Four ways online program partnerships can go awry

Different end goals, contract issues, confusion, enrollment size

The Chronicle of Higher Education examined different cases of failed partnerships between nonprofit higher education institutions and for-profit companies that launch online programs together. 

Often, the for-profits, also known as "online-education enablers," will run marketing and enrollment initiatives for the institutions.

Among the relationships that did not work out, four themes emerged.

1. Disparate goals.

For-profits and nonprofits inherently have different end-games, says Steven Filling, chair of California State University's Academic Senate. While enablers must report to their shareholders, schools work toward their missions.

These differences may be more pronounced when the college involved is a selective one. The enabler may work to increase enrollment and bring the school prospective students—only to have the school admit relatively few of them, says Chris Ross, a managing director at business strategy firm Parthenon-EY.

2. Contracts generally favor enablers.

A typical contract between an institution and a for-profit may last a decade and award more revenue to the for-profit, Ross says.

The enablers say this is because they take on more risk than the school does. They front the funding—and it takes at least two to three years to prepare a program and several more to stabilize it.

But as colleges gain more experience in the online world, more "are driving a harder bargain," Ross says. Now, the contracts tend to be shorter and revenue splits more evenly because the institutions can handle some of the responsibilities that formerly belonged to the enablers.

Toolkit: Evaluating and implementing partnerships with online program enablement vendors

3. Confusion over who owns and controls responsibilities.

Some faculty members say they do not know if they own their courses—or if the content belongs to the company that delivers it. However, enablers say the college administrators and professors maintain control of the course design and curriculum.

According to federal regulations, less than half of work can be outsourced to non-accredited agencies.

4. Enrollment falls short of projections.

In many cases, officials develop the online business plan based on predictions that tens of thousands of students will enroll within just a few years. However, when enrollments fail to hit those marks, colleges and universities often terminate their contracts with enablers (Brown, Chronicle of Higher Education, 10/27).

Thoughts on the story? Tweet us at @eab_daily and let us know.


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