December 3, 2009 « The Wrong Direction on Safe Harbors »
Other commentators have suggested that the aggressive stance taken by the US Department of Education (DEd) regarding incentive compensation for admissions personnel could be a negotiating tactic. The assertion here is that they would "settle" for additional restrictions. Even if this turns out to be the case, the DEd is proposing exactly the wrong set of changes to the regulation enabling the Higher Education Act. Instead of eliminating the Safe Harbors to avoid abuses, they should clarify the definitions and practice effective and efficient enforcement.
DEd, NACAC, and other opponents of incenting enrollment professionals assert that such payments encourage unethical behavior. Specifically, knowingly enrolling students who fail the ability to benefit test and who have little or no chance of succeeding at the school. I have to wonder if these critics have read the regulations thoroughly, have developed enrollment compensation plans such as we have, or have even worked with enrollment professionals and lawyers to craft compensation plans that comply with the regulations and support institutional values and goals.
Our experiences providing guidance in the development and revision of enrollment compensation plans have taught us that a thoughtful compensation plan, once that includes performance-based compensation, encourages behaviors in enrollment personnel that we would all consider ethical.
Unpacking the Ethical Issues
The best schools realize that it is expensive to attract and enroll students. In fact, if students leave or are dismissed before a school recovers the cost of enrolling the student, the school suffers a net financial loss on that student. All schools, with or without incentive compensation, run this risk and accept it because students who do persist can offset the loss taken on the early attrition. In effect, then, those who do persist pay the freight for those who drop before the break-even point in their course of study,
There is a point, however, when low retention rates consume too much revenue and the cost and benefit curves begin to collapse and cross each other.
Beyond the strictly financial case, everyone in higher education can agree that schools should retain students to graduation, so long as they possess the ability to benefit. This goal satisfies every stakeholder in the system, obviously including the student. Given the importance of this goal, and the importance of proper admissions functions to support it, retention must be a part of any valid and useful incentive compensation plan.
NACAC and DEd are not interested in meeting the needs of the working adult population, as they have repeatedly demonstrated. To large portions of the staffs of these organizations, college is an institution designed for 18 year olds freshly graduated from high school. This antiquated approach ignores the actual students at many schools in the United States. If NACAC and DEd were interested in the other half of college enrollments, they would support compensation schemes that made admissions or enrollment counselors well-paid professionals who remained in their roles for extended amounts of time. The current approach taken by most traditional schools ensures a relatively rapid turnover of the counselors because they view the admissions counselor role as an entry-level position. This leads to staffing this vital role with recent college graduates who are actively looking for their next position in another university department.
None of this excuses the DEd from carrying out its proper role: writing realistic regulations that serve the interests of the students and enforcing them. If schools or individuals act illegally or unethically, they must be punished. If enforcement mechanisms are weak or used improperly, the DEd should concentrate on fixing them.
Media coverage, even in much of the education press, of this issue is also failing the public:
- It is too superficial. The articles I've read focus on the fact of compensating enrollment professionals for bringing students into the school. They do not address the details of the Harbors, which are quite a bit more restrictive than portrayed in these accounts.
- By framing this as an issue primarily important to for-profit schools, it ignores innovators at schools that do not pay taxes. While many of these schools have admissions personnel who belong to NACAC and cannot accept such compensation, by no means do all of them.
- The biggest problem with these regulations as currently written is the lack of clarity about how to create a conforming plan. Specifically, in the most effective Harbor, the regulations only say that the twice annual adjustment complies if it "is not based solely" on enrollment performance.
The solution, as we see it, is not for DEd to eliminate all or some of the 12 Safe Harbors but for the Department to remedy the long problematic ambiguities in the language of some of them. Properly executed, the Safe Harbors provide the guidance necessary to ensure ethical conduct. Equally important, the 12 Safe Harbors provide a way to achieve ethical conduct that exceeds that of many public and independent colleges with respect to the treatment of prospective students.
Keith Blakeman is Vice President of Analytics at InterEd, Inc.
He can be reached through this forum.
Keith welcomes the expression of other views by senior professionals.
Reader Comments (2)
"There is a point, however, when low retention rates consume too much revenue and the cost and benefit curves begin to collapse and cross each other."
A light-bulb went off when I read this; but I'm not sure if it is the right light-bulb. In any case, it clarifies for me the fiscal consequences of low retention for the institution, and provides context for retention efforts. (At least for high-spending schools. Does anyone know the range of recruiting costs for students at different schools?)
But what I noticed is that there may be a conflict of interests at work here: admissions counselors are interested in bringing in the most students (it is, after all, their job), but without special attention to their potential to benefit; school administrators, however, want those students to complete their programs of study.
Unless there is some artificial means of integrating these diverse roles, and for linking retention rates (that are, after all, years in the future) to the admissions performance standards, I don't see how this can be resolved. What am I missing here?
There is no doubt that conflicts of interest play out, not only in admissions but also throughout the system.
The first serious error I see is holding any proposed change, such as performance-based compensation, against the standard (100+ year old) higher education model as if the proposed change has to prove itself against a gold standard benchmark. In fact, the 100+ year old model is so badly flawed and riddled with inefficiencies, ethical lapses, and self-serving systems that it deserves to be studied for its flaws more than its strengths. A second serious error is failing to understand that any complex system contains conflicts of interest. There are generally conflicts of interest when any two individuals perform even the same role.
The challenge in designing performance-based compensation for the enrollment function, as I see it, is to arrange the various incentives and disincentives with intelligence to achieve a decent, never perfect, balance among the inevitable competing interests. Ignoring human nature, as higher education has done on this issue throughout its modern history, is simply unintelligent.
What are some of the incentives that might balance the competing interests? Do we want some compensation to derive from doing our jobs and getting students enrolled? Yes. Do we want some compensation to derive from staying on task (showing up, making calls, responding quickly to inquiries, etc.)? Yes. Do we want some compensation to derive from understanding the programs well and being able to communicate with integrity how they might or might not be a good fit for each prospective student based on his unique profile? Yes. Do we want some compensation to derive from having the skill to enroll students who end up succeeding rather than dropping out somewhere along the way? Yes. Do we want some compensation to derive from the judgments of academic program managers that they are, on balance, seeing students who have the ability to benefit from the program in which they have been enrolled? Yes. There are other important criteria – and the devil is in the details – but these are sufficient to make the point.
The underlying question being debated is this:
Anyone who fails to understand the the performance-based approach represents a position that is morally and empirically (psychologically) superior is not likely to agree with this discussion.Lastly, how about the 100+ year old model where idiots and geniuses earn the same pay, if they are enrollment counselors (not so if they belong to the faculty). Does anyone believe that this model is free of conflicts of interest? Assuming the counselors are Homo Sapiens, each individual is seeking to maximize some perceived or real benefit to himself by seeking the benefits accorded by someone else in the system based on criteria that may or may not be explicit, appropriate, or serving the larger values of the institution.
In the final analysis, it is an empirical question as to how the two models compare with respect to Type I and Type II error. Does anyone have any hard evidence on this question? My observations suggest that the 100+ year old model tends toward failing to admit individuals who need a little extra help getting over the barriers but would eventually succeed. It also fails more in being genuinely helpful. The for-profits tend toward admitting individuals who are marginal with respect to ability to benefit. They also tend toward failing to be genuinely helpful but for different reasons. I do not see a large difference in error rates, net/net. There are too few not-for-profits using performance-based incentive compensation for me to make a good judgment about them. So far as I know, the only schools in this category have been clients for whom we designed the compensation system. Therefore, in addition to the sample being small, I would have to think the issues through to remove the biases introduced by my more detailed knowledge of their operations.