OPM Watch: Are University of California Campuses Properly Monitoring Online Programs?

Over the last several years, a troubling trend has emerged in higher education. For-profit companies eager to earn big bucks peddling substandard online education have increasingly enticed colleges into contracting with them.

These online program managers, or OPMs, have gained momentum in part because institutions have argued they can’t afford to set up virtual options solo, including crafting curricula and marketing.

However, deals with OPMs promote some of the worst behaviors in college recruitment and admissions.

OPMs aggressively target prospective students, pressuring them, badgering them incessantly with texts and phone calls — any way to lock them into a program. That’s because oftentimes, colleges only pay OPMs when they enroll students into those online programs.

Sometimes students are outright deceived, unaware that an OPM, rather than an institution, is wooing them.

The quality of these programs is also questionable. They’re often pricey master’s degrees, but with potentially low-quality instruction — delivered in some cases through prerecorded lectures — and can leave students with low wages and unaffordable debts.

At the same time, policy oversight of OPMs, at both the state and federal levels, has not kept pace with the rise of these types of programs.

This month, for instance, an Education Department spokesperson said the agency believes it is institutions’ responsibility to help students enrolled in programs run by an OPM if that company encounters financial trouble and shuts down.

“The department views institutions as responsible for ensuring students are not harmed by any potential failure of an OPM,” the spokesperson said.

But at least one OPM is in fact on the brink of financial ruin. And while Education Secretary Miguel Cardona has signaled interest in ramping up oversight of OPMs, it’s not explicit that the Education Department will act against colleges that allow students in these programs to flounder.

What is clear is the Education Department should develop guidance that guarantees these student protections — without it, exploitative OPMs will go unchecked.

To further shed light on the pitfalls of OPMs, New America will publish a series on the topic throughout July, with a new piece every Wednesday.

OPM-related issues have come to a head in California, where a new state audit revealed several University of California system campuses did not properly oversee OPM-run programs.

Marketing for these virtual courses was sometimes misleading, the California State Auditor found. Students who the government watchdog surveyed said they did not know an OPM had recruited them, not a UC institution.

Students aren’t the only ones confused. In one case, a University of California, San Diego staff member told the auditor that a third party wasn’t at all involved in a manufacturing certificate program, when in fact an OPM provided instruction.

The system’s president also never advised UC campuses on how to best protect students recruited into OPM programs, the state auditor said. Meanwhile, the institutions’ accreditor, WASC Senior College and University Commission, does offer guidance on which parts of colleges’ operations they should avoid outsourcing — but UC campuses were not even following those directives, according to the audit.

These findings should alarm policymakers in California and beyond. And they should consider restrictions on a type of agreement that OPMs develop with colleges, called tuition-sharing deals.

California’s auditor examined 30 of the system’s 51 OPM contracts, though eight of those reviewed either had expired or had been terminated before the audit’s release in early June.

OPMs, per their contracts, sometimes provided instruction, but some only focused on marketing or strengthening student services, such as career counseling.

The contracts were with UC Berkeley, UC Davis, UCLA, UC San Diego and UC Santa Barbara.

Each of those universities supplied “incomplete or misleading information” about OPM involvement in programs, including overstating their value, according to auditors.

Only two of 10 programs in which OPMs provided curricula explicitly stated on their websites that they did so, the auditors found. Just three of the 10 programs published their instructors’ qualifications, like work experience or degrees earned.

The auditors also looked at marketing for 20 OPM programs and found four of their websites did not disclose the companies’ involvement at all. The five institutions under review told auditors they would be willing to add more to their websites about instructors’ credentials and OPMs’ role in the programs.

Concerningly, UC Santa Barbara’s continuing education unit, which operates independently from the main campus, did not inspect instructor qualifications when approving OPM courses. A UC Santa Barbara official told auditors the institution trusted OPMs to ensure quality education.

In fact, the university chafed at the idea of even paying for a review of instructors' qualifications, telling auditors that doing so “could potentially impact the economic benefits of using OPMs.”

Continuing education programs at the other four campuses did review instructor history, though only one of them could prove they followed their processes to the letter. Students in these bootcamps often suffered financially, though, as sometimes they would take out expensive private loans to pay for programs. At one UC Berkeley technology boot camp, for instance, students received private loans totaling about $725,000 to pay for the program.

Overall, none of the campuses always gave “accurate, complete, or current information about program outcomes, rankings, costs, or graduate employability, which may limit the ability of students to make knowledgeable choices regarding their education,” auditors wrote.

