The California Institute of Technology will settle a class-action lawsuit from students who argued the institution misled them when they enrolled in an online cybersecurity bootcamp that bore Caltech’s name—but was run by a contractor called an online program manager, or OPM.

Caltech must be explicit in its advertising that the cybersecurity program is a product of the contractor, Simplilearn, according to the settlement, made public this week. Simplilearn recruiters must also only represent themselves as part of the company, not the institution, which is one of the nation’s most esteemed.

The settlement terms are common-sense restrictions that can be widely applied to OPMs.

These entities exploded in popularity over the past several years, especially as Covid-19’s spread in 2020 prompted many campuses to shut down and introduce new online options.

However, the quality of OPM-run programs is often questionable, as multiple news investigations have revealed. And OPMs’ work—devising curricula and recruiting students and often faculty—can cost colleges majorly. The companies take hefty amounts of revenue from programs they create, sometimes as much as 80%, in what’s called a tuition-share agreement.

Because OPMs profit most when more students enroll, they often employ predatory recruitment tactics. Recruiters pose as college representatives, pushing students into costly programs while hiding their corporate affiliations.

That was the heart of the Caltech lawsuit allegations, filed in July 2023 by a former student. Elva Lopez accused Caltech of violating California consumer protection law because it hadn’t made clear Simplilearn’s part in developing the cybersecurity bootcamp.

The program was also shoddy, Lopez argued. She discovered, for instance, that one of her instructors was not a highly credentialed Caltech professor, but rather a recent graduate of the bootcamp itself, according to the lawsuit.

As part of the settlement, Caltech and Simplilearn can’t employ program instructors whose only credentials are having graduated from a cybersecurity bootcamp.

Caltech must also evaluate the bootcamp more deeply, including vetting and approving its curricula, teachers, and marketing materials, none of which it did previously.

“Defendants’ advertisements concerning the bootcamp will, to the extent space permits, disclose that the Bootcamp is delivered ‘in collaboration with Simplilearn,’” the lawsuit said. “Simplilearn employees will disclose their affiliation when communicating with potential bootcamp students and use Simplilearn email addresses.”

Simpilearn and Caltech will also pay a combined $400,000 to more than 260 students who joined the lawsuit. Each student will receive, on average, about $1,465, roughly 16% of their tuition costs, according to court filings. That likely amounts to students having paid more than $9,000 for a nondegree program, exceeding the cost of a year at a California State University campus, which is roughly $6,000.

The settlement terms are a positive development, but they ultimately matter little for Caltech’s program. The institution will wind down its relationship with Simplilearn at the end of November, CalTech’s president announced recently, likely an acknowledgement that it was a costly and reputation-damaging endeavor. A New York Times investigation last year revealed details of another of CalTech’s bootcamps conceived with Simplilearn, in cloud computing. One student described how his instructor, who would sometimes disappear for long stretches during class time, lived in a completely different state.

But Caltech is one institution. Across the country, many colleges continue to work with similarly opaque and aggressive online program managers. They are striking tuition-share agreements that will disadvantage students.

Like in Caltech’s case, these may lead to pricey and time-burning litigation.

States and college leaders can do right by students by demanding transparency from OPMs and colleges that work with them. They can also outright reject tuition-share agreements with OPMs, cutting off the incentive for company recruiters to try to lock students into programs and maximize their profits.

California audited one of its public systems last year, finding that it failed to properly oversee OPMs, leading to misleading marketing and student confusion about who was providing instruction.

Minnesota became the first state last year to block tuition-share deals at its public colleges. This year, Ohio passed legislation that puts new requirements on OPMs, including that college websites disclose when they use them.

For other policymakers and advocates looking to act, New America, along with the Center for American Progress, Student Borrower Protection Center, The Century Foundation, and The Institute for College Access & Success, created a comprehensive online toolkit on OPMs. The toolkit is a one-stop resource, providing guidance on OPM contracts, model legislation to bolster transparency or ban tuition-sharing, and strategies to hold institutions accountable for credentials delivered in their name.

Students deserve more than a poorly run program hidden behind polished marketing and a prestigious name. They should know who is designing and teaching their courses, and if their tuition dollars are flowing to a reputable institution—or an outside company with little interest in their futures.