Online Education Companies Make Big Money From Programs at Nonprofit Schools

NONPROFITS’ PROFITS: For-profit colleges aren’t the only ones accused of aggressively recruiting students to make money. This week The Atlantic published a damaging piece illustrating how online program managers (OPMs) make millions of dollars a year from tuition-sharing deals with nonprofit colleges and universities.

OPMs design, run and market online programs for colleges. For instance Berkeley offers an online master's in data science in partnership with 2U for $60,000. The market for these online education services is $1.1 billion annually and five companies—2U, Academic Partnerships, Bisk, Pearson Embanet and Wiley Education Solutions—control half of it. 

Most schools that use OPMs pay for those services by sharing tuition with the companies, which take an average cut of 50 percent of tuition. Since these OPMs profit based on how many students enroll, it's in their best interest to find more students who can pay for these programs. “The result is a very lucrative but nearly invisible education market in which students pay, companies profit, costs escalate, and the prospect of scandal lingers,” Derek Newton reports in The Atlantic.

The tuition-sharing business model may be on its way out though, Phil Hill explains on e-Literate. OPMs, including some traditional providers, are moving to fee-for-service models, in which they take a flat sum to run online programs. Hill offers a useful chart of the current OPM market landscape, including business models and degree and certificate types.

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