They found that 10 of 20 program websites they assessed contained outdated, unverified or misleading information about job and salary prospects. One UC Berkeley bootcamp website stated that the U.S. Bureau of Labor Statistics expected digital marketing jobs to grow 20% in a decade, “four times the average growth rate expected for all occupations.”

But auditors found UC Berkeley did not cite a source in that claim and said the Bureau of Labor Statistics doesn’t even report on the outlook for digital marketing positions.

The degree to which the institutions vetted the marketing materials is also unclear. Campus representatives reviewed marketing information for almost all of the 30 programs the auditor studied.

Only one of the universities, UC Davis, had a formal, written policy in place for how to review the promotional and website materials.

The omissions in program marketing had consequences. The state auditor surveyed more than 330 students — and only half of them knew that an OPM, not UC, was in charge of instruction.

About a third of the students said they felt the program misrepresented OPM instructors as UC representatives.

“The shortcomings in the marketing information for OPM programs to potential students, along with responses to our survey, suggest that the campuses need additional guidance about how the programs should be marketed,” the auditor wrote.

Though the audit said the universities need broad guidance from the UC president on contracting with OPMs, system campuses should already know they need to vet instructors and institute better oversight measures. They’ve also been warned about OPMs and poor-quality online programs before, when the Student Borrower Protection Center last year urged the system to ban online programs that don’t lead to a degree, like coding bootcamps.

The president’s office has advised campuses not to work with third parties on undergraduate programs, but has been silent on graduate and continuing education, the focus of the system’s OPM contracts.

The auditor said the president should issue such guidelines.

Regardless, the UC campuses seem to be flouting other guidance on contracting with unaccreditied entities — from its accreditor, known as WSCUC.

WSCUC policies caution that colleges should not outsource operations including admitting applicants, collecting tuition, maintaining student records and hiring educators.

Yet OPMs handled such responsibilities for many of the 30 programs audited. Of those, 16 had OPMs admitting students and 17 were taking tuition money directly.

A WSCUC representative declined to comment on behalf of Jamienne Studley, its president.

The auditors said the UC system should draft guidance for working with OPMs by June 2025. The system should beef up oversight of OPMs and ensure campuses are transparent about the companies’ part in creating online programs, they said.

Also by June 2025, the UC system should firm up policies on federal law that prohibits colleges from offering commissions or bonuses based on admissions professionals’ or outside entities’ success in recruiting students.

This ban has complicated OPMs’ work with colleges. That’s because the federal government has deemed tuition-sharing agreements that colleges commonly develop with OPMs to be that form of usually illegal incentive compensation.

However, in a loophole to the rules, tuition sharing is allowed if an OPM is delivering other services, such as marketing. The U.S. Department of Education has considered ending this exception, however, and is currently drafting policies that could block colleges from striking tuition-sharing deals.

Such a policy would give needed clarity to institutions nationwide, as legal questions arise absent of it. For example, a UC representative asked the Education Department whether a bonus to an OPM would violate the incentive compensation ban, a question the agency declined to answer.

No matter what, the OPM conversation in California — and across the country — is far over. The audit came about after state lawmakers last year requested it, citing concerns about OPMs taking so many tuition dollars.

The universities the state audited still maintain more than two dozen programs with OPMs.

And one of the most infamous OPM-led programs was at the University of Southern California, where a company, 2U, helped piece together an online master’s in social work.

Students paid more than $100,000 in tuition to enroll, but the program was reportedly low grade. Some students sued USC last year, arguing the top-ranked private nonprofit institution had presented the online and on-campus programs as the same, despite the quality differences between the two. USC last year paid about $25 million to 2U to unravel their deal and end the online program.

Also, an OPM-related lawsuit against one of the most prestigious institutions in the country, the California Institute of Technology, is moving forward. The complaint, filed last year, accuses Caltech and a bootcamp provider, Simplilearn Americas, Inc., of misrepresenting the OPM-led program as being university run.

The federal Education Department should advise the higher education sector if or how OPM practices violate the ban on incentivized compensation. Regulators must act swiftly — as soon as possible — to save students from investing precious time and money for what’s often a junk credential.

California officials should also act. For one, they can follow Minnesota’s lead and draft legislation to block tuition-sharing agreements. This would weaken predatory OPMs’ hold on institutions, and reduce risk for recruiting exploitation.

Next week's installment of New America’s OPM series will explore how this Minnesota law came to pass.