Capitalism in Higher Ed

I find myself at ASU-GSV this week, surrounded by three significant categories of people: Investors who want to help fund companies doing interesting things with colleges and universities, Entrepreneurs / Company Execs who are looking for new schools to work with while often also seeking funding from investors, and Academic Administrators who are looking at some of the newest solutions out there, hoping to impact enrollment, retention, communication, outcomes, and more.

Perhaps the Golden-Child on the company side are the OPMs. Online Program Management has seen a tremendous boon in partnerships over the past decade, seeing revenues skyrocket over that same time.


But while these companies have been an investor’s dream for a healthy number of years, they often come under fire from outsiders who suggest that these organizations may be hurting higher ed more than helping. This was the take from Kevin Carey in his Huffington Post piece, “The Capitalist Takeover of Higher Education.”

Nobody really questions whether a reporter can speak to online education, OPMs, or beyond, but you might wonder what gives me any credibility in this regard. If you are new to my blog, know that for a decade I worked at eCollege (an LMS company which was eventually acquired by Pearson). There was a time that I was the main eLearning trainer / academic strategy consultant for 17 of the biggest 20 For-Profit universities, many of which spawned current OPMs. As well, I was involved on the Pearson side with their OPM partnerships with ASU and beyond. And lately, the institute has been providing a lot of consultation to colleges and universities specifically addressing whether or not they can “compete” online if they choose not to use an OPM. (The short answer is, “yes” they can.)

So, I do know this world. I know the landscape. I still have a large number of colleagues who work for these companies. Some of those people have a fire to transform education for the masses. Some of those people are genuinely good, solid people. Does that mean their companies are making good or bad decisions? Not necessarily. But I think it is relevant to know that despite Mr. Carey’s assertions about OPMs, there are some really good people doing work they hope will “change the world” for the better.


But that is not really the question here. If you read the piece in the Huff Post, there are a lot of serious arrows slung at both OPMs and Universities who work with them regarding pricing being driven up instead of taking advantage of the “low overhead” associated with eLearning. Is that accurate?

Again, if you read my stuff regularly, I am a believer in radical transparency. I’m not going to blow smoke. If something is bad, I’ll try to credibly argue that it is bad. But the OPM / elearning / University culmination experience is far, far more complicated than Mr. Carey presents. Are there “bad” parts to it? Sure. But is it as cut and dry as he makes it? Not even close. He creates a straw man argument, which is pretty easy to knock down. But there is a lot of context missing.


Having spent my entire life working with, through, or for eLearning, I can remember the “promise” of online learning back in the late 90’s being all about cost savings. This was part of the catalyst for the MOOC craze in the early 2000’s - take the online experience out to the masses at almost no cost!

Of course, we all saw what happened to the first set of MOOCs, having to be significantly retooled, reconsidered, and rebooted into the experiences you see today. (I think of ASU’s MOOC that prospective students can take allowing them access to join the school. Despite being a very clever idea that can help change someones stripes, ASU loses a bunch of money on that endeavor…)

So let’s talk about how you build a course. In a face to face course, the professor builds 100% of the experience based on whatever they wish. They build the lectures from their own experiences and readings, and for the truly gifted professors our there, they find ways to teach without any lecture at all. (Although this is quite rare.)

Online learning does not work that way. True, in the late 90’s, we tried the exact same strategies. An individual professor would try to create an online class, completely on their own. Having audited hundreds of online courses in my time, I would argue that about 5 out of 100 of these courses were truly “good” learning experiences. Even the Huff Post piece alludes to the idea that eLearning has come a long way.

But there is a cost associated with how far eLearning has come. Today’s “good” courses are not built by a single faculty member. They are built by a faculty member acting as a SME (Subject Matter Expert), an Instructional Designer, and likely a Multimedia expert. In the best Instructional Design departments (of which I have run three throughout my career), this process likely includes a project manager, a Quality Assurance specialist, and potentially graphics people, web people, or more.

Ok. So, after the initial cost of the course, which is obviously 4-5 times the cost of a face to face experience, then we can start passing the savings along? After all, a school would quickly build up a library of courses that should be easy to deliver at that point, only having to pay a faculty member to facilitate.

Not so fast. The first “run” of a course should likely see a number of revisions before it runs a second time. There will be things that simply will not work for students, so a meaningful evaluation should take place (which of course costs more money). But yes, after this revision process is done, a college or university should now have a quality offering which can be run without the overhead costs of a building or lawn care. For no more than two years.

Wait, why? Why would a course need to be “refreshed” every two years? Think about it. If an online course is truly strong, meaning it helps novices make connections to the content via scaffolding, then it means leveraging current, cultural references throughout. How “fresh” would an Bush Presidency reference be at this point? How effective would a “Friends” example be today? If a course is truly relevant, it will need to be updated on a regular basis.

I was speaking with a CIO last week. He works for a major bank - one for which you likely have their credit card in your wallet. He told me that he needs a fleet of developers who are proficient in a computer language that not a single university in the US teaches. His claim was the computer science programs are still teaching languages from 2 years ago, which are not helpful to him at all. That is in the context of face to face programs. How on Earth can an online class keep up?

