State Legislative Toolkit for Protecting Students from Online Program Managers (OPMs) in Higher Education

Online program managers and their tuition-share model were born out of shifts in federal policy over decades. In 1992, Congress amended the Higher Education Act, introducing a ban on incentive compensation, the practice that allowed colleges to provide commissions or bonuses based on their employees’ success in boosting student enrollment. Lawmakers acted because such incentives prioritized admissions officials’ financial interests over student well-being.

The incentive compensation ban was inconsistently enforced, however, and policy changes throughout the 2000s that introduced exceptions, or regulatory “safe harbors,” further complicated the admissions landscape.

In 2011, the Obama administration issued guidance that allowed third parties that work with colleges to receive incentive compensation for marketing and recruitment so long as they provide these services as part of a “bundle” of services, which could include areas like recruitment or marketing, curriculum development, or IT support.

The Obama-era guidelines allow OPMs to create the tuition-share deals, in which the companies take part of tuition revenue, and which otherwise would flout the incentive compensation ban. Consumer protection advocates have long called for the U.S. Department of Education to withdraw the guidance, which remains in place as of May 2025.

In January 2025, the U.S. Department of Education issued a “Dear Colleague” letter that stated that OPMs working with colleges that receive Title IV federal financial aid must ensure they are not misrepresenting themselves to students. Colleges that violate this policy may lose access to federal funding, the agency said. The Education Department identified three circumstances that likely qualified as misrepresentation and a consumer protection violation, but stressed its list was not exhaustive:

• OPM workers being labeled college employees
• OPM staff being referred to as admissions or academic counselors
• OPMs advertising their programs as being “the same as” an on-campus version

While federal regulations on OPMs remain at a standstill, states can still independently ban tuition-share deals. In 2024, Minnesota became the first state to prohibit such arrangements with its public colleges after recognizing the risks OPMs posed to its institutions.

The Century Foundation’s Higher Education team and the Student Borrower Protection Center developed draft legislation on OPMs, which states are free to use. The Century Foundation also created a blueprint for regulating OPMs that describes the key components of state-level legislation. State-level bills should:

• Ban incentive compensation. State legislation should prohibit tuition-sharing and other types of incentive compensation for OPMs. Colleges currently engaged in such agreements should be provided a transition period to rescind or modify their contracts.
• Prevent misrepresentations and misleading branding. Legislation should prohibit OPMs from engaging in deceptive marketing or recruiting practices. It should also require OPMs to clearly disclose their status as third-party providers. Legislation should require OPMs to use distinct branding and prohibit OPM employees from using college logos, emails addresses, or falsely representing themselves as an employee of a college.
• Create universal application. State legislation should regulate OPMs at all types of postsecondary institutions, including public, private nonprofit, proprietary, and private career schools.
• Require reporting. Legislation should require colleges that work with OPMs to submit OPM contracts to state regulators so they can track OPM-run programs and monitor compliance with state law.
• Protect institutional authority. Legislation should ensure that colleges retain full decision-making over essential functions when working with OPMs, including curriculum development, instructor selection, admissions standards, and enrollment targets.
• Protect faculty intellectual property. State legislation should safeguard faculty rights, ensuring that intellectual property, such as instructor-developed course materials, remains under faculty ownership, not an OPM.
• Require transparency. State legislation should require OPMs and colleges they work with to disclose an OPM’s role in marketing, enrollment, and instruction. Colleges that partner with OPMs should clearly disclose the nature of the relationship in promotional materials.
• Provide for enforcement. State legislation should include clear enforcement mechanisms, such as civil penalties, to assure state regulators can enforce state law.

The map below tracks state-level reform efforts to regulate OPMs. Updated July 2025 to reflect Ohio passing OPM legislation.

Below are talking points advocates can use to effectively make the case for stronger oversight of OPMs:

• Online program managers, or OPMs, are for-profit companies that contract with nonprofit private and public colleges to operate online courses and educational programs.
• OPMs often provide services to institutions that include recruitment, marketing, advertising, instruction, and course design for low-quality online programs, often using tuition-share agreements.
• Student borrowers are often left in debt, taking on federal and private loans for these low-quality online programs.
• Students overwhelmingly report feeling misled about these online programs, and they are often entirely unaware of the existence of OPMs.
• OPMs can claim up to 80 percent of tuition revenue, making them a poor solution for addressing institutional budget shortfalls.
• OPMs that enter into tuition-sharing arrangements are incentivized to boost enrollment in those programs in order to augment their profits, and thus they are incentivized to engage in aggressive recruitment tactics, such as persistent emails, text messages, and phone calls.
• OPMs have often targeted vulnerable populations, including nontraditional students, those from low-income backgrounds, and working adults. Black students and those eligible for the federal Pell Grant enroll in online programs at higher rates than their peers.
• OPM-run programs are not a silver bullet for enrollment challenges. These companies argue that online programs will help colleges attract new students nationwide. However, students most often attend a college near to them, which means that institutions won’t see massive enrollment increases.
• Fee-for-service models, in which OPMs receive fixed payments, pose fewer consumer protection risks than tuition-share deals because the companies are not trying to maximize enrollment to boost profits.
• Tuition-share contracts often run for many years, offering students weak online options even if the programs aren’t successful academically or financially. OPM contracts also can include restrictive provisions, such as automatic renewals, long notice periods to end the agreement, or prohibitions on working with other online providers after the deals end.

Below is a list of research, government and legal reports, and journalism exposing the risks that OPMs pose. Updated August 2025 with an additional research resource.

Editorial disclosure: The views expressed in this toolkit are solely those of the author and do not necessarily reflect the views of New America, its staff, fellows, funders, or board of directors.

Updated at 11:00 a.m. on June 11, 2025: The toolkit was updated with an additional resource from The Century Foundation for regulating OPMs.