Comment on the Department of Education’s Bundled Services Guidance

In 2011, the Department of Education created an exception to the long-standing legal prohibition on paying recruiters financial incentives to enroll students. Such payments were allowed, in the form of revenue-sharing, if recruitment was bundled with other services. This bundled services loophole was and is inconsistent with statute (as noted by the Department itself) and regulation.

In the 12 years since, we have learned a great deal about how the higher education market responded to these incentives and have seen that this arrangement has had significant consequences that are borne immediately by students and eventually by taxpayers. Now is the time for the Department to take stock of that experience, and adjust its guidance accordingly. These comments outline ways the Department can and should change the bundled services guidance.