already marginalized, will pay the price.

    Sources (Selection)

    Harriet A. Washington – Medical Apartheid; Carte Blanche

    Rebecca Skloot – The Immortal Life of Henrietta Lacks

    Elisabeth Rosenthal – An American Sickness

    Alondra Nelson – Body and Soul

    Stephanie Hall & The Century Foundation – work on OPMs and revenue sharing

    Robert Shireman – analyses of for-profit colleges and PE ownership

    GAO (Government Accountability Office) reports on OPMs and student loan servicing

    ED OIG and FTC public reports on oversight failures (various years)

    National Student Legal Defense Network investigations

    Federal Student Aid servicer audits and public documentation

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  • Misrepresentations by OPMs could land colleges in trouble, Education Department says

    Misrepresentations by OPMs could land colleges in trouble, Education Department says

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    Colleges could lose access to federal financial aid or face penalties if their external service providers mislead their students, the U.S. Department of Education said Tuesday. 

    That includes companies that help colleges launch and run online programs. Employees of online program managers, or OPMs, cannot represent themselves as working directly for colleges, including by having email addresses or signatures implying they’re employed by those institutions, according to the guidance. 

    OPM employees are also not allowed to represent a virtual program as equivalent to a college’s campus-based version if they have dissimilar admissions criteria, completion rates, faculty qualifications or other substantive differences. And workers in recruiting or sales roles can’t call themselves an “academic counselor” or use a similar title if it doesn’t accurately describe their position. 

    The guidance — issued in the waning days of the Biden administration — aims to add more oversight to colleges’ relationships with OPMs. Student advocacy groups have long called for stricter rules for these companies, which often help colleges launch online programs in exchange for a significant cut of their tuition revenue.

    Carolyn Fast, director of higher education policy at The Century Foundation, a left-leaning think tank, praised the letter Wednesday. 

    “Today’s move by the Department of Education is a step in the right direction, affirming what we already know: OPMs commonly mislead students about the quality of their online programs and that is illegal,” Fast said in a statement. “This action will deter misconduct by OPMs and their college partners and will help protect online college students from the risks posed by predatory OPMs.”

    What led to the guidance?

    The guidance comes after the Biden administration’s other plans to add oversight to the OPM industry faltered. 

    In early 2023, the administration said it would review guidance that allows colleges to enter tuition-sharing deals with OPMs that provide recruiting help — so long as it is part of a larger bundle of services. Despite asking for public comment on the matter, the Education Department has not updated or rescinded the 2011 guidance.

    At the same time it announced the review, the administration issued separate guidance that would designate OPMs and other organizations as third-party servicers. The change would have subjected them to regulations that would give the department insight into their contracts with colleges. 

    However, the Education Department quickly delayed the guidance — and eventually rescinded it altogether — amid widespread criticism that it would create burdensome requirements for the higher education sector. 

    “We finally have clarity, in the last days of the administration, what they’re actually going to do with the guidance around [third-party servicers]” and OPMs, said Phil Hill, an ed tech consultant. “It’s just been this soap opera for 2 1/2 years now.”

    However, Hill described Tuesday’s guidance as “petulant rulemaking” from the Biden administration. 

    “This Dear Colleague letter is attempting to go down to the level of telling colleges and universities and vendors what words are allowable and what aren’t,” Hill said. “And this went through zero process, zero attempt to get input from schools.”

    That includes whether the guidance will hamstring colleges from running online programs or whether the policies address the issues they’re trying to solve, Hill said. 

    Stephanie Hall, senior director for higher education policy at the Center for American Progress, a left-leaning think tank, took a different stance. 

    The Education Department received a “treasure trove of comments” when it sought public input in 2023 on policies that would have impacted the OPM sector, Hall argued. 

    “A lot was given over the past couple of years, and I see this guidance letter as just an extension or a conclusion of that process and not something new that didn’t take any input,” Hall said. 

    Whether the Trump administration will enforce the new guidance is another matter. But Hall said the guidance is likely to create changes either way. 

    “Schools are put on notice,” Hall said. “It’s something they take very seriously.” 

    The incoming Trump administration could also rescind the guidance altogether, though it’s unclear if OPM oversight is a priority issue to incoming officials. 

    “Are they aware of the impact this could have on online education, and is this going to be on their radars to take action and just immediately get rid of it?” Hill said. 

    The guidance could also draw legal challenges. The Biden administration’s now-rescinded 2023 guidance sparked a lawsuit from 2U, a prominent OPM. 

    “This is just waiting for a rescission or a lawsuit,” he said. 

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