College & Workforce Readiness

Proposed Rules for College Recruitment Brings Swift Reaction

By Caralee J. Adams — June 17, 2010 4 min read
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Some higher education groups were eager to have their say about proposed federal new rules that are expected to rein in college-recruitment practices, even before the Department of Education issues them.

The tentative regulations, which are expected out tomorrow, would prohibit colleges from paying recruiters for students or engaging in misleading recruitment practices.

The draft regulatory language would prevent the awarding of any bonus, commission, or incentive payment to individuals involved in admissions or financial aid at an institution of higher education. This was exactly what Congress intended when it banned incentive compensation in 1992, says Terry Hartle, senior vice president for the American Council of Education in Washington.

“While specific changes to the proposed language may be necessary, we think this proposal is important and desirable,” says Hartle. “I don’t think it’s a good idea that we compensate people who help provide access to postsecondary education in the same way we compensate people who share timeshares with a financial incentive.”

While the changes would apply to all colleges, they would not affect traditional institutions as much as for-profit colleges. The surge in enrollment at for-profit colleges has also come with some criticism that students are being misled about the value of the programs and are amassing high student-loan debt that they can’t repay. (See Monday’s post.)

The new rules would make it easier for the government to take action against institutions that engage in deceptive advertising, marketing, and sales practices. They would require that colleges make sure only students with valid high school diplomas are enrolled, ensure students are making satisfactory academic progress, explain to prospective students graduation and job-placement rates, and determine more accurately student-debt levels and income after graduation.

The proposal would close a loophole to the 1992 law. The so-called safe harbor regulations of 2003 had the effect of permitting some incentive payment to people in admissions and financial aid in a way that was inconsistent with the statute, says Hartle.

“The department is taking a step that is desirable,” says Hartle. “I don’t think we should sell access to higher education.”

Education Secretary Arne Duncan positioned the proposed changes as a move about accountability and protecting students.

Negotiations over changes to the rules took place in the winter, and news of the possible revisions were not particularly surprising. The 500 pages of regulatory proposals are expected to be released Friday and open for public comment until early August. In the fall, the department will likely issue new regulations that will take effect in July 2011.

Representatives from the for-profit businesses were among those who negotiated the new rules over the winter. Among those at the table was the College Career Association, a membership organization of private postsecondary schools. CCA President Harris Miller issued a statement Wednesday saying that the proposal focuses on issues that cut across all sectors of higher education and, for the most part, have support from the higher education community. However, issues remain. “CCA and its member institutions will send robust comments on those elements of the proposed rules that harm students, including the department’s decision to end all incentive-compensation safe harbors without offering alternative guidance. Incentive compensation as it stands is an extreme proposal that needs to be thought through carefully to protect students and make sure that it does not become a lawyers’ relief act,” Miller said.

Also involved in the rules review process was the Apollo Group, Inc., which owns the University of Phoenix, among other for-profit colleges. A statement by Manny Rivera, executive director of public affairs, says: Apollo “supports the U.S. Department of Education’s efforts to enhance accountability within higher education and is striving to play a leadership role in continuously improving and transparently reporting the outcomes and achievements of students served by our schools. Of the currently proposed rules, we support their overall intent to protect borrowers and taxpayers.”

About 18 months ago, Apollo looked at how its counselors who advise and enroll students perform their duties and are compensated. Based on its findings, Apollo is piloting a new advisement and enrollment organizational structure, with a focus on enhancing student satisfaction and the student experience, in addition to a new compensation plan for counselors. Rivera says the company anticipates the new compensation plan will be in compliance with the department’s proposed incentive-compensation provision, but he says he cannot confirm that until the rules are finalized. “Our overall goal is to ensure that students receive pressure-free advisement and informative counseling to help them make appropriate decisions for their academic future,” Rivera says.

The broader issue of federal financial aid and the for-profit college sector will be in the news again later this month when Sen. Tom Harkin (D-Iowa) holds congressional hearings on the topic.

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A version of this news article first appeared in the College Bound blog.