On the Frontline of Education

While at an industry get together, a friend had a funny experience. Listening to an account manager, he heard about a campaign doing really well on Facebook. He asked the account manager if he was sure it was that campaign because he had tested it on Facebook, and it sucked, this coming from one who has had success. When asked if the other affiliate was running only the approved creatives, the account manager said something to the effect of "That’s what he says." Missing from this account of the story is the look the account manager gave the other affiliate, that almost imperceptible nod saying, “I’m not asking too much.” This is no knock on the account manager or any implication that any would knowingly allow and condone the use of unapproved creatives. The fact is that it happens, and many times it happens for a reason. In many cases, the chief reason for unapproved creatives occurs because the advertiser doesn’t have a handle on what converts and what doesn’t. They don’t have the resources, or more importantly, the systems in place to enable others to succeed. The famous help me help you situation.

In those situations where the publishers especially feel as though the advertisers don’t do enough to help them, many will start to rationalize why creating and running unapproved ads is fine. If others say to them they shouldn’t, again, they have come up with reasons why they would still continue the practice. The issue runs a little deeper than a misunderstanding between advertiser and publisher. Were we in a conversion at all costs environment or a conversion with limited perceived downside (like certain continuity or adult), having publishers empowered to do what it takes almost makes sense. The tension comes in areas where advertisers answer to a higher authority. When an advertiser finds themselves accountable to strict guidelines in order to stay in business, layer on top of that being a publicly traded company, you will find those concerns of running afoul of the higher power overriding their desire to take risk. We have seen this play out in several areas but none like the world of continuing education.

We are coming off a period of great growth in the education sector. Just ask the companies that do lead generation. With great growth comes great scrutiny, and the combination of risk taking plus government scrutiny is not a good combination. The for-profit education sector is under intense scrutiny. The issue at hand? A cycle of schools enrolling unqualified students by making promises to students that couldn’t be fulfilled, reaping profits from tax payer dollars in the form of federal student loan dollars, churning out students whose biggest gain from the education is a mountain of debt they can’t pay. Schools win, students and tax payers lose. Combine that perception with a government that doesn’t believe in education as a business. That’s the mix of ingredients faced right now. The facts are a new government with slightly anti-business leanings (especially with regards to education), a recession due to a credit crisis, certain private companies profiting off of education dollars. Not much has really changed in the last piece. The schools haven’t changed their practices for the worse. It’s simply the environment in which they operate and the lens being used to interpret the actions that changed dramatically.

To better grasp the timing and why everyone in the funnel for higher education marketing feels the scrutiny, focus on the funds. Access to federal funds is contained in Title IV of the Higher Education Act, enacted into law in 1965. This complicated piece of legislation covers much more than student aid. On August 14, 2008, President George W. Bush signed the Higher Education Opportunity Act (HEOA) into law, effectively reauthorizing the Higher Education Act (HEA) of 1965. The process of reauthorizing versus simply renewing certain sections compared to extensions, is past our pay grade. The ultimate goal through each change is to update the bill to reflect the changing landscape and to improve so that it can serve the needs of students better, whether that is requiring changes from schools, modifying loan forgiveness, and many other things. The Department of Education is responsible for examining the requirements of the new law and publishing a series of draft regulations to help with compliance. These regulations are what is being determined now.

Unlike other parts of legislation, the process of drafting regulations to enforce the HEOA, has some public components. The Dept of Education solicits some feedback and in essence shares their thoughts along the way. When drafting updated regulations around one of the most important pieces, Title IV, home to the money, this process is called negotiated rule making, negotiated because it supposedly brings together a group representatives of the industry to make the final say. Supposedly is a big word, because a big warning flag occurred when the committee was announced as it looked anything but balanced in the eyes of those with the interest of for-profits in mind. Much of the friction stems from a 2002 ruling by the Department of Education that clarified language around acceptable behavior for one of the key sectors of Title IV and the perceived need to correct it.

Any day now, the Department, through the result of the committee’s input will reveal their final draft of the updated guidelines. Throughout the "neg reg" process, all but the largest of lead generators and aggregators (or regular readers of the Federal Registry) have continued their daily lives without paying much notice of the process. For those paying close attention, the sector was and still is incredibly concerned. Taken to the extreme, it was quite possible that schools might have been forced to no longer advertise via lead generation if they wanted to stay compliant with the law and have access to funds. The tone seems less severe, but new legal guidelines are coming out imminently, and they have the very real potential to change how business gets done. At the very least, it means continued scrutiny, and that means scrutiny throughout the chain.

Perhaps the best way to summarize the entire situation is to back up to 1992, when Congress added a provision to the Higher Education Act prohibiting colleges from giving "any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments." In other words, schools can’t be truly performance based. That obviously runs counter to the nature of our industry, and many in the for-profit / career college industry felt the same way. They were pleased when in November 2002, the Department issued new regulations that established 12 "safe harbors" which loosely allowed colleges greater freedoms with regards to incentive compensation by outlining more specific do’s and don’ts. It’s a see-saw. The 1992 revision focused on stopping fly-by-night trade school operations taking advantage of Title IV. In 2002, the change swung back not in favor of but allowing career schools greater freedoms. And now we sit, in 2010, the collective breaths of the for-profit sector and those who market for them are being held, wondering just how far the pendulum will swing.