Regulatory Barriers to OPMs Are Stifling Innovation

Across the country, colleges and universities face fierce competition for students and pressure to keep costs low. One way to lower costs is to move some course offerings online. Online Program Managers (OPMs) have become an essential part of that effort. OPMs allow colleges and universities to develop online courses without assuming all of the associated costs and risks. They also provide technology, instructional design, marketing, and student-support services, enabling institutions to scale their online offerings efficiently.

However, increasing regulatory scrutiny at the federal and state levels threatens to stifle innovation and limit universities’ ability to adapt to a rapidly changing higher-education landscape. To be sure, there have been bad actors, but let’s not throw the baby out with the bathwater.

Increasing regulatory scrutiny limits universities’ ability to adapt to a rapidly changing higher-education landscape. While OPMs have traditionally been associated with graduate programs, they are becoming increasingly relevant to undergraduate education. Universities are now turning to OPMs to help develop online courses for specific undergraduate populations, including working adults, rural students, and students seeking cost-effective alternatives to traditional four-year degrees. OPMs are fast, turn-key operations that many institutions lack the expertise or funding to develop independently.

Despite the potential value of partnering with OPMs in undergraduate education, regulatory barriers may stifle these efforts before they ever get off the ground. (The Martin Center has previously covered the overregulation of OPMs in California.) Three key regulatory challenges stand out:

1. Federal Scrutiny of Revenue-Sharing Agreements: One of the most significant regulatory threats to OPMs is the increased scrutiny of revenue-sharing agreements between institutions and OPM providers, which the Department of Education considered last year. It’s unclear what will happen under President Trump’s administration. Critics argue that revenue-sharing arrangements incentivize aggressive marketing tactics that can harm college-bound students, but these agreements also enable universities to partner with OPMs without upfront costs, making online expansion feasible for institutions with limited resources. Restricting these agreements could push universities toward less efficient models, ultimately increasing costs for students.
2. State Authorization and Compliance Costs: OPMs often operate across multiple states, requiring compliance with a patchwork of state regulations that govern online education. The State Authorization Reciprocity Agreement (SARA) was designed to streamline this process, but states are increasingly imposing additional requirements that create bureaucratic hurdles for OPM-facilitated programs. (Legislatures in Minnesota, New Jersey, and California have either considered or passed legislation to increase regulations on OPM partnerships.) These compliance burdens drive up costs, slow down course development, and deter institutions from pursuing online undergraduate programs altogether.
3. Accreditation Barriers: Accrediting bodies play a critical role in regulating OPMs. Some accreditors have raised concerns about the extent of OPM involvement in course design and instruction. This has led to accreditation policies that limit the scope of OPM engagement, forcing universities to navigate additional layers of approval that delay program rollouts.

These regulatory barriers don’t just impact OPMs; they have consequences for students and institutions. By restricting revenue-sharing models, imposing costly compliance requirements, and creating accreditation roadblocks, regulators are inadvertently limiting the availability of affordable and flexible online undergraduate programs.

Without the ability to leverage OPMs, many universities may be forced to scale back or abandon their online-expansion plans. Institutions, particularly those with limited resources, face difficult choices. Without the ability to leverage OPMs, many universities may be forced to scale back or abandon their online-expansion plans. Others may attempt to build online programs internally, often at a greater cost than if they had partnered with an experienced OPM provider.

Rather than imposing blanket restrictions that stifle innovation, policymakers should pursue a balanced approach to OPM regulation—one that ensures transparency and consumer protection without undermining the viability of these partnerships. Key recommendations include:

• Preserving Revenue-Sharing Models: Instead of banning revenue-sharing agreements outright, regulators should focus on ensuring transparency in recruitment practices and requiring clear disclosures to students.
• Streamlining State-Authorization Processes: SARA should be reinforced to prevent states from adding excessive compliance burdens that drive up costs without clear benefits.
• Clarifying Accreditation Standards: Accreditors should adopt consistent guidelines that recognize the value of OPM partnerships.

OPMs have the potential to play an important role in expanding access to university education. However, excessive regulatory barriers threaten to derail this progress, making it harder for institutions to offer cost-effective, scalable online programs. A thoughtful approach to regulation—one that supports responsible OPM engagement while safeguarding student interests—is essential to ensuring that higher education remains accessible and innovative in the digital age.

Jenna A. Robinson is president of the James G. Martin Center for Academic Renewal.