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Dozens of colleges, including many with widely known brands, outsource parts of degree programs to other institutions or private companies. Under federal rules, colleges can offer degree programs in which up to 50 percent of instruction is outsourced, including through unaccredited entities.
A proposal from the Education Department would remove that cap entirely, potentially allowing colleges to completely outsource curriculum and instruction for degree programs. That possibility is alarming consumer advocates who worry it will give low-quality operators backdoor access to federal student aid money.
Amy Laitinen, director for higher education at New America’s education policy program, said it would basically allow colleges to rent out their names to third-party companies while pulling in federal aid.
“It raises questions about what it means to be an institution and what it means to have to get a degree from your university,” she said.
The idea is part of a package of proposed changes to the regulatory system governing higher education that the Education Department will ask a group of appointed negotiators to consider beginning next week. They’ll have a chance in that process, known as negotiated rule making, to weigh in on the outsourcing proposal and its implications for students and parents.
The slate of proposals focuses largely on rolling back regulations involving higher ed accreditors, the bodies that serve as gatekeepers for federal student aid. Current rules say an institution can outsource up to 25 percent of a program to an unaccredited provider. But having a third party provide between 25 and 50 percent of a program requires an accreditor’s approval.
Under the proposed change, colleges could outsource any amount of a program with permission from their accreditor.
Diane Auer Jones, the department's principal deputy under secretary, said in a call with reporters this week that officials would seek feedback from negotiators about what the appropriate cap may be for outsourcing programs.
“We don’t really know what the right answer is,” she said. “There probably are not many institutions that would outsource 100 percent of a program.”
Jones said the change was proposed with work-based learning in mind and not online-driven models like coding boot camps.
But most observers expect the change would have the biggest implications for just those kinds of alternative higher ed providers. And the proposal is being greeted with skepticism even from companies in that sector.
Liz Simon, vice president of legal and external affairs at General Assembly, one of the biggest operators in the coding boot camp market, said the company is still grappling with how to offer quality education at a large scale. And she said there are plenty of examples in the past of new higher ed companies exploiting the federal student aid system.
“There’s still a hard conversation to be had about ensuring quality in some of these nontraditional programs,” she said.
Without hearing more details about protections for students and federal funds, Simon said the company would be hesitant to endorse the idea.
Rick O'Donnell, the founder and CEO of the Skills Fund, which provides financing for coding boot camps and other skills-training programs, said a regulatory overhaul that results in more partnerships between colleges and outcomes-focused higher ed providers would be a win.
“However, innovation cannot be prioritized over program quality,” he said via email. “As ED rightfully pushes to limit the authority of accreditors, who are unequipped to serve as the gatekeeper of institutional quality, private market quality assurance entities become that much more crucial to ensure student learning and positive outcomes.”
Although the proposal has driven concerns about program quality, one higher ed entrepreneur doubts that it will be the department’s most impactful proposal for the market of postsecondary providers.
Paul Freedman, co-founder and CEO of the Entangled Group, said agreements between colleges and unaccredited content providers haven’t been blocked in the past on the basis of the 50 percent cap. And he said unaccredited companies just don’t generate the material themselves to fill 120 credit hours of courses.
“There aren’t a lot of places besides educational institutions that teach that much,” he said. “I don’t think it will dramatically change the marketplace.”
