Recruitment ads by for-profit colleges targeted

While some smaller higher education groups such as the American Association of Collegiate Registrars and Admissions Officers expressed support for the bill, the American Council on Education — a main group representing all of higher education — did not.

Terry W. Hartle, the senior vice president at the Council, said in a statement Wednesday that the proposal contributes to an important conversation about how to ensure students are not overwhelmed by aggressive marketing tactics but would impose a “very complex set of requirements of all institutions because of a handful of bad actors.” He said it was unlikely to be enacted this year.

The Association of Private Sector Colleges and Universities, which represents for-profits, called the bill misguided at a time when the country will depend on such schools to help get millions more workers college-level training.

“Legislative proposals like this only create more burdensome regulations affecting our ability to ensure that all Americans have access to a high-quality education,” it said.

Another concern: definitions such as “marketing” are so slippery such a law would be hard to apply fairly, said BMO Capital Markets managing director Jeff Silber. He noted, for example, that the Ohio State University football team doesn’t get counted as a marketing expense but clearly promotes the school as effectively as any advertising campaign.

Wall Street appeared to agree the bill stood little chance of passing, with stocks of leading for-profit companies such as Apollo Group (parent of the University of Phoenix), Corinthian Colleges Inc., and DeVry Inc. all lower in mid-day trading but not substantially on a day when the market overall was down.

In fact, Silber said most for-profits have been cutting back in recent years on advertising and recruiting budgets. Still, the business model relies heavily on Web and broadcast ads, billboards and well-staffed call centers to drive enrollment.

“Yes, this would be an issue for everybody (in the sector),” Silber said. “Advertising and selling is a fairly sizable component of the business model,” and if spending were limited, “it would limit their growth.”