A Non-Profit College Recruiting Scandal?

Non-profit colleges may soon have a major recruiting scandal of their own involving the use of commissioned salespeople.

As regular readers of Higher Ed Watch know, federal law prohibits colleges from compensating recruiters from providing "any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments" to admissions officers. Some of the largest for-profit college chains have come under fire in recent years for circumventing the law, and the Department of Education rewrote its student aid regulations last year to stop them.

Congress put the incentive compensation ban in place in 1992 as part of a broader effort to crack down on unscrupulous for-profit schools that were enrolling unqualified, low-income individuals to get access to federal student aid funds. But in doing so, lawmakers created a double standard that many traditional colleges are now fully exploiting: the prohibition does not apply to foreign students because they are ineligible for federal student aid. In other words, it is perfectly legal for colleges to make commissioned payments to recruiters for each international student they enroll.

This has become a big issue now as public universities, facing declining state revenues, are increasingly seeking to attract foreign students who are able to pay full-freight. The State University of New York, for example, announced earlier this month that it plans to nearly double its enrollment of foreign students over the next five years, to 32,000.

Because most colleges are reluctant to go to the expense of sending their own admissions officers overseas, schools like SUNY often rely on third-party international recruitment agents to find the students, and then pay them a per-student commission for their services. According to a recent investigation by Bloomberg News, the agents also typically charge the students a fee, and sometimes even require them to hand over a portion of any scholarships they receive.

While there may be many reputable agents, there are also plenty of sleazy ones, who “often misrepresent or conceal their U.S. affiliations,” and offer false promises to lure students in, Bloomberg states.

Alarmed by such reports, the National Association for College Admission Counseling (NACAC) is considering expressly barring its members from providing per-student commissions to recruiters both here and abroad. The organization has long opposed the use of incentive compensation in admissions and, in fact, helped lead the fight to strengthen the Department’s ability to enforce the ban against for-profit colleges. But in light of recent developments, the association’s leaders are seeking to revise its policy to make clear that it applies “equally to all employees and contracted agents working inside or outside the U.S.” The association aims to finalize its recommendation by the group’s national conference in September.

The organization’s stance has provoked a firestorm of controversy among a portion of its members, who say that banning such practices is simply unrealistic at this point and would cripple the ability of most colleges to recruit foreign students. They argue that efforts by a group known as the American International Recruiting Council, which is made up of colleges and international recruiting agencies, to set standards and credential foreign agents are sufficient to ensure ethical practices.

But NACAC is not buying it and neither are we. Based on what we’ve seen in the for-profit higher education industry, paying recruiters for each student they enroll simply invites abuse — as the one and only incentive these individuals have is to reel in students, whether it’s in the best interest of these students or not. As NACAC writes in its draft policy change:

Reducing the basis for compensation to the number of students enrolled in any circumstance introduces an incentive from recruiters to ignore the student interest in the transition to postsecondary education, and invites complications involving misrepresentation, conflict of interest, and fraud at the expense of the student.

Moreover, eliminating incentive compensation payments to agents will not stop colleges from recruiting foreign students. As the Bloomberg article points out, some colleges have pursued alternative approaches:

Fifteen schools including Wake Forest University and the University of Maryland have joined an alliance called CAN-USA to bypass agents and build relationships directly with Chinese high schools, said Richard Hesel, principal of Art & Science Group, a Baltimore-based consulting firm that helped set up CAN-USA last year. Representatives have visited high schools in Guangdong province, conducted application workshops for students, and provided college counseling at no cost to the families or high schools, Hesel said.

The University of Connecticut…sends admissions staff to China. ‘We tell students, ‘We don’t have agents,’” said Lee Melvin, vice president for enrollment planning and management. “They can’t call on your behalf. They can’t write essays on your behalf. We’ll build our international population ourselves.”

Certainly these efforts require a good deal more effort and are more costly for colleges than paying others to do the work for them. But they ensure that colleges are in control of the process, and don’t need to rely on the good will of foreign agents who have no real ties or loyalty to their institutions.

College leaders should take a lesson from the scrutiny that the for-profit higher education industry has been under and not allow expediency and the promises of great riches cloud their better judgment. Because otherwise, they may soon find that the tables have turned, and that they are the ones being called to account for their recruiting practices.


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