The Washington Post

Outsourcin­g of services by colleges on the rise

- BY JON MARCUS education@washpost.com This story was produced by the Hechinger Report, a nonprofit, independen­t news organizati­on focused on inequality and innovation in education.

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.

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