Legislation Will Restrict Growth at For-Profit Colleges

Rules restricting incentive-based sales practices have been approved by the Obama administration. The draft of the proposal, which was released in June this past summer, caused the slowing of enrollment significantly at the University of Phoenix, which is run by the Apollo Group Inc.The rules will be published today, and disallow colleges from paying recruiters according to the number of students they sign up. The legislation will also create guidelines for course credits and will obligate the colleges to inform the government of any new job-training programs they are offering, according to a statement issued by the U.S. Department of Education. This legislation will affect for and not-for profit schools of higher education, such as universities and colleges.After the draft rules were first made public in June Apollo Group quickly changed their recruiting behavior. Apollo runs the University of Phoenix, which is the largest for-profit college in the U.S. , with an enrollment of 470,800. Apollo explained that they eliminated ‘enrollment targets’ as a part of the recruiters pay, which was called ‘incentive compensation.’According to Arne Duncan, Secretary of Education, “These new rules will help ensure that students are getting from schools what they pay for: solid preparation for a good job.”The rules will become law this coming July. On October 13 Apollo issued a statement saying that “new student enrollment will fall in the coming year in the changing regulatory environment.  Apollo’s shares dropped 23 percent and an index of 13 education companies fell 18 percent.

Alyssa Anderson

Alyssa Anderson has been involved in the world of business on several levels for many years. She was the CEO of a start-up high-tech company until its purchase by a global on-line e-business. Alyssa helped formulate marketing strategies for several other companies as an independent consultant, and she has advised local government on methods to achieve appropriate fiscal responsibility. Her opinions are well known through her many editorials which have been published throughout her career in a variety of local and national print media. She has been heard on radio discussing current issues affecting the business community and Alyssa hopes to bring her special brand of commonsense coupled with uncanny insight into her editorial responsibilities as the Business Page editor for Left Justified. Contact Alyssa at alyssa(at)leftjustified.com.

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