Skip to content Menu

Following a court decision, the Department of Education has reversed its 2010 guidance on whether institutions can pay employees based on graduation and completion rates.

Employees such as recruiters may receive commissions or bonuses for the total number of students who graduate from or complete a program, which ED prohibited in its program integrity rules issued in 2010. They still may not be compensated based on numbers of students who enroll in a program.

The reversal comes after a lawsuit filed by the Association of Private Sector Colleges and Universities (APSCU), which has sued ED several times regarding program integrity regulations. In the case, a district court found that ED's stated interpretation of its final rules—which proscribed both enrollment-based and graduation- and completion-based compensation—did not adequately explain the latter.

"The Department has changed its interpretation because, at this time, it lacks sufficient evidence to demonstrate that schools are using graduation-based or completion-based compensation as a proxy for enrollment-based compensation," ED wrote in the Federal Register.

ED notes, however, that it will reserve the right to penalize institutions that merely label compensation structures as graduation- or compensation-based when they actually reward enrollment figures.

The Federal Register notice also includes explanations for two questions regarding regulatory effects on minority enrollment and diversity recruitment, which the district court found ED had not answered sufficiently in the past. In short, commenters questioned whether institutions could financially incentivize employees for enrolling low-income or minority students—neither of which is permissible, ED said.

"Minority student enrollment is not a goal in itself; minority student success matters, not just enrollment," ED noted. "....The Department continues to support all lawful efforts to promote diversity in enrollment, and nothing in the amended regulations changes that fact. Schools can implement effective recruiting programs generally, and effective minority outreach programs specifically, without compensating recruiters based on the number of students enrolled."

Contact

Liz Clark

Vice President, Policy and Research

202.861.2553

Contact

Bryan Dickson

Director, Student Financial Services and Educational Programs

202.861.2505


Related Content

NACUBO Updates Student Agreement Language to Address Assessment of Collection Fees

NACUBO’s updated advisory, Best Practices for Student Financial Responsibility Agreements, includes model language for the agreements and addresses court decisions affecting the ability of an institution to recover costs associated with collections, among other topics of interest to business officers.

ED Shares Details on New Borrower Defense Policy

When considering approved borrower defense to repayment claims, the Department of Education will now apply a presumption of full relief as the starting point and will reduce the amount of relief offered, if warranted, by evidence provided by a school, a borrower, or other sources.

2021 NACUBO Student Financial Services Benchmarking Report Released

New data indicate electronic student payments and credit balance refunds have continued to increase during the COVID-19 pandemic. The report also provides benchmarking data on several other measures, including: student account and loan receivables; third-party payments; staffing; and expenditures for student financial services.