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ARTICLE · 13 JANUARY 2016

Can Colleges Compensate Recruiters Based On Graduation Rates?

Thompson Coburn LLP
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As we've noted before, our higher education practice regularly receives inquiries related to incentive compensation plans for recruiters.

United StatesConsumer Protection
Aaron D. Lacey
Aaron D. Lacey
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As we've noted before, our higher education practice regularly receives inquiries related to incentive compensation plans for recruiters. Late last year, following a series of rulemakings, lawsuits, and court decisions, the Department finally revised its position regarding whether institutions of higher education may pay recruiters completion-based or graduation-based compensation.* We've received enough inquiries on this topic that we thought we would address it here in REGucation. As is always the case with incentive compensation matters, the guidance is murky, and institutions should proceed with caution.

Rulemakings and remands

The Department's regulations addressing incentive compensation, located at 34 C.F.R. 668.14(22)(i), require that as a condition of participation in the federal financial aid programs, an institution must agree:

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