The University of Illinois Chicago and the University of Illinois Springfield are paying a for-profit company for each student it recruits to online programs — a practice that would be illegal if done by the universities’ admissions offices and one that’s been banned by another state, a WBEZ investigation has found.
Critics, including United States senators and consumer protection advocates, say this kind of arrangement incentivizes the company, Risepoint, to recruit as many students as possible, whether or not the online programs are a good fit or will help the students get better jobs or make more money. One group is calling for state officials to investigate the public universities’ contracts with the company, which is owned by the Chicago private equity firm Vistria.
Southern Illinois University Edwardsville and Southern Illinois University Carbondale also contract with Risepoint to provide online courses.
“If you’re going to pay [recruiters] per student, that person then has the incentive to do whatever they can to get you to enroll,” said Stephanie Hall, a researcher of for-profit colleges and companies like Risepoint. “They will tell you whatever they need to tell you. They will promise you whatever needs to be promised.”
In contracts obtained through public records requests, WBEZ found that two of the campuses in the University of Illinois system gave Risepoint permission to contact students using the universities’ names, logos and websites. In exchange, the universities pay the company, one of many businesses known as online program managers, as much as 50% of tuition revenue for each student the company enrolls.
Federal law bars university adminissions staff members from being paid for each student they recruit.
University of Illinois System officials said Risepoint can reach different students than the campuses serve with their in-person programs and that the students in online programs must meet admissions requirements set by each university. Though the contracts specify that Risepoint helps with course design, U. of I. officials said course content is the sole domain of university faculty.
But Hall said students don’t know they’re being recruited by a for-profit company, not the university. And the contracts don’t require Risepoint recruiters to identify themselves as non-university employees.
“The student thinks they are talking to someone who is giving academic or enrollment advice like you would expect from an admissions counselor, but really they’re talking to a salesperson whose only goal is to close the deal,” said Hall, a fellow with the consumer advocacy group Protect Borrowers. “So it’s not necessarily going to get that [student] information about whether that degree is a fit for what they need in life.”
Protect Borrowers cited the records obtained by WBEZ in a letter to the Illinois attorney general’s office and the Illinois Board of Higher Education. The organization, the faculty union at the University of Illinois Chicago and the University Professionals of Illinois Local 4100 are calling for an investigation into whether the contracts between Illinois’ public universities and Risepoint violate state and federal consumer protection law.
Protect Borrowers also asked the state agencies to look into any potential conflicts of interest. Jesse Ruiz, chairman of the University of Illinois System Board of Trustees — which oversees and approves the hiring of third parties — is a partner in and chief compliance officer for the private equity firm that owns Risepoint.
Ruiz did not respond to a request for a comment.
In a written statement, a university spokeswoman said the system’s relationship with Risepoint predates Ruiz joining the U. of I. board. Adrienne Nazon, vice president of external relations for the University of Illinois system, said Ruiz abstained from voting on a contract renewal between the University of Illinois Springfield and Risepoint and did not participate in any discussions about the company.
Inclusion at a cost
The contracts show Risepoint has helped the two University of Illinois campuses launch several online graduate programs, including master’s degrees in business administration and human resource management — and online undergraduate programs, including a bachelor’s degree in nursing. The web pages for these programs advertise convenience, fast completion and affordability even though taking these courses online might cost a student the same or more than attending in person.
Hall said programs like these often attract students who have been shut out of traditional colleges and need the flexibility of online education, including working Black and Latino adults and parents.
But Hall and other Protect Borrowers staff wrote in their letter to U. of I. officials that tuition-sharing agreements “have been shown to lead to predatory tactics mirroring some of the worst practices by the for-profit college industry that disproportionately harms communities of color and low-income students.”
Online program managers “have been found using inflated and false job placement data and high-pressure sales tactics, only to leave students burdened with a mountain of debt and without the success or skills they were promised,” the letter said.
In an interview, Nicholas Jones, the university system’s executive vice president defended the universities’ contracts with Risepoint. He said the campuses have traditionally served students who attend class in person, so they do not have the tools or faculty know-how to deliver classes in an online format at scale or to reach students who might be interested in online learning. The university system stressed that Risepoint does not design courses or provide instruction.
“This is new to us,” Jones said. “We don’t know where those markets are. We don’t know where the students are. We don’t know how to best reach them. And we don’t know how to engage them in the recruitment process effectively.”
