The Washington Post
Outsourcing of services by colleges on the rise
medford, mass. — The Tufts University campus was a quiet place in the fall, where students were scolded to stay in their dorms, checked frequently for the coronavirus and — if they tested positive — quarantined in modular housing set up on the tennis courts.
As with much in higher education, the real activity was online, where the university was busy launching a virtual master’s degree in data science and an online program in computer science for people who already have bachelor’s degrees.
Aimed at consumers needing to find new jobs or preparing for graduate school, the offerings seemed well timed to attract students.
What students won’t see in the promotional materials or when they register, however, is that the programs are being managed by a private, for-profit company called Noodle that is being paid $12,000 to $22,000 per month, per program, plus $88 per credit hour, per student, according to a list of fees disclosed by Noodle.
Colleges and universities have long outsourced such things as bookstores and dining and custodial services. Now they’re paying billions of dollars a year to forprofit corporations to create and administer online courses; recruit and enroll students; advise and tutor those students once they start school; oversee research; manage information technology and utilities; and build or manage dorms, classrooms, labs, parking and student unions.
Some of these functions are outside the institutions’ educational missions, advocates of such partnerships point out, though what’s new is that “more and more are cutting closer to the academic core,” said Dennis Gephardt, vice president and senior credit officer on the higher education and notfor-profit team at the Moody’s bond-rating agency.
Universities and colleges say outsourcing also saves them money and makes them more nimble and efficient.
Under the Noodle deal, for example, the university retains control of admissions and content and hires instructors, said Tufts spokesman Patrick Collins. Noodle provides “flexible capacity to quickly ramp up new programs,” Collins said.
Tufts is charging $1,697 per credit hour for most of the courses in the programs it just started, not including mandatory fees.
“The benefit to institutions seems fairly clear,” said Clare McCann, deputy director for federal higher education policy at the think tank New America. “It means someone else will handle the difficult process of getting these programs up and running and of growing these programs.”
The benefits to students, she added, speaking generally about such deals, “are a lot less clear. Many students don’t realize their programs have been outsourced to a for-profit company they have probably never heard of.”
Universities and colleges now pay $4 billion a year to online program managers such as Noodle; that figure is expected to increase to $10 billion by 2025, according to the education marketresearch firm Holoniq. They spend $16 billion annually on educational technology, projected to rise to $20 billion by 2024, BMO Capital Markets estimates. And they channel at least an estimated $15 billion to companies in the enrollment management sector for marketing, recruiting and enrolling students, a senior industry insider says.
“What we’re seeing is a real blurring of the lines between nonprofit and for-profit higher education,” said Michelle Dimino, education senior policy adviser at the think tank Third Way.
Even as the pandemic has accelerated the pace of outsourcing, it has exposed problems with these kinds of arrangements.
Colleges and universities have increasingly outsourced housing, for example, in so-called publicprivate partnerships, or P3s, under which private companies such as Corvias and Capstone Development Partners build and manage dorms.
That became a problem this fall when Capstone wouldn’t let students at Maryland public universities out of their leases or give them refunds — which their classmates who lived in universityowned dorms received — after the campuses went virtual because of the pandemic.
The dispute was finally settled in late December, when students in the privately managed residence halls were freed from their leases or promised credit toward future housing.
Employees of private contractors that staff and run dining halls and custodial services at institutions including Harvard University and the University of Pennsylvania, meanwhile, were vulnerable to layoffs when those schools went remote in the spring, even while other campus workers were protected. After criticism from students and unions, Harvard and Penn responded by agreeing to pay contract workers through the end of the spring, though other universities with contract employees did not.
Yet outsourcing has speeded up during the pandemic. Holoniq projects some 300 new partnerships this year between universities and online program managers, or OPMS, for instance, a 79 percent increase over last year.
OPMS collect commissions from the universities of as much as 80 percent.
In a third of cases, the OPM, not the university faculty, provides the instruction, even though it carries the university’s name, according to documents obtained by the Century Foundation think tank from 79 public universities.
Some deals cover much more than single courses or programs.
The University of Arizona in December wrapped up its acquisition of for-profit online provider Ashford University. The fine print locks the public Arizona university into a 15-year contract with Ashford’s former parent company, Zovio; after Zovio makes guaranteed minimum annual payments to what is now known as the University of Arizona Global Campus, it will be reimbursed for the costs of recruiting, marketing and other services it provides, plus get 20 percent of tuition revenue.