Inside Higher Ed: Contrasting Views on Ending Tuition-Sharing Agreements

Inside Higher Ed: Contrasting Views on Ending Tuition-Sharing Agreements

“If officials at the U.S. Department of Education hoped the ‘listening sessions’ they arranged this week would provide consensus on whether to stop letting colleges pay outside companies a share of tuition revenue when they help recruit students, they were surely disappointed.

Like just about every policy discussion in Washington these days, this one found the students, consumer advocates, college officials, corporate leaders and others who shared their opinions in three-minute increments to be sharply divided, with little to no middle ground to be found.

Virtually all of them—whether they argued for or against current policy guidance, which permits revenue-sharing agreements if the provider ‘bundles’ nonrecruitment services with the recruitment work it does—purported to be speaking on behalf of students.”

Their major arguments, and an effort to make sense of what’s at stake, follow.

What Is the ‘Bundled-Services Exemption’?

The Education Department announced last month that it would revisit nearly three decades of policy making under Title IV of the Higher Education Act that has largely restricted colleges from paying recruiters based on how many students they enroll.

The original 1992 legislation that cracked down on ‘incentive compensation’ in programs that are eligible for federal student financial aid was modified by 2011 guidance from the Obama administration, which exempted recruiters from that ban if the provider of recruitment and marketing services ‘bundles’ that work with other nonrecruitment services (instructional design, say, or support for enrolled students). That 2011 guidance enabled the emergence over the last decade of an entire industry of companies known as online program management firms, or OPMs.

The companies helped a significant number of nonprofit private and public institutions enter online learning (competing against the for-profit colleges that had previously dominated the online space) by investing up-front funds to build and market the programs (amid an array of other services—hence the ‘bundle’) in exchange for a large share of the subsequent revenue. Consumer advocates have argued with increasing intensity in recent years that the revenue sharing between colleges and companies incentivizes excessive digital marketing that can draw learners into suboptimal programs and drives up the cost and price of online programs.

While many legal experts believe the administration has the authority to yank the 2011 guidance and unilaterally eliminate the bundled-services exemption, as it is called, agency officials—having seen many of their recent regulatory efforts challenged in court—said they would accept comments on the 2011 guidance through March 16 and hold two ‘listening sessions’ this week. Those happened virtually on Wednesday and Thursday afternoons, with several dozen speakers speeding through the allowed three-minute statements.”

Read more on Inside Higher Ed here.