Vulture Capitalism and the Future of Higher Education

The costs of ceding core functions

April 4, 2019

If you haven’t read Kevin Carey’s “The Creeping Capitalist Takeover of Higher Education,” a chilling account of Online Program Managers, drop whatever you’re doing and read it right now.

Many of the facts that the author offers will be familiar to anyone involved in online or continuing education. And the article doesn’t discuss at any length the “a la carte” alternatives to OPMs that have already emerged.

But what makes this article a must read is the larger picture that Carey presents: That in exchange for start-up funding, colleges and universities are increasingly ceding core functions to profit-making companies and, as a result, delivering any cost savings into the hands of the vendors and the digital marketing platforms that they utilize.

(Many of you will also have read that even at the wealthiest universities with “no student loan” policies, low-income students are graduating with debt).

There are several points that Carey makes that bear repeating:

  • Elite institutions have played a crucial role in legitimating OPMs.
    Harvard, Yale, Georgetown, NYU, UC Berkeley, UNC Chapel Hill, Northwestern, Syracuse, Rice, and USC are among the institutions that partnered with OPMs.
  • The quality of the programs that are offered remains opaque.
    As a New Yorker cartoon put it: “On the Internet, nobody knows you’re a dog.” It’s often unclear whether a course is taught by a regular faculty, whether there is any genuine interaction or informed feedback, or whether the course was designed by an OPM or an actual professor.  
  • The revenue sharing agreements are profoundly biased in favor of the OPMs.
    Contracts, which last as long as seven years or more, often award fifty to seventy percent of revenue to the OPM. Some contracts require the institution to agree to use texts or even an LMS provided by the OPM. Meanwhile, termination clauses are often especially onerous, with the OPM retaining “ownership” of the students (and, at times, the data) that it helped acquire.

There’s reason to think that the worst abuses are taking place at the most financially hard-pressed institutions, which are desperate for new sources of revenue. Some of the OPMs not only offer marketing and support services, but pre-packaged courses and an ability to recruit adjuncts to serve as instructors and graders.  In these instances, institutions are ceding their responsibilities as an educational institution.

One point that Carey doesn’t develop is that the OPMs are only the tip of the iceberg. Outsourcing is no longer confined food services, but now extends to campus housing, email and learning management systems, and aspects of the academic experience previously were regarded as core to colleges and universities.

  • Even as for-profit universities decline (or miraculously transform themselves into non-profits), an expansive “embedded for-profit” sector has emerged, that promises to improve student enrollment, persistence, and graduation rates, by offering learning analytics, coaching services, adaptive courseware, career counseling, and administration of internship, study abroad, and service learning projects.
  • Despite the calls for open access and open learning, cartels continue (and even expand) control over essential research resources.
  • Joint ventures proliferate, including coding boot camps, branded by a university but staffed by a vendor.
  • Even foundations have gotten into the game, through strategic or  Impact investments into for-profits, which grantees are encouraged to partner with.

Much of the concern over for-profit universities was that they prioritized maximizing enrollments over all else. As Carey makes clear, some of the contracts make it impossible for institutions to reduce the cost of tuition or to raise admission standards. Revenue generation comes first. "Plus ça change, plus c'est la même chose"—"the more things change, the more they remain the same.”

Higher education has always existed in a competitive marketplace, but the competition has grown much more cutthroat and predatory, with institutions aggressively encroach on one another’s turf. At the same time, the most selective, well-resourced institutions constantly up the ante in terms of facilities, breadth of programming, amenities, and student services, while the smaller, less well-funded institutions experience a slow meltdown: broken business models, ever rising expenses, and mounting competition (including from the mega online providers).

The result is that a growing number of institutions are becoming chronic invalids, with inadequate resources  resulting in diminishing quality and sagging reputations, and the ecosystem as a whole becoming more bifurcated in terms of institutional resources, student preparedness, expenditures on instruction and support services, and graduation rates.

Who, we might ask, is working to ensure that students’ interests and needs come first?

Steven Mintz is Professor of History at the University of Texas at Austin.

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