7 Questions for Trace Urdan on OPMs

A conversation with a managing director at Tyton Partners.

February 6, 2019
 

I first met Trace Urdan, managing director at Tyton Partners, through a Twitter exchange on the online program management sector (“An OPM Debate: 11 Colleagues in 32 Tweets”). Trace generously agreed to answer my OPM questions.

Q: Can you give us the elevator spiel on what Tyton Partners does, and what your role as managing director entails? Tell us a bit about your background.

A: Tyton Partners is an advisory firm that serves clients across the education, information and media markets within the global knowledge sector through two practices: investment banking, where we help clients both buy and sell companies as well as raise capital; and strategy consulting, where we provide a range of analysis and advice for for-profit and not-for-profit enterprises, philanthropic foundations and education institutions.

My own background is as an equity research analyst covering the global knowledge services sector for public and private market investors. For the past 20 years, I have covered investable companies operating in every sector from early childhood education through corporate training for a number of investment banks, most recently Credit Suisse. I joined Tyton in 2017 and spend my time equally across both practices.

Q: What are the big questions that we should be asking about the OPM industry and its relation to the future of higher education?

A: As I suggested in the Twitter exchange, I think more transparency around standards and practices is in order. I think there should be a more open discussion among both sides of the OPM partnerships (companies and schools) about what sort of practices are acceptable and standard. It’s pretty anodyne and easy, for example, to insist that faculty are responsible for content, but what does that mean in practical terms?

Also, the financial motivations of schools are pretty clear in these arrangements, and in several cases OPM programs have led to relatively explosive growth, so I think it’s fair to ask them how they avoid enrolling students that may not be in a position to really benefit from the programs.

As those of us that followed the for-profit college sector learned all too well, just because you can enroll a student doesn’t always mean you should. The same sorts of ROI discussions that we have around cosmetology programs need to be had around master’s programs in social work or education -- even if they are from a highly ranked research institution. This, of course, means greater transparency around outcomes including not only completion (which most tout as very high), but also employment and loan repayment.

Q: Please expand on your thoughts about the potential, or need or even wisdom, of a nonprofit university spinning up an OPM business in competition with the for-profit OPM providers.

A: There are a handful of highly effective not-for-profit schools that have the expertise and the resources to provide this sort of assistance to traditional schools. Of course, one of the big benefits of partnering with OPMs is the investment capital they bring to the partnership. The OPM relationship differs from a traditional vendor relationship in that the OPM bears considerable financial risk, including fronting most of the (often considerable) development costs up to a year before any tuition revenue comes in.

Not every NFP will be comfortable bearing that sort of risk -- it’s not how most are conceptually structured. But leaving that aside, my biggest pushback on this concept is why? Why does anyone feel this is needed? What existing market problem does an NFP entrant solve? It seems entirely ideological. And perhaps that is enough because of ideology-based opposition that exists in many faculty senates, but I honestly don’t see any benefit that is not otherwise addressed through good old-fashioned market-based competition.

In general, I find that the mistrust of the OPM model does a serious disservice to their NFP partners, assuming that they are somehow dupes in some colossal grift -- and in my experience that couldn’t be further from the truth.

Q: If you were running one of the big OPM providers, what would you be doing differently?

A: Now that’s what Tyton gets paid for, so I’m going to demur, except to say that I believe 2019 will be a year in which some of the larger OPMs introduce a much wider range of offerings and capabilities to the market.

I also believe that the biggest white space in the OPM market is undergraduate enrollment. Expanding undergrad enrollment has typically been something that makes traditional schools very nervous. But I believe many schools -- particularly public institutions -- are becoming far more comfortable with the idea of the adult market for both reasons of mission and, frankly, revenue and that we will soon begin to see OPM deals that address degree completion and other undergraduate programs at scale.

Q: I'm having a hard time getting a handle on the impact of OPMs on institutions and students. Where do you go to get data on institutional and student outcomes from across higher education and across school/OPM partnerships?

A: You can tease out some of this data from IPEDS by isolating some program offerings, but this speaks to what I believe is the greatest need at the moment, which is greater transparency around program outcomes.

Q: There is no OPM professional association. No conference (that I know of) where people from across the OPM industry come together with people who work in higher ed (including analysts and consultants and professional associations and journalists and foundation people) to share research or build a community of practice. I want this to happen. But I don't know where to start. Any thoughts and advice?

A: Speaking as someone that has covered (and supported) profit-seeking enterprise in education for 20 years, professional associations tend to draw fire. And in any case, isolating one side of these partnerships creates a false impression of what is actually happening here.

But I do believe there is room for industry leaders to begin to articulate standards and practices of behavior publicly. Apart from that, there is an excellent conference co-sponsored by George Mason University that is only in its second year, known as P3EDU, that is beginning to encourage these conversations. George Mason is probably at an 11 on a 10-point scale of innovation and has really stepped up to provide some leadership on this topic.

Q: When it comes to the growth of the OPM industry and the emerging model of nonprofit/for-profit partnerships for online education, what keeps you up at night?

A: President Elizabeth Warren.

What questions do you have for Trace?

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