A new model to unlock students’ “stranded credits” is up and running.
It’s real! A model that lets students return to college even if past debts once blocked them from enrolling is now open for business.
The program, which I discussed in a previous newsletter as it was being developed, now has a name — the Ohio College Comeback Compact — and a website. And this month the eight public colleges and universities in the compact will begin outreach to about 15,000 former students who are the first priority for the program.
Those 15,000 are former students who have been out of school for at least a year, maintained a 2.0 GPA before they left, and owe $5,000 or less to one of the participating institutions. Students in the program who complete at least six credits in a term at any of the eight compact colleges can get up to $2,500 in debt cancellation. If they enroll for a consecutive term, they can get an additional $2,500 canceled.
Recently, growing numbers of colleges and states have ended transcript holds because of unpaid debts to colleges — Illinois being among the latest — and with the help of federal funds, many have provided debt forgiveness, too.
But the compact is notable because it also offers the colleges a way to recoup some of the money owed to them, even if their former students enroll elsewhere within the compact. In those cases, the institution that enrolls the student will make an initial $500 payment to the college or university the student previously attended, followed by a $250 payment for students who continue for a second semester.
That may not cover all that the college is owed, but according to research from Ithaka S+R, the nonprofit consultancy that has spearheaded work on the compact, it’s more than most colleges would likely collect on those debts anyway; on average, Ithaka says, they collect only about 7 cents on the dollar when they send debts out for collection. The program is for debts students owe directly to colleges; not federal or private student loans.
As I’ve described before, a 2018 session I hosted at SXSW EDU helped set Ithaka’s work on this project in motion, and I couldn’t be prouder to see this compact take shape. As Ithaka S+R noted in a blog post published this week, transcript holds disproportionately affect students of color and those from low-income families, “which makes finding a solution a critical equity issue as well.” Even more gratifying: This approach could be catching on. Ithaka S+R folks tell me that they’ve heard from colleges in northwest Ohio about creating a similar compact, and they’ve received inquiries from at least seven other states or systems about the idea.
I also note there are still a few catches: Students who owe money to more than one college in the compact aren’t currently eligible during this pilot phase of the program. And if, say, a student satisfies the requirement for $2,500 in debt cancellation but still owes more than that to a college, they could still find their transcript held up until they settle that remaining debt, either through a payment plan or as a single payment.
But hey, it’s a start. Now let’s see if students sign up.
What shifts at the U. of Arizona Global Campus may portend.
By now, I hope you’ve read the in-depth Chronicle piece by my colleague Dan Bauman on the parting of the ways between the University of Arizona Global Campus and the company that helped run its online programs, Zovio.
As I’ve been digesting this news — and how it fits with some emerging trends around the future of colleges’ dependence on online-program managers — I kept thinking: What a difference two years makes.
It was in the first week of August 2020 that the University of Arizona officials were all aglow about a “transformational” deal to take over the for-profit online Ashford University and contract with its parent company, Zovio, to provide all the necessary marketing, technology, and advising services the institution would need. On Monday, Zovio and UA Global Campus ended that agreement, with the president of the university Paul Pastorek declaring that such outsourcing was “at odds with our aspirations and desired outcomes.”
I’ve got lots of questions concerning what this says about the University of Arizona’s decision in the first place to do this deal — and whether the UA Global Campus can reverse a slide that has seen its enrollment slip to about 28,000, from 35,000, in two years. That 20-percent drop is nearly three times as great as the nationwide decline of about seven percent in the same period.
Some of those questions are the same ones I had in 2020, when I questioned whether this would be a good deal, financially, for the University of Arizona. A big selling point of the original deal was that Zovio was to pay the new UA Global Campus $225 million over the 15-year life of the contract. I’d love to be able to tell you how much of that the university ever saw, especially compared to how much it paid Zovio for services. I asked both Zovio and the university but didn’t get a definitive answer by my deadline. (If I ever hear, I’ll let you know.) Even with the upfront payment of $37.5 million Zovio was to have paid at the start of the deal, the UA Global Campus reported an $11-million loss in its fiscal 2021.
Apparently the arrangement wasn’t such a great deal for Zovio either. Its president, Randy Hendricks, said on an investor call that the company didn’t see a path to profitability as an online-program manager with the limited capital it has left. Besides a coding academy called Fullstack, which it is considering selling, its only asset of note is about $12 million in cash, and it still owes some money out of that to UA Global Campus.
Signs of change in the outsourcing of online-education services.
I’m not drawing too many conclusions about the fate of the OPM model solely from Zovio’s experience; the UA Global Campus was its only client, and the transfer of Ashford to Arizona affected the terms of that OPM relationship.
But UA Global Campus’s decision to assume control over operations it had formerly outsourced is more than a little telling. The university is hiring about 800 people from Zovio, or about 80 percent of Zovio’s OPM staff.
This major in-sourcing investment is especially noteworthy in light of several other recent OPM developments. (Hat tip to Phil Hill, an edtech consultant and writer, whose blog post this week fleshes out the examples that follow, and a few others.)
- Arizona State University plans to end its decade-long outsourcing relationship with Pearson, effective at the end of June 2023. ASU is bringing that marketing and support services in-house, its president Michael Crow told me this week, because the university thinks “we can do a better job” in recruiting students better suited to its academic programs at a lower cost than the tuition-revenue share it was paying to Pearson. (Crow said the share of tuition ASU pays Pearson is in the “high 30-percent” range.)
- 2U last week announced a new pricing model for its OPM services, with revenue-share options beginning at 35 percent for a basic set of services. It also said it would reduce its revenue-share requirements for institutions that “significantly reduce” tuition on their programs.
- Wiley recently reported decreasing revenue from its OPM business year-over-year based on an eight-percent drop in online enrollment.
The moves come amid growing public questioning over the role of outsourcing companies in online education from political leaders, government agencies, and watchdog groups. (A Wall Street Journal piece last month centered on 2U has possibly added to the pressure.) And as Hill notes, these details tell only part of the story. Privately owned OPMs are also likely facing some headwinds that aren’t as visible.
This isn’t the situation many would have predicted. Two years ago, OPMs were riding high, picking and choosing which colleges they would take on as clients in the face of unprecedented demand for more online programs. It’s a stark reminder of how the winds can shift.
Got a tip you’d like to share or a question you’d like me to answer? Let me know, at goldie@chronicle.com. If you have been forwarded this newsletter and would like to see past issues, find them here. To receive your own copy, free, register here. If you want to follow me on Twitter, @GoldieStandard is my handle.
