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Online Degrees: Is Embanet an Agent?

The “agent debate” that exists with university admissions folks has centered on the part of Title IV that expressly prohibits incentive payment and then expressly exempts international activity. The clause reads: “The institution will not provide any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any persons or entities engaged in any student recruiting or admission activities or in making decisions regarding the award of student financial assistance, except that this paragraph shall not apply to the recruitment of foreign students residing in foreign countries who are not eligible to receive Federal student assistance.”

Critics state that professional practice supersedes the regulation and since the federal government has declared that incentive compensation for domestic student recruiting is unlawful, it should be the case for recruiting foreign students. Since US law is bound to US citizens, the counter argument is that imposition of US domestic practice to international markets is paramount to restraint of trade. Back and forth the argument goes which is why NACAC has given the conundrum to a commission to help guide best practice overseas

At the first meeting of this commission, toward the end of a long day of back and forth, point-counterpoint, one member finally proclaimed – “I hear all the arguments, but I just can’t get over the fact that its not OK to do it here, but that we think its OK to do it there.” This apparent loophole is what has a lot of professionals in the practice of college admissions in a quandary, but haven’t they missed something? What about online university degrees, who sells those?

It was about a decade ago, when online degrees offered by for-profit schools started hitting the market, that the Department of Education offered what was called the “12 safe harbors” allowing degrees to be sold by third parties and for those involved to be rewarded based on their success. The Department exempted these organizations from the incentive compensation limitations under a very defined set of parameters as long as those programs did not receive Federal Aid.

In 2008, reauthorization the Higher Education Act removed the “safe harbors” and put these exemptions into formal policy. This endorsed the practice of a growth industry, that of corporate partners that run university online degrees. These partners do everything related to student recruitment and student service while the universities are left to develop the curriculum and teach the program. The corporate partners advertise the programs, they operate call centers to take student inquiries, they manage inquiries in a CRM-style database, they sustain a dialog with these prospective students pushing them toward enrolling in a degree, they then facilitate the completion of that application and submit it to the university for approval. The university reviews the application and renders an admissions decision and the student is notified of their acceptance or denial. This is exactly the model used by overseas recruiters.

In return for this upfront investment, the corporate partner is rewarded with a share of the student tuition. Today that figure can range from 40-60% of the full tuition of the program. This isn’t an isolated program or two operating under the radar, this is a burgeoning industry that employs thousands of workers and enrolls what might be a quarter of a million AMERICAN students. Who are these companies?

They offer programs from a who’s who of nationally recognized universities such as: Boston University, Brandeis University, George Washington University, Northeastern University, Northwestern University, Michigan State University, Tulane University, University of Florida, University of Notre Dame, University of San Francisco, University of Southern California, University of Vermont, Vanderbilt University, Villanova University, Wake Forest University, Washington State University, and many more.

So to those who struggle with the rationale of overseas versus domestic policies, I suggest taking a deep breath and looking across their own campus to the partnerships that have evolved in recent years. Title IV’s restrictions on incentive compensation for domestic students has been bridged, and has been bridged in a very pronounced way. The higher education industry has benefited from such domestic partnerships and we expect that robust partnerships with overseas entities will do the same.

Mark Shay is a business developer with a long history of success helping higher education institutions recruit students. In an illustrative career that has spanned three decades, Shay has served thousands of customers, ranging from individual faculty members and graduate deans, to university presidents and foreign governments. He is well known for balancing the non-commercial spirit of educators with the commercial realities of operating efficiently and effectively using technology to improve results. He founded StudyAbroad.com, GradSchools.com and has worked in leadership roles at two universities and IDP Education. He has recently started a consulting practice and is serving as an advisor to AAE. Mark is also the editor of ChinaTrend: Insights into the Higher Education market in China

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