Private companies that hope to contract with Minnesota State colleges and universities for online programs could face new rules, after lawmakers said students deserve to know who’s teaching their classes and taxpayers deserve to know how their money is being spent.

Rep. Nathan Coulter and Sen. Robert Kupec, both DFL lawmakers, say they hope their bills will add oversight for online program management companies, which provide recruiting services or help run online classes, often in exchange for a portion of students’ tuition.

“It just became clear to me and some other folks that these [online program management companies] aren’t going anywhere,” said Coulter, of Bloomington. “It really made sense to be proactive and get some common sense basic regulations on the books to head off some of the more abusive and predatory practices we’ve seen in other states.”

Lawmakers introduced the bills after some faculty raised concerns about contracts at St. Cloud State University, Southwest Minnesota State University, and elsewhere in the country.

Critics accuse online program management companies of using misleading tactics to recruit students, and some federal lawmakers have questioned in recent years whether tuition-sharing contracts increase students’ costs and debt. The companies’ supporters argue they help boost the workforce by reaching nontraditional students and that adequate safeguards are in place to ensure their quality.

The new bills would prohibit the Minnesota State system’s 33 colleges and universities from entering into new contracts that rely on a tuition-sharing model or hand over intellectual property rights to faculty members’ course materials. They would also require contracts with the companies to receive approval from the system’s Board of Trustees as opposed to individual colleges’ leaders. The bills ask the University of Minnesota to consider creating similar rules, but lawmakers note they don’t have the same oversight of that system.

In legislative hearings, Republicans have said they’re interested in trying to strike a balance. Sen. Zach Duckworth, R-Lakeville, said he doesn’t “want us to overregulate.”

Questions about tuition

Two schools in the Minnesota State system have contracts with online program management companies, and they operate differently. Southwest Minnesota State University contracted with a company to help market its existing online programs, in exchange for 35% of the tuition the company helps bring in. St. Cloud State University is partnering with one to offer “accelerated online programs” in exchange for 50% of the programs’ tuition.

Leaders of the Inter Faculty Organization, which represents professors at the system’s universities, welcomed the bills. They say tuition-sharing contracts rarely leave schools with enough money to hire more faculty when demand for programs rapidly rises. They also worry about professors’ work being shared with private companies when budget crunches have forced staff cuts.

With the state launching a new free tuition program, “there is an urgency here to make sure that state money is being invested in the state and not just being passed through to for-profit companies that are not benefitting the state of Minnesota,” said Jenna Chernega, the organization’s president.

Minnesota State leaders declined to comment on the legislation. Satasha Green-Stephen, senior vice chancellor for academic and student affairs, told lawmakers in a hearing earlier this year that they put additional “checks and balances” in place. She said schools must notify system leaders before entering a new agreement, outline how it would benefit students and explain whether it could compete with existing programs.

Nathan Polfliet, associate vice president of advancement for Southwest Minnesota State University, said leaders there recently signed a contract with an online program management company to get help “recruiting students we normally wouldn’t be able to reach and retaining them as successful students.” Polfliet said it’s too early to tell whether the partnership is boosting enrollment but leaders will be closely watching the data, and the bills lawmakers are considering.

Leaders at St. Cloud State University said they worry the bills would “severely cripple our ability to grow enrollment,” saying a contract with Dallas-based Academic Partnerships helped boost enrollment in an MBA program from 28 students to more than 400. They said the partnership was especially helpful for women and students of color.

“We agree that we do not want any predatory third-party providers taking advantage of students. It is important to protect faculty intellectual property and their curriculum content,” the university said in a statement. “The Minnesota State System currently has a rigorous and transparent vetting process which we previously completed. We feel the system’s process should be respected as it stands and the legislation is unnecessary.”

Representatives for Academic Partnerships say they worry the prohibition on tuition-sharing could harm programs that are helping to prepare workers for in high-demand industries like healthcare, education and business.

“While we support the vast majority of the proposed legislation, we do have concerns around certain aspects of the bill that would make Minnesota public universities less competitive in the online program market, which ultimately would have a negative impact on Minnesota students who are looking to further their education close to home,” the company said in a statement.