Students for profit? University of Illinois campuses pay company per online student

“[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 continued.

In an interview with WBEZ, University of Illinois System Executive Vice President Nicholas Jones 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 technology or staff know-how to deliver classes in an online format or to reach students who might be interested in online learning.

“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 ultimate goal is to build each university’s capacity to accomplish that without external help.

“There’s a reason … we’re paying [Risepoint] 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 extensive research into online program managers and their contracts with nonprofit private and public universities. She said she understands these institutions may need outside help launching online degrees and courses, but she 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. … ‘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,’” Villalobos said. “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 spokesperson for the University of Illinois system 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 that students learning online tend to be less successful than students who attend class in person and are less likely to be able to repay their student debt.

The University of Illinois system does not separately track completion rates for online students, according to a spokesperson.

A loophole

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 aid that they might not be able to pay back.

But nearly two decades later, the U.S. Department of Education created a loophole in the rule. It allows colleges to pay an outside company to recruit students 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 often paid per student for recruiting, but also for services like course design and academic support.

Several groups, including the National Student Legal Defense Network, have called for this loophole to be closed because they say it opens students up 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.

Nicholas Jones from the University of Illinois system 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 the 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 … . So it’s not just a numbers game.”

‘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.

Minnesota took the lead in 2024 in response to concerns about contracts between universities in that state and Risepoint. Legislators there outlawed public colleges from paying online program managers a share of tuition, both to prevent abusive recruiting practices and to stop cash-strapped public colleges from losing out on revenue.

The law went into effect in January 2025 and also requires staff from online program managers to make clear that they are third-party contractors, and not university employees, in ads and when speaking to students. Ohio has since passed similar legislation requiring more transparency from online program managers, although it does not ban tuition-share agreements. Massachusetts lawmakers are considering guardrails there as well.

Villalobos from The Century Foundation 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,” she said.