Leading For-profit College Responds to GAO Report

A major for-profit college targeted in last week’s stinging Government Accountability Office report has announced it will change the way its student recruiters are compensated, a reform that could neutralize the high-pressure sales tactics revealed in the undercover investigation.

Westwood College, a career college company based in Denver with 17 campuses, says in a release it will "implement a compensation policy more restrictive than the current regulations permit by converting its admissions representatives’ compensation to fixed salary effective August 21, 2010, thereby eliminating enrollment targets as a component of compensation."

In other words, Westwood recruiters henceforth will not be rewarded for bringing more students in the doors.

The GAO report surveyed a sampling of 15 for-profit institutions and found evidence of deceptive or aggressive marketing techniques at every one. The targeted institutions included Westwood as well as Corinthian Colleges, the University of Phoenix, Education Management Corp. and Kaplan Higher Education, some of the industry’s biggest players. Kaplan is owned by the Washington Post Co.

The Obama administration has proposed more than a dozen rule changes intended to tighten oversight of for-profit colleges. One of the most contentious changes would make it much harder for the colleges to pay recruiters according to how many "sales" they turn.

In 1992, Congress prohibited colleges from compensating recruiters based solely on how many students they brought in. But a series of "safe harbor" caveats, added in subsequent years, allowed the practice to continue. The proposed rule change would restore the original 1992 law.

"It creates such an aggressive marketing atmosphere that a person will do almost anything to get a student into the program," said Chris Lindstrom, higher education program director at the U.S. Public Interest Research Group, a group that supports the proposed regulations, speaking for a previous post.

Westwood doesn’t say in its release how it compensates recruiters now. Presumably, some of their pay is based on the bodies they bring in.

The other big for-profit companies named in the report announced housecleaning efforts of their own: internal investigations, and (at least in the case of Kaplan) suspension of operations at the campuses cited in the report.

Westwood, though, appears to have responded with the most sweeping changes:

The college "will implement independent third-party verification programs" that have students confirm they have received and understood admissions information before the first day of class, according to the Westwood release.

Westwood also will expand its own "mystery shopper" program, mirroring the undercover approach of the GAO, to ensure recruiters are "being clear and accurate with students and the College is compliant with all state and federal regulations."

The college is raising admission requirements, including test scores, to "better assess academic preparedness and serve a larger percentage of students that are likely to succeed and graduate."

Finally, the college will roll out a new "admission presentation" after a year of effort, designed to help students determine whether Westwood is "the right fit." It reportedly includes complete and comprehensive information on tuition costs, average starting salaries and the student’s obligation to repay student loans.


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