Administration

Educational Entrepreneur Wants to Clean Up Online College-Search Business

January 14, 2015

The Internet has hundreds of college-search sites, most of them guided not by sophisticated algorithms but by money: Colleges directly or indirectly pay the sites to get names of prospective students, and the sites give play to the colleges that are paying the most for those "leads," often without clear disclosure to the people using the sites.

John Katzman, a prominent education-industry entrepreneur and the founder of an education-search company called Noodle, says it’s time "to clean up the education marketplace" involving online search.

A new Noodle-commissioned survey found that most users think they understand how pay-driven "lead generation" sites work, Mr. Katzman says, but they really don’t.

"If substandard schools are tumors on the body of higher education, these sites serve as their blood supply," Noodle says in a paper it made available to The Chronicle this week.

Mr. Katzman isn’t stopping with rhetoric. He and his company are also asking the U.S. Department of Education to help raise the bar on how online college search operates. After consulting with a law firm, he has asked Ted Mitchell, the under secretary of education, to issue a letter to all colleges advising them that they could be found liable for violating federal rules against misrepresentation if they use pay-for-good-play search sites "without a prominent, easily understood disclaimer."

The department does not regulate search sites, but it does hold a "big stick" over colleges, which must comply with its regulations to participate in the federal student-aid programs. By issuing a letter like the one he proposed, Mr. Katzman says, the department would be telling colleges "you are on the hook for the misrepresentation and, effectively, the false endorsements that these guys are doing."

"You can’t be Title IV compliant if you’re misrepresenting your school," he says, referring to the section of the Higher Education Act that governs student aid. "If only 10 percent of your users know that this is a paid ad, how do you defend that?"

The sites might not be breaking the law, "but the Department of Education can and should set a higher bar," says Mr. Katzman. "We can set a higher bar than ‘it’s not illegal.’"

A department spokeswoman said on Tuesday that Mr. Mitchell was unavailable to discuss the matter.

Survey Findings

In Noodle’s survey, as many as 70 percent of respondents in some cases said they believed the sites were counseling them and a comparable proportion said they believed they understood how the site’s results had been produced. But only 5 to 7 percent knew that colleges had paid to be listed in search results. The survey, which was based on a representative sample of 203 high-school graduates ages 17 to 45, has a margin of error of 4.5 percent.

Noodle paid an independent survey firm, Smarty Pants, to conduct the survey, which involved having the subjects pursue searches on three search sites—schools.com, degreedirectory.org (Learn.org), and guidetoonlineschools.com—and then answer questions.

Those who were more likely to trust the sites were older than 20 and not already full-time college students, suggesting that the people most likely to be misled were those who were also less likely to have access to guidance counseling about colleges.

Mr. Katzman says Noodle was not included in the survey because it clearly discloses its advertising-driven results. He says Noodle uses the same methodology and iconography that Google uses. "It’s not just the standard, it’s a pretty good standard," he says.

By contrast, the sites in the survey produced results where the colleges’ paid sponsorships were not readily apparent.

On guidetoonlineschools.com, for example, a search via the search function for bachelor’s-degree programs in accounting produced this page, where there was no indication at all that the colleges had paid to be listed.

Kimberly Wetter, head of marketing for the site’s parent company, SR Education, said that the company had been working to upgrade its pages. She said searches on that site using other techniques, such as a navigation bar, would produce pages where the paid placements were displayed separately under the label "Featured Schools."

She acknowledged that even with that distinction, "the wording is not clear enough." (A few hours after Ms. Wetter spoke with The Chronicle, the site had been updated to display "Sponsored Schools" over the search results, with a mouse-over box providing a fuller explanation.)

Ms. Wetter said SR Education was a small company of 11 people that has been trying to make its several sites more useful to students, by including in some cases information on colleges’ loan-default rates and whether they are for-profit or nonprofit. Several of its other search sites don’t include any paid placements at all. Told of the Noodle effort, she said, "We’re fully behind that."

Schools.com is owned by QuinStreet Inc., a company that in 2012 settled allegations by more than a dozen state attorneys general that its sites aimed at current and former members of the military were deceptive.

A search for an accounting program on its site produced a page like this, where the only disclosure is the phrase "Matching School Ads" that appears in small faint type at the top right. Company officials said that disclosure complies with the terms of an agreement with the attorneys general.

A search for a bachelor’s-degree program at Learn.org, the site that appears when you enter degreedirectory.org, produced this page, where the disclosure was not immediately evident at all. The company did not reply to an email from The Chronicle seeking comment.

The lack of disclosure on websites is hardly the only issue in college search, according to executives in the industry. Some say a more blatant example of abuse comes from sites purporting to be job-search sites but in fact containing no job listings.

Such sites lure in visitors and offer them the chance to learn about educational opportunities in exchange for providing contact information (or sometimes suggest that they need to provide the information in order to see the job postings). The sites then sell the contact information they collect to colleges as if they were prospective students.

Mr. Katzman, who was the founder of Princeton Review Inc. and of the distance-education company 2U, says his interest in this issue arose when he was at 2U at few years ago. Then, he says, he "realized we were buying leads from sites I thought were problematic."

"The whole point of the Noodle project for me is clean up the marketplace," he says. "This is just an appeal to our better selves."

(Disclosure: Mr. Katzman provided a blurb for a book written by this reporter.)

Goldie Blumenstyk writes about the intersection of business and higher education. Check out www.goldieblumenstyk.com for information on her new book about the higher-education crisis; follow her on Twitter @GoldieStandard; or email her at goldie@chronicle.com.

Correction (1/14/2015, 8:15 a.m.): This article originally included a slightly incorrect number for Noodle's survey respondents: 203 were surveyed, not 205. Also, John Katzman was the founder, not a co-founder, of 2U. The text has been corrected.