For-profit universities have come under a lot of fire lately. Not only are they being scrutinized because of the amount of federal student loans that have gone into default, but there have also been some suspicious recruitment tactics taking place. Most recruiters for these schools are compensated based on how many students they enroll. This has led to a spike in students being given unrealistic expectations about their education and future earning potential in order to increase enrollment numbers. These practices have also led to students taking out student loans they can’t repay after they graduate if they don’t receive a high enough paying job.
Due to a federal crackdown on for-profit colleges’ recruiting activities, changes are being made. Education Management Corporation, which is the nation’s second largest for-profit school operator, announced that they will be rolling out new incentive plans over the next year to change how they pay recruiters. The Department of Education has eliminated safe harbor guidelines which allowed recruiters to be paid based on the number of students they enrolled. The company does believe that these new rules will restrict some students from being able to receive a college education, however.
Education Management Corporation has outlined some steps they will take in case revenue gains or enrollment numbers are hurt by the new government rules. The company’s plan is to reduce expenditures, trim expansion and possibly lower some tuition costs if necessary, but they do not expect the new rules to hurt their gains significantly enough for these changes to occur.
Via Pittsburgh Tribune Review, Image via EDMC.edu