Of course you will also hear from the academy that most online courses are inferior from the start as well as being typically taught by adjunct faculty which cannot be as good as full-time. I have heard these tired arguments for years by people who either have not seen brilliant online courses, by those with a lot of confirmation bias, or simply by people defending only what they know (people hate change). I actually disagree completely that online learning is inferior and to say that an adjunct is a “worse” facilitator than a full-time faculty member is also an argument I would gladly take on. But, I guess this may provide a small savings per teacher, per course. But is it enough to completely change the cost of a credit hour?

Obviously this example is only about the course itself. But OPMs provide a heck of a lot more than that. They front the cost of marketing for brand new programs, which can be an expensive venture. As they find students, they will enroll and “coach” students through the process. They will act in a Student Success capacity. This is something colleges today are scrambling to do themselves as retention numbers for US college students are generally so poor. In fact, other than the actual teaching of the courses, which OPMs typically leave to the school, they are working on almost every other aspect of the experience, from admissions to tutoring.

And of course there is the other elephant in the room. Most OPM work to this point fronts 100% of the cost for new programs, new courses, and new students. Why? Because schools just don’t have that kind of money. Most colleges and universities cannot simply spend $1 million dollars on a new program as they don’t have $1 million dollars just “laying around.” And starting a program, including marketing, enrollment, student success, and more can cost that much and beyond.

The Real Story

The point is Mr. Carey did not really go into full detail about all of this. From the perspective of someone who has woven in and out of formal higher education for twenty years, he missed the mark. If we want to have a conversation about whether or not OPMs charge too much for their services, fair enough. Should a 7-10 year contract, taking 60% of student tuition dollars be considered appropriate? Interestingly, most OPMs are finding that the market appetite is waning from this kind of agreement. They are unbundling more and more of their services, looking at very different models than a decade ago. Colleges and Universities are saying more and more that the price is simply too high.

Could eLearning have become the saving grace for inflated tuition hikes, year over year? It depends on how “good” you wanted that eLearning to be. Still seen by many academics as a “red-headed step-child” to “real” learning in a classroom, I’m not sure that super inexpensive eLearning would have cut the mustard. I have seen eLearning be far more successful than face to face experiences, but it took a lot of work and effort in the creation process, as well as the facilitation process.

At the end of the day, the problem (from my perspective) is not with the tools used by colleges or universities, it is with the institutions themselves. We saw the same issue with textbooks for 4-5 decades. The prices were ridiculous, yet the schools perpetuated the problem en masse. But textbooks are a symptom. The problem lies within.

Walk around most campuses today and it will not take long to see why a degree is so expensive. Bloat is choking the life out of many schools. Our institute recently did a consultation for a traditional, R-1 University to be told that office staff had to “order” a single pen from an internal department. Think about that. There is a group of people, hired by a university, who dole out pens, paper, and other office supplies. How much does that institution pay an office of people who supply offices?

Many schools, especially state run institutions, run just like our government in terms of budgeting. Your department should ALWAYS asks for an increased budget - every year - while ensuring you spend all of your existing budget. Why? Because if you don’t spend your current budget, then next year’s budget is cut. If you don’t ask for more money, you can’t do the things you eventually hope to do. But what does that mean practically? It means the same thing for higher education as it means in government. Waste. Unnecessary hires. Unnecessary travel. Unnecessary resources.

Walk around a state university and look at work-study students. How much “work” are they doing? I’ve literally watched dozens of work-study students playing games, talking, surfing the web, for hours at a time. Why? Because every term, the department admin asks for 1 more work-study student. Sometimes they get one, sometimes they don’t. But eventually, they have a bevy of students and they don’t know what to do with them.

In fact, think about school hires. They don’t pay market value for almost anyone. They count on hiring people who believe in mission over money. But how often do you suppose that happens? (Versus the hiring of people who struggle to simply get hired in other places?) Yes, colleges and universities absolutely have employees who value mission over money. But those same institutions also have plenty of people who could not keep a job anywhere else. Spend a few days talking with admins, staff, and faculty at any school and you will quickly find those that are solid, sharp, and even future facing, often frustrated at being surrounded by a sea of mediocrity. Add to that a bevy of additional middle-management, extra VPs, professors who work their way out of teaching at every turn (some because they want to, others because it is required), and most organizational consultants could easily explain why tuition has outpaced inflation by 300% over the past several decades.

Colleges and universities are incubators of inefficiency, bureaucracy-filled silos with people who are not just risk-averse, but who are rewarded for keeping the status quo.

If the Huffington Post wants to blame all of that on OPMs, it is their right of course. But it seems a bit fallacious in nature. Does a school have to use an OPM to compete online? I don’t believe they do. Can they generate new revenue without an OPM, eventually seeing a program really take off? Yes! Perhaps slower than an OPM can generate, but absolutely. But if a school partners with an OPM to provide a new program, giving students an entirely new option, did they contribute to the issue(s) of tuition inflation? Not really. That boat set sail a long time ago and is going to take change and transformation at an entirely different level. It’s starting to happen. Slowly. The best Presidents and Provosts are trying to bring business acumen into the glass castle, but most today just don’t want to waste political capital on that kind of fight.

So is the brokenness of higher education. OPMs may be a symptom of a problem, but they are not the problem. The problem likely goes significantly deeper.

Good luck and good learning.