By Ryan Craig and Ben Wallerstein

Higher education is abuzz with talk of partnerships between private companies and universities. Yet ask a dozen faculty what they mean by “private sector” and you may feel a bit like the blind man and the elephant. Left to their own devices, education entrepreneurs and investors tend to revel in their own awesomeness, critique risk-averse leaders and exchange vague descriptions of so-called “bureaucratic processes” that stymie innovation and impede progress.

At the same time, faculty and institutional leaders are increasingly intrigued with private sector partnerships but hesitant to act. Their skepticism is often rooted in a belief that the profit motive and education are fundamentally at odds.

Higher education’s approach-avoidance conflict with the private sector reflects a multitude of concerns: frustration with corporate America’s calls for reform and lack of consideration of higher education’s multifaceted mission; antipathy toward for-profit universities, the publishing oligopoly and—increasingly—worries about student data. The plight of Altius Education and recent rejection of Grand Canyon University’s application to convert to non-profit status raise interesting questions about the intersection of academics and administration. And, in an ironic twist that is giving accreditors whiplash, the U.S. Department of Education’s EQUIP program is putting the ultimate good housekeeping seal of approval on partnerships with unaccredited providers.

Private sector partnerships are not new to higher education. For decades, colleges and universities have relied on a panoply of technology vendors and readily outsourced ancillary functions like food services or bookstores. What's (relatively) new, and drawing increased attention, are private partnerships that support the delivery of academic programs.

These partnerships commenced in the 1980s and 90s with delivery of accelerated programs for adult learners. Private sector graybeards will recall this was the original Apollo Group business—Institute for Professional Development—as well as the origin of Bisk Education. Early academic partnerships interfaced with the continuing education or extension divisions of universities, and therefore remained largely out-of-sight, out-of-mind as far as presidents and provosts were concerned.

The advent of online learning ushered in a new era of private-sector collaboration and moved for-profit providers closer to the heart of the academic enterprise. While universities retained academic and financial control over online programs, they often required expertise and capacity—curriculum conversion and delivery, lead generation, enrollment and student support—that didn’t exist within most universities. Consider this: of the dozens of nonprofit universities that have achieved any material scale online, only two—Southern New Hampshire and Liberty—have done so without the assistance of Online Program Management (OPM) companies that provide these services. Over the last decade, full-service OPMs have dominated the private provider landscape, and in return command at least a 50 percent split of tuition revenue from institutions. (Some actually employ faculty and demand a whopping 80 percent share!)

With the market for fully-online degree programs congested and growing slowly (if at all), private partnerships are beginning to take a step back from the full-service OPM. This retreat reflects increasing sophistication—and capacity—of colleges and universities as they launch new online programs.

So how will private sector partnerships support program delivery in the future? Here are the major trends we’re seeing:

Unbundled Services

In a few years, most colleges and universities won’t be excited about committing to long-term contracts, including hefty tuition revenue splits, in order to launch plain vanilla online programs. OPMs that enable highly differentiated programs (such as 2U) or competency-based programs may be exempt from this trend. But more and more universities will opt to partner with firms that offer unbundled services to create higher quality online programs, or take a differentiated approach to address discrete challenges like enrollment management and marketing. Look for increased moral outrage and regulatory scrutiny for fee sharing arrangements that drive growth and revenue—at the expense of questionable student outcomes.

Instructional Design

The emergence of learning analytics and next-generation courseware is enabling faculty to experiment with new learning modalities that extend beyond the traditional online format. Colleges and universities have embraced flipped, active and dynamic classrooms to engage learners and capture unprecedented amounts of data to guide instructional design. The unbundling of the OPM has also given birth to outsourced instructional design—private providers that provide faculty with genius-bar-like support as they design new programs and credentials from the ground up, utilizing new technologies and data-driven insights to improve student outcomes.

Blended

How does a university stand out in the increasingly crowded and competitive fully-online marketplace? By doing less online. Savvy colleges and universities have partnered with OPMs to pair on-ground clinical and practicum experiences with online health and education masters programs. Gwynedd Mercy University, for example, now delivers ABSN and other healthcare programs both online and through brick-and-mortar clinical centers operated by a private-sector partner in major metropolitan areas. In the future, we’ll see even more “backward innovation” as private partnerships help colleges and universities that require an on-ground presence to extend their reach to new student populations.

Program Support

Unbundling the OPM is also about creating high-impact partnerships that address non-academic student challenges, rather than simply delivering programs. Companies like Inside Track have evolved their business model to offer not only coaching-as-a-service, but technology and training to help institutions launch and sustain their own programs at scale. One startup, ReUp Education, plans to help colleges identify previously enrolled students who have “stopped out” map the quickest path to completion using prior learning assessment, and then coach them through to completion. Other similar services will engage students before they set foot on campus through mentoring, coaching and other supports.

Such partnerships represent a major opportunity not only for private providers and investors, but also for universities that must adjust to the new market reality where, as Purdue President Mitch Daniels says, “Higher education has to get past the ‘take our word for it’ era.”

New categories of partnerships are emerging, with roles becoming better defined and more meaningful collaborations between academics and their private sector peers. Both sides have a lot to learn. And if they do, we’ll see a wide range of new delivery models and student services that help even our most traditional colleges and universities boost their value propositions in an increasingly competitive environment.