Over the past decade, online learning has become an increasingly important part of the higher education landscape. Online programs provide a way forward for those who are interested in getting a higher education but, for a variety of reasons, can’t attend on campus. Universities offer these online learning options with the assistance of Online Program Management (OPM) partners, companies that provide infrastructure and marketing to the schools.  

Here in Indiana, two successful online models have been implemented by Butler University and The University of Southern Indiana. Both programs seek to address the “skills gap” that many employers are complaining about. Although these programs are increasing in popularity, new regulations from the Department of Education aims to intervene in how these partnerships are structured, ultimately threatening educational opportunities for millions of Americans, particularly at Butler University and the University of Southern Indiana. 

Butler University is utilizing online learning to address a tech skills gap in the state by partnering with online provider 2U on an Executive Education Program. These “boot camps” provide an opportunity for non-traditional students to gain the skills they need to compete for positions as tech professionals in the digital economy.  

The University of Southern Indiana has been able to take advantage of a revenue-sharing agreement with the online program manager Academic Partnerships that, according to comments filed with the Department of Education, allowed them to build an MBA program that is one of the most affordable in the state, while ranking in the top 5 percent of MBA programs worldwide. The feedback they receive from their OPM partner allows them to fine tune these programs to help students achieve their goals. 

The Department of Education’s attempted intervention involves exploiting the federal funding relationships with institutions to exert influence and stifle innovation. When this occurs, time, talent, and resources will be diverted away from providing cost-effective options for students and instead will be redirected towards maintaining regulatory compliance. The Department of Education would be wise to rethink its plans to intervene, and instead, allow universities and OPM partners to experiment and innovate to meet the changing students’ changing demands. 

Online learning exploded after 2012, when the Obama Administration carved out an exception that allowed for “bundled services agreements between universities and online program managers (OPMs).” Since then, university systems across the country have offered an array of online learning programs, from massive open online courses (MOOCs) to “coding boot camps” and continuing education programs.  

OPM partners helped provide the framework and infrastructure for these online programs, offering a high level of expertise that would be costly for universities to replicate. The Department’s new proposed guidance would likely prohibit these revenue-sharing agreements, making these innovative partnerships less feasible, frontloading costs, and heaping heavy compliance costs on universities. 

This would be a tremendous mistake.  These OPMs are also playing a key role in addressing affordability, and may be an answer to the growing concern  rand doubts that college provides a good return on investment. OPMs aren’t the only way forward. But while larger schools, such as Indiana University, can build out these programs “in house,” smaller and rural schools could not do so without taking up a significant chunk of their budget.  

OPMs have enabled these smaller institutions to offer a variety of online learning options. They offer their services via revenue sharing, where the OPM pays the up-front costs of setting up and getting the program underway. Once the program is up and running, revenue is split between the school and the OPM. This model has enabled smaller institutions such as Wabash College the ability to provide these online programs without a major upfront impact on their budgets. 

This innovative model also enables schools to combat recent doubts about the value of higher education.  In comments filed in opposition to the department’s efforts to crack down on OPM partnerships, several Indiana institutions highlighted their opposition and laid out how these partnerships are helping them. The programs at Butler and USI enable Indiana to compete with regional competitors such as Michigan, Ohio, and Tennessee, as well as national competitors Florida and Texas. Americans are moving to states that foster free enterprise and innovation, including educational choice. 

The Department of Education sees an opportunity to intervene and regulate these programs thanks to government funding of higher education. By providing this funding, the Department of Education engages in what Philip Hamburger calls “the transactional mode of control,” the government has the force of law to punish those who receive funds and do not comply with the terms and conditions of said funding.  

Between federal, state, and local governments, hundreds of billions of taxpayer dollars end up in postsecondary institutions. Between grants, contracts, and appropriations, public institutions receive  $21,230 per full-time student, private nonprofit institutions receive $11,438 per full-time student, and private for-profit institutions receive $406 per full-time student. Multiply those amounts by the 10.5 million full-time students at public institutions, 3.8 million at private non-profits, and 1.2 million at private for-profits, and that totals $517.4 billion (slightly more than the GDP of Austria). By providing this funding, the government feels empowered to dictate how the system operates. 

That’s why when the department initially put out a call for comment, institutions from all over the country, ranging from small Campbellsville University to the University of California System pushed back, noting that OPMs are already bound by federal regulations and cannot misrepresent key features such as academic programs, cost, and a program’s employment prospects. These proposed regulations also threaten to stifle the programs at Butler and USI and, ultimately, Indiana’s economic competitiveness. 

At a time when 91 percent of small business owners believe that higher education is not “graduating students with relevant skills that today’s business community needs,” higher education needs to find ways to adapt. Online education offers the ability to provide educational choice to millions of Americans who may otherwise think that going to school is a waste of time.  

The Department of Education’s regulations threaten not only Butler and USI and rob Hoosiers of educational options. If the Department of Education gets out of the way, Indiana’s innovations could be an education model for the nation.