By J. Harvard Feldhouse
Youngstown State University launched new online degree programs this semester in collaboration with Academic Partnerships LLC, but the university may have overlooked AP’s notorious history targeting universities with predatory contracts.
AP is a for-profit online program manager, or OPM. OPMs are education tech companies that contract with schools to help them offer online programs. OPMs have grown increasingly prevalent in colleges, universities and even some grade schools. The more popular ones include AP, 2U, Pearson, Bisk, Wiley and Blackboard.
AP offers universities like YSU a platform for online degree programs, assistance developing curriculum for the programs and marketing and recruiting services in exchange for a portion of the revenue.
The programs offered this semester include a program for registered nurses to earn their bachelor’s in nursing and various master’s in education programs, with several more programs to come for the spring and summer 2020 semesters.
To universities such as YSU that are looking to diversify their education and increase enrollment, AP offers a deal like no other. But there are legal and ethical concerns in the fine print of APs contracts.
The Century Foundation, a nonprofit think tank, investigated dozens of OPM contracts between 2017 and 2019 and released a report in September with a list of five red flags universities should look out for in OPM contracts.
The red flags are “Don’t buy bundled services,” “Don’t bypass your own faculty,” “Don’t sign lengthy, unbreakable contracts,” “Don’t share your tuition revenue” and “Don’t facilitate aggressive recruiting.”
The Jambar analyzed YSU’s AP contract with help from Taela Dudley, higher education policy associate at The Century Foundation and a researcher for the OPM contract project.
Analysis showed YSU’s contract contains most of the red flags. The biggest red flag is the revenue-sharing clause.
Revenue Sharing
According to the AP payment clause in the YSU contract, AP will receive 50% of all revenue from the online courses, defined to mean “all tuition and Online Program related fees charged to Students enrolled in the Online Programs.”
“When it’s a nonprofit school, the mission is academic-driven because it’s a nonprofit,” Dudley said. “They can’t do anything with extra funds; it has to go back into the school, but as soon as a for-profit entity is involved, profits are going into pockets.”
According to the National Center for Education Statistics, about 85% of tuition in the U.S. is paid for by financial aid, which comes from taxpayer dollars.
This means potentially a gross 50% of taxpayer dollars used for this online program are going to a for-profit company instead of YSU.
Neal McNally, vice president for finance and business operations at YSU, said though he was concerned at first about the revenue-sharing, the university accepted the clause after consulting other universities.
“YSU consulted with a number of other universities that had already contracted with AP,” McNally said. “As a result of this due diligence, we came to view the revenue-sharing model as acceptable, especially since it effectively saves YSU from having to incur substantial startup costs, including marketing the programs and recruiting students.”
While YSU would be saving money on startup costs, the university would have to enroll two online students to earn the same amount of revenue as one on-campus student. With YSU’s $8.9 million deficit due to a decrease in on-campus enrollment, this cost-saving venture could prove to have adverse effects.
Bundled Services
Marketing and recruiting are where legal dilemmas become more apparent. Many AP contracts, like YSU’s contract, bundle the online program management and development services with marketing and recruiting services.
However, the dynamic of incentivizing third-party assistance in student recruitment violates the Higher Education Act, according to an October article by Robert Shireman for Inside Higher Ed.
“In citing the law, the inspector general [of the U.S. Department of Education] boldfaced the keywords of the Higher Education Act: ‘The HEA prohibition on incentive payments is clear: ‘The Institution will not provide any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any persons or entities engaged in any student recruiting,’” Shireman wrote.
A few years later, the Department of Education created a memorandum for a loophole for bundled-service OPMs like AP to continue recruiting as long as the contracted university controls the enrollment levels. Detailed in the YSU contract and backed up by McNally, YSU controls admissions, legally allowing AP’s services.
Tuition sharing for recruitment services is still illegal under the Higher Education Act, but essentially, the Department of Education only enforces it under very narrow circumstances.
“When you’re working with a for-profit company, their bottom line is to profit at the end of the day,” Dudley said. “They’re going to be incentivized to jack up enrollment as high as they can to increase their access to tuition and possibly cut corners in other places.”
Aggressive Recruiting
In YSU’s contract with AP, there are two sections that work together in AP’s recruiting process: the section that details the roles and tasks of AP in the recruiting process and the license grant section allowing AP to use YSU’s intellectual property to recruit.
AP designs a website using a YSU domain and facilitates recruiting from that website. Enrollment specialist representatives are AP recruiters who serve as the primary contacts for prospective students interested in YSU’s online program
The website, online.ysu.edu, provides some basic information about expected cost, accreditation and application requirements; it doesn’t go into detail. The only way students can get details is by entering their name and contact information. From there, the representatives contact those students frequently, using phone calls, texts and emails to keep in touch.
The website is designed to look like YSU’s website. There are no links to the real site and none of the phone numbers are YSU numbers, with the exception of the financial aid office.
Also, it is not indicated on the site that AP is the one operating it. Someone who doesn’t know better could easily think this is solely organized and operated by YSU.
The Jambar entered contact information into the request box. Immediately, we received a text message saying that they will call soon and received an email from an enrollment specialist representative seemingly posing as a YSU employee. The next morning, a representative called twice and left a voicemail.
A quick search in the directory found no employee with the representative’s name.
“When the OPM is essentially running a whole program under the guise of the school’s name, the marketing [at] some for-profit colleges will pay per click on Google,” Dudley said. “So, if a student types in ‘master’s in nursing,’ the same for-profit college will pop up at the very top of the list and make that student think that is, like, one of the biggest colleges for nursing or something.”
It is detailed in YSU’s contract that AP is allowed to utilize denied applicants’ information to promote programs at other universities. The Century Foundation recognized this problem in a 2017 article by Margaret Mattes titled “The Private Side of Public Higher Education.”
“Either implicitly or explicitly granting these contractors the ability to use leads to steer students toward programs other than those they originally indicated interest expands the risks presented by these entities to consumers,” Mattes said.
“Operating on behalf of a public institution, these companies may be able to earn the trust of, and therefore collect and utilize more information from, potential students than would otherwise be possible,” Mattes said.
Dudley said because the contract language surrounding contact information is vague, AP could be selling applicants’ information to marketers.
“A lot of these contracts really only mentioned data in the context of FERPA records. But other aspects of student data, like contact information, often that’s less vague and you don’t know what they’re doing with that information,” Dudley said. “That information is very valuable, and it’s what makes a lot of these tech companies their money.”
Moving Forward
In the coming years, it will be enlightening to see how this contract with AP will affect YSU’s goal to reduce the university’s deficit and make up for lost enrollment this academic year.
While YSU’s contract with AP raises many red flags, McNally said the university entered into this contract with careful consideration.
“YSU did not enter into this agreement with AP lightly,” McNally said. “To the contrary, YSU took a measured and prolonged approach, debating the pros and cons of the AP model extensively, and consulting with a number of other universities who had already contracted with AP.”
“The decision for YSU to enter into this agreement signifies that YSU is unwilling to be left behind in the digital age,” McNally added. “Our relationship with AP is evidence that YSU recognizes the need to adapt to the changing higher education landscape.”
