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Beyond the News

Recruiting for Profit

University Business, September 2012

At the end of July, the Senate Health, Education, Labor, and Pensions (HELP) Committee released “For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success.”

Outlined in the report are concerns about aggressive marketing and recruiting and low student success rates, including that 54 percent of students who enrolled in 2008-09 left without a degree or certificate by mid-2010. In 2009, the education companies examined spent $4.2 billion, or 22.7 percent, of all revenue on marketing, advertising, recruiting, and admissions staffing compared to $3.2 billion, or 17.2 percent, of all revenue on instruction.

As Integrated Postsecondary Education Data System (IPEDS) and the Government Accountability Office numbers show, “nonprofits don’t spend anywhere near the percentage of their overall budget on marketing that for-profits do,” says David Hawkins, director of public policy and research for the National Association for College Admission Counseling. Yet, legislation being considered to restrict spending of federal funds on marketing will apply to both for-profits and nonprofits alike. The report, he adds, “should make us ask if this is what higher ed is about.”

Earlier this year, Senator Tom Harkin, who led the committee that produced the new report, sent a letter to the chancellor of the University System of Maryland inquiring about marketing and recruiting tactics at the University of Maryland University College. At NACAC, shares Hawkins, there’s concern around recruiting international students, with “vigorous debate” about compensating agents by number of students recruited. The report shows what can happen when things go wrong, he notes.

Another area of interest is staffing and compensation. In 2010, the for-profit colleges examined employed more than two-and-a-half recruiters for each support services employee, the report reveals.

While compensation at public institutions won’t reach the average of $7.3 million educational companies paid to their chief executive officers in 2009, concerns about the administrative budget are regularly expressed when tuition increases. Overhead is a concern in both sectors, Hawkins points out, but nonprofits are service heavy while for-profits are focused on recruiting.

Hawkins thinks that legislation in response to the report is not a matter of if, but when. “It will be important that business offices keep an eye on it,” he cautions, especially restriction on how funds are used. “I think it’s important that those of us who practice higher ed in a way that is above board and sound are at the table for these discussions.”