Democratic Senators Probe Whether Online Degree Programs Contribute to High Student Debt Loads

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Lawmakers request information on companies’ recruitment strategy and contracts with universities

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Lawmakers asked whether deals in which universities sometimes share 50% or more of tuition revenue with companies could prompt schools to keep costing students high and recruit more aggressively.

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The letter cited Journal reporting, which found that 2U recruiters working for USC often called and emailed potential applicants to enroll in a two-year online master’s program in social work, the cost of which is currently is approximately $115,000. At that time the company said that admission decisions rest with the school.

The Journal found that recent USC social work graduates who had borrowed federal loans took out an average of $112,000, yet made an average of $52,000 two years after finishing school. Many of the people who enrolled came from low-income backgrounds.

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“We are concerned about the impact of the OPM partnership on the growing student loan load,” the senators wrote in the letter. “Although millions of dollars in federal student aid go to online degree programs each year, there is no consistent public disclosure of how many of those dollars are directed to recruitment, advertising, and benefits rather than instruction.”

The Journal recently reported how graduate degrees have grown into massive revenue streams for universities, even some of the nation’s wealthiest nonprofits. Partnerships with for-profit online education companies have grown rapidly over the past decade, allowing colleges to offer more graduate programs as well as other degrees and certificates—often without deducting tuition. The partnership has been controversial, with school officials saying the programs often hold low standards against those who say they make it easier for students from diverse backgrounds to earn degrees.

Sen. Smith said in a statement that “these unconscious practices harm students and taxpayers, and distort the concept of higher education as a public good. And we have to hold colleges accountable for these practices.”

A spokesperson for 2U said the company, which acquired nonprofit education company edX last year, is committed to transparency. “We welcome continued discussions with senators about the important role we play in making high-quality online higher education more accessible and affordable,” she said.

The letters follow previous inquiries to leaders of online companies in January 2020. Over the past two years, the pandemic has fueled the growth of online degrees. According to the letter, the number of partnerships between online program management companies and colleges has increased from about 200 in January 2020 to around 367 by the end of 2021.

Senators are asking online companies to disclose more information on their tuition-sharing agreements, their use of federal student loan dollars, and demographic breakdowns of admitted students, among other questions, by Jan.

Write Andrea Fuller at [email protected] and Lisa Bannon at [email protected]

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