Colleges are trying to plan online enrollment seasons while the federal rulebook on online program managers keeps moving.
On February 15, 2023, the U.S. Department of Education released Dear Colleague Letter GEN-23-03, a sweeping reinterpretation of what counts as a third-party servicer under Title IV of the Higher Education Act. The letter said companies that recruit students, support retention, build instructional content, or supply software used to manage federal financial aid could be treated as servicers. That classification carries real compliance duties: annual audits, reporting to the Department, and liability exposure for institutions.
Within weeks, the Department pushed the deadline back. Then it paused enforcement and said it would revisit the guidance after an avalanche of comment from online program managers, university associations, and accreditors. That backward step is the oversight rollback now shaping online program decisions across U.S. higher education.
What the Oversight Reversal Means for University Online Programs
An online program manager, or OPM, is a company that finances, markets, and operates a university's online degree program. The arrangement usually rests on a tuition-revenue share: the OPM takes a percentage of every enrolled student's tuition, often for five to ten years. In exchange, the university avoids upfront spending and gains marketing reach it rarely has in-house.
That model has scale. A 2022 report from the U.S. Government Accountability Office found roughly 550 institutions had some form of OPM contract, and the largest companies held portfolios of hundreds of programs across nonprofit and public campuses. Major OPMs include 2U, Academic Partnerships, Pearson Online Learning Services, and Keypath Education. GAO also identified a core tension: tuition-sharing contracts can create pressure to maximize enrollments, which critics say looks like the incentive compensation federal law bans for recruiting.
When the Department threatened to place OPMs under third-party servicer rules, it hit the financial center of online education. Then it stepped back, leaving universities with the same old business model and no final answer on compliance.
What the original guidance would have changed
The February 2023 Dear Colleague Letter did not create new law, but it drastically widened the Department's interpretation of an existing one. It listed activities such as student recruiting, retention, instructional content, and software used to manage Title IV aid as functions that could make a vendor a third-party servicer. The letter remains available on the Department's Federal Student Aid site: Dear Colleague Letter GEN-23-03.
For OPMs, that shift would have meant audits, data reporting, direct federal scrutiny, and institutional liability exposure under the servicer framework. For universities, it would have forced a hard look at contracts, subcontractors, and online learning platforms that touch student records and financial aid. The federal ban on incentive compensation, which prohibits paying recruiters based on enrollment numbers, was a quiet part of the fight. Tuition-share deals can sit uncomfortably close to that line.
Why the sector pushed back
University leaders and OPM executives argued the February guidance was overbroad. Small nonprofits said it could sweep in study-abroad providers, clinical placement vendors, tutoring platforms, and the learning management systems campuses already use. Trade associations warned that the audit requirements would land within the same fiscal year and could cost institutions millions of dollars in professional fees.
The Government Accountability Office had already flagged the oversight gap in 2022. Its report, GAO-22-104443, found that the Department had not collected enough data on OPM contracts and that tuition-sharing arrangements needed closer attention. The 2023 letter was, in part, a response to that criticism. The pushback forced a different response.
Photo by Rolf van Root on Unsplash
The rollback, in writing
On April 11, 2023, Federal Student Aid posted an update announcing that the Department was extending implementation of the third-party servicer guidance and would consider changes based on public comment. The electronic announcement pulled the immediacy out of the guidance while leaving unresolved whether OPMs would eventually be treated as servicers.
The practical result: universities that had rushed to inventory vendors in February and March hit pause. Compliance officers put their spreadsheets away. Presidents went back to signing OPM contracts, but many added new clauses on audits, data ownership, and termination.
How universities are rewriting contracts now
Here's the pattern showing up in hiring searches and board conversations: institutions are not abandoning online programs. They are changing how they staff them. Some are taking marketing and enrollment functions back in-house. Some are renegotiating tuition-share percentages down as they bring their own brand strength to the table. Others are chopping partnerships into narrower scopes, one vendor for technology, another for recruiting, another for course design, and another for student support, so no single company controls the whole revenue stream.
Those shifts follow directly from the oversight confusion. If a vendor's status is uncertain, spreading risk across smaller contracts looks safer than betting the online campus on one master agreement. That is also creating a wave of new positions: directors of online operations, data analysts who can read enrollment funnels, and compliance officers who understand both federal student aid and marketing law.
What it means for online program staff and candidates
For people working inside online education, the rollback has made job descriptions messier. A role posted as an enrollment counselor at an OPM may shift to an admissions specialist inside the university, with different pay, different compliance training, and different data access. If you're looking at those roles, read the contract status before you read the benefits package.
The hiring slowdown many campuses are experiencing is already documented. Our coverage of faculty hiring freezes shows how budget pressure flows into instructional budgets. Online programs are not immune, but because revenue from online learners is often one of the few growing lines on a campus budget, online operations jobs are holding up better than many traditional academic roles.
At the same time, colleges are packaging shorter online credentials, which shifts the compliance conversation away from full degrees. The rise of microcredentials and skills-based hiring adds another layer: short courses often fall outside Title IV rules, but they still depend on the same student recruitment channels the regulators were examining.
Four moves for universities that want this settled
You don't need federal rulemaking to get control of your OPM exposure. Start with the contract, not the policy memo.
- Inventory every vendor that touches recruitment, retention, course content, student data, and financial aid software. If you cannot name them, you cannot assess them.
- Pull the revenue-share clause and calculate exactly what you're paying per enrolled student, including marketing spend and technology fees.
- Add an audit clause that lets the university inspect enrollment, marketing, and student-support data without waiting for the OPM's permission.
- Assign one executive, not a committee, to own OPM compliance and give that person a direct line to the provost and the chief financial officer.
Committees are where vendor oversight goes to die. One named owner, one quarterly review, one written log of contract changes. That is the entire accountability system most campuses need.
Photo by Brecht Corbeel on Unsplash
This week's action
Pull your institution's largest OPM contract and read the exit, data-ownership, and revenue-share clauses. Not the marketing summary, the actual contract. If you can't explain the exit terms in two sentences, you've just found the most important risk on your online program balance sheet.
The federal guidance may keep shifting. Your enrollment revenue cannot wait for it.
