ED CENTRAL: The Ed Dept Knows How to Write Rules, but Does it Know How to Enforce Them?

Career College Central Summary:

  • In 2010, the Obama Administration put new teeth into regulations barring colleges from compensating recruiters based on their success in enrolling students. But apparently, the U.S. Department of Education’s Federal Student Aid (FSA) office, which is in charge of enforcing the rules, didn’t get the message.
  • It’s hard to reach any other conclusion after reading last week’s report from the Education Department’s Inspector General, which faulted FSA for its lax enforcement of the incentive compensation rules.
  • Here’s the backstory. Congress in 1992 prohibited colleges from providing “any commission, bonus, or other incentive payment based directly on success in securing enrollments” to admissions officers. The ban on incentive compensation for college recruiters was included as part of a broader effort by lawmakers to crack down on for-profit colleges that were set up to reap profits from the federal student aid programs.
  • A decade later, Bush administration officials with close ties to the for-profit college sector set out to undermine the prohibition. Under their leadership, the Education Department issued new regulations creating 12 “safe harbors” for colleges that wished to provide incentive payments to their admissions employees. Among other things, the revised rules allowed colleges to adjust the annual or hourly wages of recruiters up to twice a year, as long as the adjustment was “not based solely on the number of students recruited, admitted, enrolled, or awarded financial aid.” In other words, the Department’s leaders allowed colleges to expressly violate the law, which bars schools from providing any commission-based compensation to their recruiters.
  • In 2010, the Obama administration took decisive action to try and stop for-profit colleges from continuing to engage in illegal recruiting practices by rewriting the rules to eliminate the loopholes that Bush administration officials had put in place.
  • But these 2010 regulations appear to be little more than paper rules. Five years after the regulations were put into place, the Inspector General’s report found, FSA has yet to “revise its enforcement procedures and guidance to ensure that they facilitated and did not hinder enforcement actions.”
  • The most remarkable example is that FSA is still abiding by a memo written by Bill Hansen, who served as the Deputy Education Secretary during President George W. Bush’s first term, announcing that the Education Department would treat violations of the incentive compensation ban less seriously than it had before. In the 2002 memo, Hansen said that in most cases “the appropriate sanction” should “be the imposition of a fine,” rather than the limitation, suspension, or termination of Title IV student aid eligibility.

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