Guest Post: Why Rewarding Recruiters for Enrolling Students Needs to Stop

(The U.S. Department of Education is expected to soon release proposed regulations aimed at strengthening the integrity of the federal student aid programs. Among other things, the Education Department is considering toughening rules that bar colleges from compensating recruiters based on their success in enrolling students. In this guest post, David Hawkins, the director of public policy and research for the National Association for College Admission Counseling, explains why his organization is playing a leading role in fighting to ban recruiters from receiving incentive compensation.)

By David Hawkins

By proposing to tighten the rules on incentive compensation for admission and financial aid officers in the current round of rulemaking for the federal financial aid programs, the Department of Education is poised to re-establish stricter standards for college recruiting. At the National Association for College Admission Counseling (NACAC), we agree with the Department that banning the payment of commissions and other bonuses to admission and financial aid officers based on their success in enrolling students is critical to safeguarding the integrity of the taxpayer-supported federal financial aid programs.

Our organization’s historic concern with the treatment of admission officers as professionals, rather than salespersons, is rooted in the interest of students in transition to postsecondary education. Because the transition to higher education is an unsystematic, often opaque process that individuals possessing varying levels of ‘college knowledge’ must navigate, the information gap between the employees in charge of recruiting and prospective students is immense. In an unregulated environment, the potential for misrepresentation and outright fraud is a clear and present threat, which can result in harm to students and, in the case of federal aid and loans, to the taxpayer.

In 1992, Congress recognized these dangers when, reacting to widespread reports of abuse, it outlawed colleges from providing incentive compensation to admissions officers. However, under heavy pressure from  the for-profit higher education industry, the Bush Administration in 2002 created 12 loopholes to the incentive compensation ban. As a result, the commissioned sales model roared back to life, once again exposing federal financial aid funds to abuse by for-profit colleges that were providing highly incentivized pay to their recruiters.

At the time, NACAC helped lead the opposition to these changes, which we believed were in direction violation of the law. We argued that the so-called “safe harbors” would so dilute the government’s regulatory authority that they would sanction activities that put both students and taxpayer funds at risk. We’re sorry to say that our concerns have been well borne out.

Considering several enduring characteristics of student access to higher education, it is not difficult to see how colleges may employ a wide range of misrepresentations, from subtle to outright, as part of an overly-aggressive recruiting process to the detriment of students. These include the fact that:

• A lack of access to information about higher education is a well-documented challenge among under-served populations. The lack of information about college makes low-income students particularly susceptible to misrepresentation of information about a college or course of study. Aggressive recruiters whose livelihoods depend on meeting a monthly quota will have little incentive to accurately represent whether an institution’s programs are a good fit with a potential student’s interests or qualifications.

• A lack of information about financial aid is also a well-documented challenge among under-served populations. Commissioned sales create an incentive to obfuscate the source and nature of the financial means by which prospective students will pay for their education. The complexity of the modern financial aid system is indisputable, and unscrupulous institutions and recruiters use this complexity to their advantage, often loading students up with federal and private loan debt without fully explaining the terms and conditions of these loans. Indeed, NACAC has long argued for greater clarity in the presentation of financial aid packages at institutions of all types. In an environment where commissioned sales are an accepted practice, the potential for manipulation and deception of financial aid information is far greater.

• Potential students trust colleges as gateways to certifications, licensing, and professional education. Understanding the level of education that is required to work in a professional field is a complicated task. In addition, understanding the Byzantine process of accreditation is a nearly impossible task for even the most highly motivated prospective students. A major challenge for secondary school educators and counselors, in fact, is to impart upon students the appropriate institutional fit for pursuing certain careers. Nontraditional or under-served populations, who may be years removed from the structure of high school and/or whose high schools may not be equipped for college counseling, are often particularly at the mercy of recruiters or admission officers for guidance. Whereas consumers may be prepared for a high-pressure sales pitch at a car dealership, home improvement store, or other commercial setting, few are aware that a college recruiter might employ the same tactics and steer them in the wrong direction. Taking advantage of this trust enables recruiters to exploit a potential student’s lack of awareness of the terms of the interaction.

As history has shown, there is a clear case for regulating against this type of recruitment. Those opposed to the Department’s recent proposals on incentive compensation may invoke the mantra of personal responsibility or ‘buyer beware.’ But misrepresentation can affect anyone at any time, including people with so-called “elite” educational backgrounds, and caveat emptor is not a sufficient safeguard to protect against its effects. In the last decade, Enron, sub-prime mortgage lenders, and derivatives traders have employed some form of misrepresentation with a diverse array of audiences in the pursuit of seemingly endless profit, to disastrous effect. The core businesses—energy, home finance, and financial instruments—survived, but the behavior that fueled unethical and fraudulent practices in each case had to end.

NACAC considers the commitment to professional admission practice as an ethical imperative that serves student interests. We consider the additional commitment to upholding federal law a logical extension of the ethical imperative, as well as necessary obligation to protect taxpayers who underwrite the aid system that offers access to the full diversity of postsecondary institutions. The Department of Education’s regulatory agenda is aimed at safeguarding students and taxpayers. Requiring for-profit higher education companies to exercise great care in the delivery of services for which they receive nearly 100 percent of billions of taxpayer-supported dollars seems a small thing to ask.

David Hawkins is the director of public policy and research for the National Association for College Admission Counseling, and served as a primary non-federal negotiator on the Department of Education’s program integrity negotiated rulemaking panel. He has worked at NACAC since 2000. Prior to his service with NACAC, Hawkins served as a Congressional Affairs Officer at the Department of Housing and Urban Development during the Clinton Administration, and worked as the Research Director at the Democratic Congressional Campaign Committee. His views are his own and do not necessarily reflect those of the New America Foundation.