Predatory Inclusion and Targeting Without Protection

The promise of higher education as a pathway to economic mobility has long attracted students from marginalized communities. Yet recent federal guidance may inadvertently enable what scholars call “predatory inclusion”—providing educational services to historically excluded groups on exploitative terms that leave them worse off than before.

Following the U.S. Supreme Court’s 2023 decisions in Students for Fair Admissions v. Harvard and Students for Fair Admissions v. University of North Carolina, the U.S. Department of Education and the U.S. Department of Justice issued joint guidance in August 2023 clarifying permissible diversity efforts. The guidance explicitly allows institutions to “direct outreach toward school districts that serve predominantly students of color and students of limited financial means.” Although this provision aims to maintain educational access, it also creates opportunities for exploitation by actors who view vulnerable students primarily as revenue sources.

The scale of online program managers’ (OPMs)—for-profit companies that contract with colleges to manage online degree programs—involvement in higher education has expanded dramatically. A recent Government Accountability Office (GAO) report found that at least 550 colleges work with OPMs to support approximately 2,900 programs. Many of these arrangements reveal significant weaknesses in the Education Department’s oversight, including audit instructions that fail to reference key guidance on OPM compliance.

Digital advertising platforms enable what scholars term “reverse redlining”—the deliberate targeting of communities of color with inferior products and predatory terms. Unlike traditional redlining that excluded these communities from services, reverse redlining includes them under exploitative terms. Educational institutions and their OPM partners can use platform tools to direct advertisements for high-cost, low-value programs specifically to users identified as belonging to protected classes, all while claiming to expand access and opportunity.

In this week’s Saturday Seminar, scholars examine how enhanced consumer protection frameworks and strategic enforcement of existing laws could address predatory inclusion in higher education.

• Laura T. Hamilton of the University of California–Merced and coauthors examine how OPM contracts with public universities may enable predatory forms of inclusion for marginalized students in an article. The Hamilton team analyzed 161 contracts between OPMs and public universities and identified four problematic features: the targeting of marginalized students for online-only programs, revenue extraction mechanisms, opacity in university-OPM relationships, and restrictive termination clauses that keep universities in the contracts. Hamilton and colleagues find that OPMs funded by private equity or venture capital companies are significantly more likely to include aggressive recruitment provisions and revenue-sharing structures that encourage enrollment growth over student support.
• The GAO examines regulatory gaps in federal oversight of OPM contracts with public universities in a report. The GAO finds that at least 550 colleges work with OPMs to support online education programs, with many arrangements, including student recruitment services, subject to the Higher Education Act’s ban on incentive compensation. The GAO, however, identifies significant weaknesses in the Education Department’s monitoring instructions, including failure to reference the Education Department’s 2011 Dear Colleague Letter and requiring direct auditors to assess OPM recruiting staff compensation. The GAO recommends strengthening instructions to auditors and colleges to ensure proper oversight of potential incentive compensation violations.
• Jeffrey C. Sun of the University of Louisville, Heather A. Turner of Michigan State University, and Robert Cermak of Michigan State University examine why universities outsource online program management in an article in the American Journal of Distance Education. Sun, Turner, and Cermak analyze decision-making drivers through interviews with 32 Chief Online Learning Officers and identify four primary motivations: reacting to competitive pressures with speed, accessing initial upfront capital, addressing gaps in capacity and capabilities, and learning to scale up in-house operations. Sun, Turner, and Cermak contend that the study reveals universities view OPM partnerships as strategic tools for organizational learning, with nearly half entering relationships intending to eventually operate independently.
• Sam Gilman of Harvard Law School examines how digital advertising platforms enable reverse redlining of inferior products to vulnerable communities in an article in the Harvard Civil Rights-Civil Liberties Law Review. Using for-profit education as a case study, Gilman documents how advertisers leverage Google and Facebook targeting tools to manipulate low-income consumers and people of color, resulting in 70 percent default rates among Black borrowers. He reveals that platform optimization algorithms create discriminatory outcomes even with neutral targeting parameters and proposes reforms, including banning look-alike amplification for social welfare products and exempting such advertisements from Section 230 protection, which currently shields platforms from liability for third-party content.
• Amber Villalobos and Carolyn Fast of The Century Foundation propose a comprehensive regulatory framework for online program managers to address the regulatory vacuum left by minimal federal oversight of OPMs in an article. Villalobos and Fast outline seven key requirements, including prohibiting tuition-sharing and incentive compensation, mandatory contract reporting, and transparency requirements. These requirements would address the exploitation of vulnerable students through aggressive recruitment tactics, prevent conflicts of interest in revenue-sharing arrangements, and ensure institutional accountability for program quality over prioritizing enrollment numbers. Villalobos and Fast highlight that states, such as Minnesota, are leading efforts to fill federal oversight gaps, as the Education Department lacks comprehensive data on OPM arrangements despite federal aid supporting tens of thousands of students.
• Jonathan D. Glater of UC Berkeley Law analyzes a critical oversight in the Supreme Court’s 2023 affirmative action rulings in an article in the Journal of College and University Law. In Students for Fair Admissions v. Harvard, Glater argues the conservative majority failed to examine whether race-conscious admissions actually caused alleged harm to Asian American applicants—a fundamental requirement of the standing doctrine. He warns that ending affirmative action will likely shift Black and Latino students to less selective, less prestigious, and less well-endowed institutions with lower completion rates where they may have to borrow more in student loans, reinforcing patterns of exploitation that higher education policies have long aimed to counter.