Department of Education to Hold Listening Sessions on Incentive Compensation for College Recruiters

Last week, the Department of Education announced plans to hold virtual listening sessions on how institutions of higher education may compensate recruiters. The Department is looking to hear from the public about how previous guidance in 2011, which banned incentive compensation but created an exception for third parties that bundled services, has affected the growth of online enrollment and associated federal student loan debt. Since issuing the guidance, the number of students recruited by entities operating under the exception has increased, particularly through online programs operated by third-party entities, including Online Program Managers (OPMs). Given the growth in online enrollment and associated federal student debt, the Department is seeking public input to understand the impact of this exception and whether any updates are necessary to the guidance. Listening sessions are scheduled for March 8 from 1-4 pm ET and March 9 from 1-4 pm ET. To register for the listening sessions, click here. Individuals who would like to present comments at the virtual listening sessions must register by sending an email message to no later than 12:00 p.m., ET, on the business day prior to the listening session at which they want to speak.

The Department of Education also released updated guidance that clarifies when organizations that contract with institutions of higher education are considered regulated entities known as third-party servicers. The guidance clarifies when companies and others who provide recruitment services to institutions of higher education will fall into the third-party servicers category. The updated guidance will ensure the Department has full transparency into and more data on the companies that work with institutions of higher education in areas that relate to federal financial aid. Institutions of higher education will have until May 1, 2023, to report any arrangements with third-party servicers that have not already been reported to the Department, detail the services the entity performs on behalf of the institution, and disclose the timeframe of the agreement. For more information, please read the full guidance here.

CGS and the higher education community have asked the Department of Education for additional time to respond to the guidance concerning third-party servicers. Please read the letter here.