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Senate Democrats probe impact of online degree programs on high student debt loads

Three lawmakers have asked companies that develop online degree programs for universities for information about their recruiting tactics and use of federal aid dollars.
Sen. Elizabeth Warren, D-Mass., questions Lael Brainard, governor of the Federal Reserve, during a Senate confirmation hearing on Jan. 13, 2022.
Elizabeth Warren, D-Mass., at a Senate hearing Thursday.Al Drago / Bloomberg via Getty Images

WASHINGTON — Three Senate Democrats are raising concerns with companies that develop online degree programs for universities over whether their recruiting tactics and tuition-sharing arrangements are contributing to high student debt loads.

The senators, Elizabeth Warren of Massachusetts, Sherrod Brown of Ohio and Tina Smith of Minnesota, sent a letter Friday to eight of the largest online program management, or OPM, companies — including 2U, Academic Partnerships and Pearson — raising concerns about their business practices.

“We continue to have concerns about the impact of OPM partnerships on rising student debt loads," the senators wrote. "The responses to our previous letters confirmed that OPMs often have tuition-sharing arrangements with universities, which commit an ongoing percentage of tuition revenue to the OPM to finance the start-up and ongoing costs of operating online degree programs."

The tuition-sharing model, they said, "also creates incentives for aggressive recruitment practices."

The companies often receive 50 percent or more of students’ tuition upon each agreement, which in turn may create a disincentive to lower costs, the senators said.

Millions of dollars in financial student aid go to online degree programs every year. But there is no consistent public disclosure of how much of the money is directed to recruiting, advertising and profit, rather than instruction.

The senators asked the companies for information about the scale and logistics of online program operations and tuition-sharing agreements, the demographics of the students they serve and breakdowns of their expenditures and their use of federal aid dollars by no later than Jan. 28.

The senators first questioned the companies in a letter sent in January 2020. Since then, the Covid pandemic has significantly increased the need for online education, the senators said in a statement.

In separate statements, 2U, Academic Partnerships and Pearson said they intend to continue dialogue with policymakers.

Pearson "welcomes the opportunity to engage with policymakers and officials about the benefits of online degree programs," a company spokesperson said.

2U "welcomes continued discussions about the important role that we play in helping non-profit colleges and universities make quality online education more accessible and affordable," a company spokesperson said.

Academic Partnerships "will continue our differentiated strategy focused on regional public universities across the country and continue our open dialog with all stakeholders," a company spokesperson said.

Student loan advocates and some congressional Democrats, including Warren, have continued to put pressure on the Biden administration to cancel student debt and grant greater financial relief during the pandemic. More than 44 million people owe about $1.7 trillion in student loan debt.

The administration announced last month that a moratorium on federal student loan payments would be extended through May 1 because of the rise in cases of the highly transmissible omicron variant of the coronavirus.

CORRECTION (Jan. 16, 2022, 2:33 p.m. ET): A previous version of this article misstated when the senators first questioned the companies in a letter. The earlier letter was sent in January 2020, not January 2021.