On Friday, November 27, 2015, the U.S. Department of Education (“Department”) issued new guidance related to the payment of incentive compensation to admissions advisers at colleges and universities (this applies to for-profit, non-profit, and public schools).  This guidance relates to the revisedincentive compensation rule from the “Program Integrity” regulations published back on October 29, 2010.

The guidance announced that the Department “does not interpret the regulations to proscribe compensation for recruiters that is based upon students’ graduation from, or completion of, educational programs.”  This, to say the least, is helpful.  A number of schools had used this incentive prior to October 29, 2010 and believed it motivated admissions personnel to recruit students that were likely to graduate and fostering an “all hands on deck” attitude for student success.   Many schools are likely to consider bringing this incentive back.

Schools will need to carefully consider issues related to using this incentive.  The Department has already expressed some concern about this payment plan:

“[A]lthough compensation based on students’ graduation from, or completion of, educational programs is not per se prohibited, the Department reserves the right to take enforcement action against institutions if compensation labeled by an institution as graduation-based or completion-based compensation is merely a guise for enrollment-based compensation, which is prohibited.”

As a result, institutions should be careful to ensure using metrics related to graduation don’t become proxies for increases in enrollment.  Institutions might consider:

  • Using increases in graduation rate, rather than raw numbers of graduates, as graduate rate is less connected to the numbers of students enrolled.
  • Keeping track of any student success activities performed by admissions advisers to show that the payment based on graduation relates to contributions made by that admissions adviser.
  • Having a system that promotes team work for student success, and doesn’t merely reward the admissions adviser for enrolling the student that ultimately enrolls.

Link to full article: https://www.linkedin.com/pulse/department-education-issues-new-guidance-incentive-based-cariello?trk=hp-feed-article-title-comment