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US: Payment of student recruiters under the spotlight

Concerns about the compensation of student recruiters—in both domestic and international contexts—have resulted in significant developments in the United States in the last month.

On the domestic front, the country’s second-largest for-profit higher education company, Education Management Corporation (EDMC), is the subject of a complaint brought by the Department of Justice (DOJ) and the states of California, Florida, Illinois and Indiana. The complaint alleges that “EDMC falsely certified compliance with provisions of federal law that prohibit a university from paying incentive-based compensation to its admissions recruiters that is tied to the number of students they recruit”. In effect, the DOJ charges that EDMC paid its recruiters for quantitative enrolment results that had little to do with applicants’ qualifications and everything to do with the federal student aid money that these students could bring to the company upon enrolment. EDMC denies the claims, yet this is another blow to the US for-profit higher education sector, which has been the subject of intense scrutiny over the last year for alleged misuse of federal student aid funds (see ACA Newsletter – Education Europe, June 2011). Adding to the bad news: media outlets such as The Chronicle of Higher Education and The Wall Street Journal are reporting double-digit drops in new-student enrollment among the country’s largest for-profit providers, during the most recent quarter.

Meanwhile, incentive compensation for agents used to recruit international students—while not considered illegal under US law—is also currently the subject of intense debate in the higher education community. Following a sometimes unfriendly public exchange of views for several months between experts and stakeholders on different sides of the issue, the National Association for College Admission Counseling (NACAC) issued a statement on the subject in July 2011. Effectively, NACAC does not oppose the use of agents by institutions for international recruitment, but does stand by “the principle that payment of commissions based on the number of students recruited or enrolled is fraught with problems and stimulates behavior that is against the interests of students and the profession”. Recognising the complexity of the issue, NACAC will appoint a commission to be tasked, among other things, with making recommendations for ethical practice for international student recruitment by its members and developing alternative solutions for the use of incentive based compensation. NACAC also commits to drafting a recommendation for its Assembly (i.e. its governing body of delegates) within two years, with regard to addressing this issue in the organisation’s Statement of Principles of Good Practice.

US Department of Justice

National Association for College Admission Counseling

Wall Street Journal

Chronicle of Higher Education