Student Defense Statement on Department of Education Review of Prohibition on Incentive Compensation

FOR IMMEDIATE RELEASE:
February 15, 2023 

MEDIA CONTACT:
press@defendstudents.org | 202-734-7495

Student Defense Statement on Department of Education Review of Prohibition on Incentive Compensation

The Department of Education today announced the agency would seek public comment regarding the outdated “bundled services guidance” that for-profit companies and institutions cite as authority to enter into contracts that use enrollment-based compensation. In response, Student Defense President Aaron Ament released the following statement:

“The bundled services loophole to the incentive compensation ban has led to the next frontier of predatory practices in higher education. We know colleges and universities — both public and private — are partnering with online program management companies to enter into profit-sharing agreements based on student enrollment. This has ripened the conditions for misleading and defrauding students, and we’ve already seen evidence of harm caused by this lack of oversight.

“The Department should rescind and replace this loophole to make clear such arrangements are barred by the Higher Education Act. We’re glad to see the Department looking into this issue and we look forward to working with the agency to develop protections to better safeguard students from being taken advantage of by predatory higher ed profiteers.”

Last month, Student Defense filed a class-action lawsuit against the University of Southern California and 2U, Inc. — a for-profit OPM company — for substantially misleading students with doctored U.S. News & World Report ratings to entice students to enroll in the Rossier School of Education’s online programs and boost enrollment profits.