Jones said Risepoint has the expertise to fill in those gaps. But he said the goal is to build each university’s capacity to accomplish that without external help.
“There’s a reason … we’re paying what we’re paying them,” Jones said. “Right now, if we were to try to do that ourselves with the resources and the experience that we have, we would probably end up paying more to do that than what we’re paying the consultant.”
Amber Villalobos, from the left-leaning group The Century Foundation, has done research into online program managers and their contracts with nonprofit private and public universities. She said she understands these institutions might need outside help launching online degrees and courses but questions why they need to pay companies per student instead of a flat, upfront fee.
“When we think about online programs, we think about accessibility,” Villalobos said. ” ‘I don’t have the kind of schedule that’ll allow me to go to school in person, but there’s this great option for me to learn online.’ ” But, in this case, we say, ‘Inclusion at what cost?’ Because what we’ve seen with tuition [share agreements] … is that sometimes the [online program managers] aggressively recruit students of color, students from low-income backgrounds — to the point that they’re often overrepresented in online programs.”
A U. of I. spokesperson said the institution does not record enrollment in online programs by race. According to an analysis of national data by The Century Foundation, 25% of white students enrolled in graduate programs across the country are taking their courses online, compared to 45% of Black students and 30% of students who identify as Hispanic or Latino.
Amber-Villalobos said that is concerning because research has shown students learning online tend to be less successful than students who attend class in person and are less likely to repay their student debt.
The University of Illinois system doesn’t separately track completion rates for online students.
Incentive compensation, like the per-student payment arrangement between the University of Illinois system campuses and Risepoint, was once banned in higher education. Congress passed a rule in 1992 that forbade schools enrolling students who receive federal loans and grants from paying commission, bonuses or any incentives to recruiters in exchange for signing up students. According to the Government Accountability Office, lawmakers did so to prevent abusive recruitment practices resulting in unqualified students receiving federal financial they might not be able to pay back.
Nearly two decades later, the U.S. Department of Education created a loophole in the rule. It allows colleges to pay an outside company for each student recruited as long as the company provides other services to the universities. The loophole has given rise to a number of for-profit companies like Risepoint that are compensated per student for recruiting, but also for services like course design and academic support.
Groups including the National Student Legal Defense Network have called for this loophole to be closed because they say it opens students to predatory recruitment by companies that prioritize maximizing profits.
“We’re basically seeing those practices now being embedded into the public and nonprofit universities via the [online program managers], who are being given permission to be paid on an incentive basis,” Hall said.
Jones said it makes sense for his institution to pay Risepoint this way.
“There’s a very strong argument to be made that … we want to incentivize them to make sure that they bring us the types of students that we want,” Jones said.
But he said those students must meet admissions standards set by the universities: “We’re not going to be happy if they just provide students who can’t succeed or are not prepared for the rigors of our program.”
‘They deserve high-quality education’
With the Trump administration’s dismantling of the Consumer Financial Protection Bureau and other agencies that advocate for student loan borrowers, groups like Protect Borrowers that favor regulating online program managers are encouraging states to step up.
In response to concerns about contracts between universities in Minnesota and Risepoint, legislators in that state outlawed public colleges from paying online program managers a share of tuition. They said that was to prevent abusive recruiting practices and stop cash-strapped public colleges from losing out on revenue.
The law went took in January and also requires staff from online program managers to make clear they are third-party contractors, not university employees, in ads and when speaking to students. Ohio has since passed similar legislation requiring more transparency from online program managers, though it doesn’t ban tuition-share agreements. Massachusetts lawmakers also are considering taking steps.
Villalobos hopes other states, including Illinois, will follow.
“Students who are trying to get their degree online deserve transparency,” she said. “They deserve to know… Is there a third party involved in creating the curriculum… . ‘Who are my teachers going to be, what kind of education am I going to get, and where do the people who finish this program end up after they’re done? What kinds of jobs are they able to get?’
“If we’re going to advertise these online programs, and we’re going to give students this accessibility, they deserve to know what they’re getting into, and they deserve high-quality education, as all students do.”
Lisa Kurian Philip covers higher education for WBEZ, in partnership with Open Campus. Follow her on Twitter @LAPhilip.
Correction: An earlier version of this story incorrectly included the University of Illinois Urbana- Champaign among the campuses contracting with Risepoint to launch online programs. The story has also been updated to clarify comments from the University of Illinois System about what help they needed to launch classes online at scale.