The U.S. Education Department last week proposed new rules that would loosen a ban on incentive compensation for college recruiters and get rid of a financial-aid regulation called the 12-hour rule, which some distance-education providers say stifles the development of innovative programs.
The department also proposed eliminating regulations, opposed by many college officials, that dictate how institutions must package financial-aid dollars to disadvantaged students who receive scholarships from the federal GEAR UP program.
The proposals, published in the Federal Register on August 8, were part of a broad package of changes to student-aid regulations that Education Department officials tried to negotiate in the spring with a panel of educators, lenders, and advocates for students. That process fell apart when no consensus could be reached.
The negotiating panel disbanded in April because of disagreements over two proposals made by the department. One would ease restrictions on how institutions pay their admissions representatives. The other would eliminate the requirement that college programs with unconventional academic schedules offer at least 12 hours of instruction per week to be eligible to provide federal student aid. Opposing the proposals were representatives of the United States Student Association, the State Public Interest Research Group’s Higher Education Project, and several legal-assistance organizations, who said they could not support changes that would discard protections that have proven effective in limiting fraud and abuse in financial-aid programs.
Despite the panel’s failure to reach consensus, the department decided to move forward with the new rules anyway. At a news conference last week, Jeffrey Andrade, deputy assistant secretary for postsecondary education, said the groups that opposed the proposals “had extreme views” and were “on the fringe.”
The negotiators, he said, had “expressed general discomfort” and “unsubstantiated fears,” but weren’t able “to articulate specific concerns” or offer thoughtful alternatives to the Education Department’s proposals.
Encouraging Innovation
The proposal to eliminate the 12-hour rule follows years of debate. Distance-education providers have pushed the department and Congress to throw out the regulation, but others have cited fears that relaxing the rule would lead to fraud.
“This issue has been kicking around probably for a good three to four years, so we decided it was finally time to do something about it,” Mr. Andrade said.
The current regulation, with the weekly minimum of 12 hours of course work, applies to college programs that don’t operate on a semester, trimester, or quarter schedule -- including some distance-education programs. Distance-education providers say many of their students want the flexibility to take courses on their own schedules.
The Education Department’s proposal calls for the regulation to be replaced with the “one day” rule, which requires programs that provide federal financial aid to deliver at least a day’s worth of instruction a week. That rule is already in place for programs that operate on a semester, trimester, or quarter schedule, although the definition of a day’s worth of instruction has never been established.
The change would primarily affect distance-education programs that don’t operate on fixed schedules, as well as some kinds of offerings by traditional institutions, like weekend-only programs.
Easing the rule would allow course providers to develop innovative teaching methods, say proponents, who argue that the number of course hours scheduled in a week is a poor measure of a program’s quality.
Others have argued that the vague one-day rule gives institutions too much flexibility and could lead to a resurgence of fraud, which is what the 12-hour rule was created to combat.
Mr. Andrade said that the one-day rule is already in effect for a majority of institutions, and that the 12-hour rule hasn’t accomplished anything. “As far as I can see, it hasn’t prevented any fraud,” he said. “It’s not like we’re going into uncharted territory with the one-day rule.”
Incentive Pay
The fight over the department’s plan to ease restrictions on incentive compensation for college recruiters was particularly fierce.
In 1992, Congress enacted the ban on paying recruiters on the basis of how many students they enrolled. The idea was to clamp down on abuses at trade schools that were found to be enrolling unqualified applicants just to receive the students’ federal-aid funds. A prohibition on paying recruiters on an incentive basis was seen as a way to stem such abuses.
However, officials at for-profit colleges have long complained that the incentive-compensation law is too vague, making it difficult for them to pay their employees based on common business practices. Those colleges’ nonprofit counterparts recently joined the fight, after some nonprofit colleges were found to be violating the ban by engaging in revenue-sharing contracts with consultants.
Advocates for students have tried to keep the ban as rigid as possible. Easing it, they warned, would encourage abuses among trade schools, some of which, they say, already recruit students to programs that will do them little good.
In the proposed regulations, the department would set up a series of so-called “safe harbors” that indicate just what compensation methods institutions can use in paying their employees. Included are provisions that would allow institutions to:
- Adjust the salaries of their recruiters -- both fixed and hourly -- twice during a 12-month period.
- Provide incentives to recruiters who attract students to programs that are not eligible for federal student aid.
- Compensate recruiters based on the number of students completing a program of study, or one academic year for a longer program.
- Pay employees based on their activities before students enroll, as long as the number of people who actually enroll is not a factor in determining the compensation. Soliciting students for interviews would be considered recruitment, however, and not a pre-enrollment activity. Therefore, those who solicit those interviews would not be eligible for such compensation.
Packaging GEAR UP Funds
The Education Department’s decision to eliminate rules that dictate how colleges must package financial-aid dollars to disadvantaged students comes after almost three years of feuding between college lobbyists and some GEAR UP supporters over the regulations.
Congress created the program in 1998 to motivate low-income students in middle-school to pursue college, and to better prepare them for it. The Education Department awarded the first grants to partnerships between colleges and middle schools in 1999.
The disputed rules prevent colleges from considering scholarships from GEAR UP in determining a student’s eligibility for institutional financial aid. The Education Department in the Clinton administration, which championed the program, put the rules in place to ensure that students who receive GEAR UP grants would not see their campus aid reduced as a result.
But higher-education lobbyists have objected to the rules, saying that they give the government an unprecedented and unwarranted say in how colleges distribute their own financial-aid funds. They argue that the regulations could limit the amount of aid that colleges can provide to needy students who do not receive GEAR UP grants.
Before disbanding, the negotiating panel agreed to make the change the department is proposing. “The committee believed that the goal of assuring a significant level of assistance to GEAR UP scholarship recipients could be achieved without mandating a federal financial-aid packaging order,” the department wrote in its introduction to the proposed rules.
The final rules are scheduled to be announced on November 1, after a 60-day public-comment period. The department has asked that comments on the proposed rules be submitted by October 7 to Wendy Macias, U.S. Department of Education, P.O. Box 33076, Washington, D.C. 20033-3076. Comments can also be sent via e-mail (ProgramNPRM@ed.gov).
http://chronicle.com Section: Government & Politics Page: A27