Online learning has become a normal part of the undergraduate experience, with more than half of all students taking at least one online course in fall 2022. And an increasing proportion of colleges are using online program managers (OPMs)—third-party servicers—to provide their courses to students. OPMs typically put up their own money to build and maintain their systems, then collect a share of enrollment revenue from participating colleges, which normally put their own courses in the system.
OPMs have the expertise and resources to innovate, while small colleges cannot easily keep up on their own. It’s win–win. In 2024, about a fourth of chief online learning officers reported working with an OPM in the annual Eduventures Research report on online learning, while only 18 percent did in 2022.
Unfortunately, during recent Democrat presidencies, the U.S. Department of Education has been fundamentally opposed to profit-making in education. Partly this animus comes from an anti-market mindset and a belief that college should simply be free to students. It also comes from resistance to new competitors among traditional residential colleges that recognize they are being left behind. The Department listens to anti-market and traditional advocates as it forms its policy, which universally privileges the established players against innovators.
Universities such as Duke University and, in Pennsylvania, Carnegie Mellon University (CMU), have been on the leading edge of innovation in higher education for at least a decade or two. They are keeping up. Duke’s partnership with Coursera crossed 10 million enrollments in 2023, while Carnegie Mellon’s in-house Open Learning Initiative (OLI) has provided resources for more than 400 American institutions over more than two decades.
My July 2024 report on online education in North Carolina examined what public and private universities were doing. At that time, the federal threats to innovation included the U.S. Department of Education’s move to very broadly regulate all third-party servicers working with colleges and universities. That threat remains; the Department revealed this summer that it intends to issue a notice of proposed rule-making on third-party servicers in June 2025.
Meanwhile, the Department has issued yet another threat. Under its latest proposed regulations, it essentially would redefine asynchronous learning—online classes that do not have enough face-to-face time—as unsuitable for access to federal student aid. In 2020, negotiators reached consensus that the definition of “clock hour” should include asynchronous learning. This was largely “to account for innovations in the delivery models used by institutions,” especially during the pandemic response. The Department, however, has chosen to go backwards and exclude asynchronous learning, to which the Defense of Freedom Institute founders and I objected in a regulatory comment.
Even a dozen years ago, a study of Carnegie Mellon’s asynchronous statistics course showed “that students using the OLI course, as an online course with minimal instructor contact, performed as well or better than students in traditional instructor-led classes.” A well-designed asynchronous, or mostly asynchronous, course should bear no “clock hour” penalty, yet that is where the Department of Education appears to be going.
In the rest of this report, I focus on Pennsylvania, where the threat to third-party servicers would catch CMU, a nonprofit university, in the Department’s anti-market talons while threatening other institutions across the state.
Carnegie Mellon University
Carnegie Mellon University (CMU) has objected—for good reason—to the U.S. Department of Education’s unwarranted third-party servicer crackdown. As part of and beyond the Open Learning Initiative, CMU notes that it hosts “a variety of learning products—from courseware and logic labs to cognitive tutors and writing tools—that simultaneously enact instruction while supporting learning research.”
Indeed, since 2020, CMU has been onto its next product, Torus, a “next-generation open platform for developing, delivering, improving, and researching adaptive learning experiences. Designed to leverage learning science while simultaneously facilitating learning research, Torus builds on the historic success of the Open Learning Initiative while expanding our community and approaches.” Torus’s partners and contributors include Arizona State University and software companies worldwide.
Addressing the Department of Education’s threat to third-party servicers, CMU wrote:
By expanding the definition of Third Party Servicers (TPSs) to include ‘learning management’ as one of the computer services explicitly mentioned, the guidance appears to encompass any and all educational technology software. … As such, the guidance appears to be in direct conflict with higher education institutions’ goals to create more innovative and engaging learning experiences for their students, as it restricts available edtech options that meet the requirements, reduces faculty members’ willingness to incorporate new materials/tools for fear of administrative load or effort to gain compliance, and ultimately shrinks the educational innovations reaching students … Classifying these types of efforts as Third-Party Service Providers and subjecting them to the proposed requirements will have a chilling effect on learning research and innovation – not just at Carnegie Mellon, but for hundreds of thousands of U.S. students at our partner institutions.
CMU is no fly-by-night servicer; it’s at the top of its game. Torus “rigorously captures robust, semantically informed learner interaction data, which is used to inform and adapt the learner and instructor experience. These same data are used to support iterative course improvement.” Four years in, the university is prepping for Torus versions 29 and 30.
In this context, it seems positively insane to expect that a small college could build its own in-house online courses and expect to be able to compete at all, much less to be able to keep up. It needs an OPM or another kind of third-party servicer. A college that hasn’t started yet is so far behind the curve that it’s operating on a different planet. If CMU is hot like Venus, a college that hasn’t started yet is like a Uranus.
Arcadia University
On the other side of the state, near Philadelphia, Arcadia University knows the value of its OPM services. It offers a Modular Master’s degree and a wide variety of online programs and majors, besides hybrid options. Arcadia controls its content and does not hide its OPM partnership.
