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Minnesota lawmakers are looking to crack down on online program managers, the for-profit companies hired by universities to help with online course offerings.

Photo illustration by Justin Morrison/Inside Higher Ed | Getty Images | Carol M. Highsmith/Library of Congress

Minnesota legislators are considering new regulations for for-profit companies that provide online learning services at higher education institutions.

Both the State House and Senate passed bills earlier this month containing a litany of restrictions on online program managers, also known as OPMs.

Many colleges and universities typically work with outside companies to provide these services due to the large technology infrastructure and upfront costs needed to provide online courses. But over the years, there has been heightened criticism of OPMs by higher education leaders and others about OPMs’ alleged predatory practices, including having too much oversight of universities’ curriculum and what some believe is unfair revenue-sharing of tuition dollars, which is often split equally between the OPM and university.

Minnesota representative Nathan Coulter first stumbled across concerns about OPMs last summer as he was scrolling X, previously known as Twitter.

“I dug into it more and started to see concerning patterns appear,” he said. He met with members of the state’s Inter Faculty Organization, made up of seven state colleges, and the Minnesota State College Faculty union to discuss potential legislation to avoid the same pitfalls he’d read about on the social media platform.

He said although the group agreed the problems were “not super prevalent in Minnesota at this moment, it’s probably more likely than not to become more prevalent in coming years.”

While the language in the State House and Senate bills varies slightly, the general themes are the same: they prohibit OPMs from being involved in curriculum development and from being granted intellectual property rights on faculty or student inventions. The proposed measures also require contracts between public institutions and OPMs to be approved by the state instead of university or college presidents; annual expenditure reports to be sent to the state higher education commissioner and that OPMs identify themselves as third-party entities in contracts and marketing materials to prospective students.

One of the most significant stipulation in the bills, however, is the proposed bans of for-profit sharing among OPMs and universities. Many OPMs currently share in the tuition profit of the universities for students taking online courses. OPMs often pay the hefty, upfront costs to launch the program, and use the profit-sharing to recoup some of those start-up funds.

“It just restricts the model that greatly benefits the OPM and adds a few other guardrails for transparency,” Jonathan Bohn, director of public affairs at the Inter Faculty Organization, said of the proposed legislation. “It’s not meant to put them out of business; if they’re doing recruitment well, continue to do that. Let’s just do it under a pay model that’s more fair to institutions.”

But a profit-sharing model is the only way the OPM program could exist at St. Cloud State University, according to Jason Woods, vice president for strategy enrollment management at the university.

“When you think of the resources this partnership provides, coming up with whatever [amount of] dollars on the front end … it’s not possible,” he said.

St. Cloud State’s contract with the OPM company, Academic Partnerships, spurred concerns among state higher education officials that led them to propose the legislation. Last fall, the public liberal arts college whittled down 11 planned online programs to three undergraduate and one master’s degree program after Minnesota State Colleges and Universities system officials raised concerns about program costs amid budget and faculty cuts.

While both Academic Partnerships and St. Cloud State officials agree with parts of the bill, they believe banning revenue-sharing would hinder small universities from having online programs.

“While we support the vast majority of the proposed legislation, we do have concerns around certain aspects of the bill that would make Minnesota public universities less competitive in the online program market, which ultimately would have a negative impact on Minnesota students who are looking to further their education close to home,” an Academic Partnerships spokesperson said.

Academic Partnerships offers institutions two payment options: revenue-share, which they refer to as fee-for-persistence, or fee-for-service. Fee-for-persistence is the sharing of tuition revenue, while fee-for-service is a-la-carte services, which could range from online course support to recruitment and counseling services. But a majority of Academic Partnerships’ clients, including SCSU, are small institutions that participate in revenue shares. Academic Partnerships receives half of SCSU’s online course tuition upon students’ successful course completion.

St. Cloud State officials said if revenue-share is ultimately banned, the college would have to shut down the online course program. While SCSU was unable to provide the exact number of students who successfully completed the online programs and graduated, Woods said it has been widely utilized to reach women and minority students.

“This directly will negatively impact those groups,” Woods said. “We want to help Minnesotans, if not all folks, but know students need access to education in different ways and this is an opportunity to reach those students.”

But Representative Coulter believes the legislation puts universities and students first. The House and Senate bills will eventually be combined into one bill, and make its way through the legislative process. Minnesota’s legislative session ends May 20.

“The decision of whether to engage with an OPM and sign a contract should still be up to individual campuses,” Coulter said. “But when we’re talking about public institutions and public investments, the state does have a role in saying, ‘We’re safeguarding these investments and protecting Minnesota tax dollars and students.’”

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