Scrutiny of a Financial Relationship

When an Arizona State professor accused the university of an unethical partnership with Cengage, the university denied it received grants from the company. But there was a financial relationship that wasn't revealed at the time. Students seek more details.

April 26, 2019
Brian Goegan, former Arizona State professor

A former Arizona State University professor sparked outcry last week by publicly accusing the institution of shady dealings with the publisher Cengage.

Brian Goegan, former clinical assistant professor of economics at Arizona State, claimed that the university had received a “large monetary grant” from Cengage. In exchange, the university made Cengage’s $100 courseware a requirement for students in introductory economics courses, said Goegan. University leaders flatly denied the accusation.

In an email to his students, which was later shared on Reddit, Goegan said he was required to fail 30 percent of his class in order to make the new courseware look like it was significantly improving students’ grades. Arizona State leaders said this was untrue.

Arizona State’s provost, Mark Searle, issued a statement in response saying there was “no factual evidence” that Arizona State received a grant from Cengage.

But The Arizona Republic unearthed a contract showing that Arizona State and Cengage did have a revenue-sharing agreement for an adaptive learning platform, which Arizona State staff and Cengage are developing together.

“I do feel some vindication,” said Goegan in an email. “Especially since for a little while there they were denying that any such contract existed.”

The “co-publishing and fulfillment agreement,” signed in January 2016, outlines how much money both Arizona State and Cengage would keep from sales of the new adaptive platform both to Arizona State students and outside students whose institutions may adopt the platform in the future.

During a pilot of the new platform from spring 2017 through spring 2018, the contract says Arizona State would charge students $100 for the courseware, retaining $21 and paying Cengage the remaining $79. Following the pilot period, Arizona State would retain $1 and remit Cengage $99. Each course is projected to enroll 2,200 students by the end of this year.

If the courseware that Arizona State helped to develop were sold to another institution, Cengage would pay Arizona State a revenue of 2 percent under sales of $250,000. This revenue share would increase as sales grow, up to a maximum of 5 percent over sales of $2,250,000.

“It’s important to note that this section of the contract envisions a hypothetical situation in which Cengage has found another university -- not Arizona State -- that wants to license the adaptive learning platform that was built collaboratively by ASU and Cengage,” said Bret Hovell, Arizona State spokesman.

Alex Baker, vice president of policy at ASU’s Undergraduate Student Government Tempe, said students “still have many unanswered questions” about the concerns raised by Goegan.

It is still unclear whether Goegan was forced to fail students, said Baker. The student government has requested to see grade distributions from the economics department but has so far been denied, he said. Requests for more information on other courseware deals with publishers, which are part of a wider adaptive learning project led by the university provost, have also been denied.

Baker feels the university’s response to Goegan’s claims was disappointing. “I wish they had been more open and transparent. They put out statements that were very carefully worded and full of caveats.”

University leaders have repeatedly said, for example, that students are not required to pay to do their homework. Yet a syllabus from one of the economics classes clearly states, “all homework is done and turned in on MindTap” -- meaning it would be impossible for students to pass if they didn't purchase an access code.

The student government passed a bill earlier this week calling for an independent external investigation into the university's partnership with Cengage. But Baker acknowledges the student government is a “paper tiger” that does not have the power to initiate such an investigation. “The university would be fully within their rights to put this bill in the shredder,” he said.

“I don’t believe the university will take any action,” said Baker. But he is hopeful that students might persuade the Arizona Board of Regents or state legislators to look more closely at how textbooks and courseware are selected by the university and consider whether they represent good value for students.

Hovell said he didn't "have anything to add about what happens going forward."

In addition to calling for an external investigation, the student government bill supports the creation of a new supervisory body with student representation “with the authority to approve or deny the usage of any homework submission platform with costs to students greater than $50.”

Alastair Adam, co-CEO of FlatWorld, a publisher of low-cost textbooks, said the students’ suggestion to play a role in approving instructional materials is a good one. “We need more sunlight on these processes,” he said.

Adam described how kickbacks and incentives have become a tool for some publishers trying to win contracts. “It’s just like how the pharma industry operates,” he said.

Though these financial inducements might be used by universities to boost departmental funds or fund legitimate research studies, they are bad news for students who want to save money. 

Adam described a recent situation in which a university, which he declined to name, asked for cash in exchange for selecting a FlatWorld textbook over a competing publisher.

The bidding document reads, “The department requests that you include a proposal for a grant, or payback program to the department for each textbook purchased in a semester. We expect this to be a dollar amount that is paid directly to the department to support facilitation of this course. We are open to other ideas in this area, and expect that you address the requirement in your proposal.”

It continues, “Any grant or payback should not simply inflate student costs. We are offering a volume and would like to absorb any discounts in the form of a grant or payback.”

The call to not inflate student costs is the “get-out-of-jail piece,” said Adam. But he notes, "given the volume, the discount obtainable for the student could have been even lower if the kickback didn’t have to be absorbed -- so it is absolutely coming out of the student’s pocket.”

When Adam responded to say his price was already low, the university suggested he mark up the price in order to mark it down. He refused.

“We did not win that contract,” he said.

Nicole Allen, director of open education for SPARC, said that publishers have always offered incentives to universities to choose their products, but what is and isn't acceptable has become less clear.

"The ethical questions were just simpler to navigate when we were only talking about books. Now the types of products are more complex with adaptive platforms and homework software, and the deals intertwine the interests of institutions and publishers," she said. "If a university customizes a resource, do they deserve royalties? If a department negotiates a deal to reduce costs, is it fair to take a cut of the 'savings'?" 

"Higher education owes it to students to grapple with the ethics of this new course content landscape, and to avoid replicating the same inequalities baked into the system it's supposed to improve." 



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