In 2019, Arcadia began to partner with servicer 2U for “clinically integrated hybrid graduate degree programs, then in 2020 for coding programs. In 2023, Arcadia and 2U announced a partnership with edX (which 2U owns) for the “first-of-its-kind doctorate-level microcredential to create affordable, flexible on-ramps to the full doctoral degree.”
Arcadia also promises that “you can study at your pace, accessing the online coursework at convenient times for your schedule.” Such asynchronous coursework will be at risk if the Department of Education defines it out of the eligible “clock hours.”
Moreover, the Department’s threat to OPM partnerships is a serious threat to Arcadia. In a comment on the proposed third-party servicer restrictions, Arcadia wrote:
For the programs we’ve strategically selected for OPM partnerships, we don’t have the resources to do this work any other way. It allows us to maintain total control over who gets admitted, how they are supported, what they are taught, and how their next professional steps unfold. While our partners provide important services to enable this work, we are the ones who are responsible for meeting the needs and enabling the ambitions of our students … We have conducted independent market research that indicates we would need to spend anywhere from 30 to 40 percent of our anticipated program revenue just on marketing and recruitment, and these investments would have to be continually adjusted using the latest techniques in data analysis and digital strategy—competitive intelligence that is extremely difficult for an institution of our size and means to build and maintain.
Even worse, one element of the third-party servicer crackdown involves prohibiting the fundamental OPM partnership model of shared revenue after an OPM builds a system. The state of Minnesota, for example, simply banned its public institutions from using this model this summer. But Arcadia correctly notes:
Because it takes many years to design, build, market, recruit and launch new programs, changing third-party servicer contracts from a revenue-sharing model to a fee-for-service model would be catastrophic for all cash-constrained institutions like Arcadia. It would create a massively unfair advantage for the handful of schools that are capable of putting millions of up-front dollars into the program development and launch process, and it would ultimately reduce the breadth and depth of high-quality educational opportunities in the U.S.
Ed2Go Partnerships in Pennsylvania
Indeed, a number of small Pennsylvania institutions of higher education rely on Ed2Go for online courses. These include Pennsylvania College of Technology, Pennsylvania Highlands Community College, and Community College of Philadelphia. These colleges are not trying to innovate; they seek to compete. In each case, the courses are branded as the college’s own courses, even when they are identical and taught by the same instructor.
University of Pennsylvania (Penn)
Penn appears to have maintained its online offerings primarily in-house. It began offering Massive Open Online Courses, when they were all the rage, in 2012. Like Arcadia, Penn promises that its online courses, at least in its College of Liberal and Professional Studies (LPS), “can be completed on a schedule that fits your unique needs and busy life.” This line suggests a high degree of asynchronicity that could put Title IV access at risk for Penn’s LPS courses.
Today, Penn’s online offerings are overseen by the university’s Center for Excellence in Teaching, Learning, and Innovation. Penn’s Online Learning Platform is part of this enterprise; it is for “management of non-credit online programs.” When students click to “learn more,” they reach unbundled class options including courses that provide a Coursera or edX certificate. These courses are branded as Penn and appear to be taught by Penn faculty, unlike the Ed2Go community college courses described above. For example, it only costs $49 to gain, from a Penn Law professor, “an introduction to the U.S. Constitution and landmark Supreme Court cases interpreting it”—plus a Coursera certificate upon successful completion of the course.
Penn State University (PSU)
Penn State’s World Campus may be Pennsylvania’s online grandfather, dating back to the late 1900s (as kids say these days)—1998. Penn State also boasts more than 125 years of “experience in distance education.” Penn State does not, unlike Carnegie Mellon, clearly show evidence that its courses benefit from evidence-based research. Even so, PSU has adopted the faddish language of “stackable credentials,” which ultimately are just courses or sets of courses that yield “certificates” along the way to a traditional degree.
Like many other universities, Penn State is at risk of losing Title IV access for many of its online courses. PSU explicitly states that these courses are “structured for asynchronous learning, ” which may be forbidden under the Department of Education’s proposed new rules.
What’s Next
Most colleges and universities across Pennsylvania understand that they need to be in the online space if they want to compete. Even distinctive Grove City College, which famously does not participate in federal student aid programs, offers online undergraduate courses taught by the college’s own faculty. (If Grove City uses third-party services to help with the edtech, such partnerships are difficult to spot.)
It appears common for Pennsylvania universities to include quite a few asynchronous courses among their offerings. However, the asynchronous courses that currently are eligible for federal student aid may soon become ineligible. In the U.S. Department of Education’s crusade against for-profit education, many nonprofit institutions may also be affected.
Furthermore, this anti-market crusade promises to sweep in a wide variety of third-party servicers for regulation. Carnegie Mellon University, perhaps the greatest online program innovator in the state, even though it’s a nonprofit, will have to watch its back like never before as the Department turns the screws.
Online education is thriving, whether universities use an OPM or innovate from within. The right move from the federal government—and any state officials who think they know better than the market—is to stay out of the way.
Image of Lyndon Baines Johnson Department of Education Building on Wikimedia Commons
