Some of the nation’s largest online colleges could be barred from tying recruiters’ pay to the number of students they enroll if the Obama administration’s new list of rules for for-profit institutions becomes federal policy.
The administration’s set of 14 proposed guidelines for for-profit colleges—announced June 16—was created in response to widespread student complaints of deceitful recruiting practices at some of the most profitable institutions.
Many of the proposals aim to ensure that federal aid is distributed only to students who are qualified to take college classes.
With the proliferation of high school “diploma mills,” for instance, the administration would require colleges to verify an applicant’s diploma if the school “has reason to believe that the diploma is not valid or was not obtained from an entity that provides secondary-school education.”
The federal guidelines also would end loopholes that allow colleges to link recruiter pay to their “success in securing student enrollment,” according to the U.S. Department of Education (ED) announcement—a practice known as incentive compensation.
ED officials heard numerous complaints from current and former students who were encouraged to take out loans they could not afford and enroll in courses they were not qualified for, according to the department.
Public hearings during the formulation of the new federal proposals included “students enrolled in programs where they felt misled on what was and was not being offered, the way programs could be paid for, and their job prospects upon completion,” according to ED.
Education Secretary Arne Duncan has stressed the need for more stringent regulations in for-profit college recruiting during his 18 months in office. Federal aid to for-profit schools has skyrocketed in recent years, going from $4.6 billion in 2000 to $26.5 billion in 2009, according to ED statistics.
“This is about accountability and protecting students,” Duncan said in a prepared statement.
Other proposals introduced by the administration include clarifying when a student has withdrawn from a college and how much “federal funding must be paid back if a student drops out of a program.” Another proposal would, “in many cases, reduce the amount of information students would have to provide to institutions” when filling out the Free Application for Federal Student Aid (FAFSA). Many students currently are required to confirm information on their FAFSA forms every year.
ED announced a 45-day comment period so that final rules could be announced Nov. 1. The rules would go into effect July 1, 2011.
For-profit college industry leaders said some of the Obama administration’s proposed rules were “extreme” and promised participation in the upcoming comment period.
Harris Miller, president of the Career College Association, said in a statement that the organization would “send robust comments on those elements of the proposed rules that harm students, including the department’s decision to end all incentive compensation safe harbors without offering alternative guidance.
Miller continued: “Incentive compensation as it stands is an extreme proposal that needs to be thought through carefully to protect students and to make sure that it does not become a lawyers’ relief act.”
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