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From Taboo to Hot Topic

From Taboo to Hot Topic
June 1, 2010

In higher education, change rarely happens quickly. Not so when it comes to hiring overseas agencies -- paid by the college in the form of per-student commissions -- to recruit international students. Two years ago the topic was taboo, and few colleges would publicly admit to the practice, which is illegal under U.S. law when it comes to recruiting American students.

Today, while ethical qualms persist, and the debate over the payment of per-student commissions still simmers, it’s nonetheless remarkable the number of colleges that have embraced the recruitment strategy -- and also those that are now willing to at least consider it.

“It’s a moving landscape,” says Susan Sutton, associate vice chancellor of international affairs at Indiana University Purdue-University Indianapolis and associate vice president for international affairs for the Indiana University system. “Two years ago, I would have said, categorically, IUPUI and IU, as a system, do not use agents and will not use agents. End of discussion.”

Now, she’s on a system-wide task force to evaluate the use of agents. “We don’t use them at this moment and are unlikely to do so in the next couple of years, but the door has been cracked open. Let me put it that way,” says Sutton.

What’s changed? There’s been a recession, for one thing. And college leaders that in more flush times embarked on grand plans to internationalize their campuses have been looking for cost-effective strategies (even, depending on your perspective, shortcuts) for increasing and diversifying their international student enrollments. These international students are typically full-paying. But international recruiting can be an expensive proposition with little guarantee on return; this being the case, the prospect of paying an outside company a portion of a student’s tuition revenue only after he or she has matriculated has proven an attractive model.

“Colleges and universities, a lot of them, are just hungry to internationalize themselves,” says Richard W. Ferrin, president and CEO of World Education Group, an agency and education services company that recruits international students (including with agents) and forges articulation agreements between its partner U.S. colleges and foreign universities. “This is for a variety of reasons, sometimes financial – we want these full-paying international students to help with our budget flows – and even with the best of educational aims, we want a more diverse student body. We’re at a time when U.S. higher education is saying we want to internationalize for educational, financial, social, and political reasons, and most don’t have the budgets to send out representatives from their institutions to go all over the world,” says Ferrin, formerly the president of Salem International University.

Seeing the opportunity, big, well-regarded international education companies – including Hobsons and IDP Education – have stepped into the marketplace, and are developing networks of agents to recruit students for U.S. colleges.

Another change, and arguably the most significant one, is that a young nonprofit association, the American International Recruitment Council, which formed in 2008, has quickly established itself as a player and has offered a degree of quality assurance to the marketplace. With aims to regulate and professionalize the industry, AIRC certifies agencies that meet its standards. Just last week, AIRC announced the certification of 16 more agencies, bringing the total number of certified agencies to 24, operating in 35 countries. (The list of certified agencies is on AIRC’s Web site. One agency was denied certification. Per its policy, AIRC declined to disclose this agent’s identity.)

“Now there is a large group of certified agents. They have been validated, if you will, they have been vetted,” says Marguerite J. Dennis, vice president for enrollment and international programs at Suffolk University, in Massachusetts. “Now it’s up to us, those of us who are involved in international education, to determine if we want to use them.”

“I think this is a tremendous opportunity for the United States,” says Dennis. “Forget my school. Forget any individual school. We have been at a distinct disadvantage for years.”

The use of international recruiting agents is common practice for colleges in Australia and Britain, but there are good reasons why universities in the United States have historically resisted it. For one, federal law restricts incentive compensation when it comes to recruiting domestic students; the 1992 law emerged out of concerns that recruiters would bring in unqualified students in order to collect commissions. While there are no such legal restrictions when it comes to international student recruitment, many have been skeptical of applying different standards offshore. Beyond general questions about the wisdom of commission-based recruiting – there are fears that agents will pass along students who lack the ability to succeed or otherwise would be poor matches for the institution -- there’s also a general concern that agents acting on behalf of a college could engage in abusive or unethical practices or misrepresent the institution, undermining its global brand.

“We still have lots of reservations about whether we need to do it and whether that would result in students who really should be coming to Indiana as opposed to being cajoled into it,” says Sutton, of IUPUI. “The concerns are that some agents – bad agents, let’s call them bad agents – would gouge the prospective students, and by gouging I mean overcharge them for what they’re doing and act in ways we view as unethical. There are concerns that bad agents would not understand Indiana, and would misrepresent what we are, and therefore that it could tarnish the university name.”

On the other hand, ”The appeal is this: that no university can be everywhere at once,” says Jim Plunkett, executive director of admissions at La Salle University, in Philadelphia, another institution that does not currently work with agents but is now considering it. “The lure of using the international agent -- the right one -- is that you already have an advocate for your university embedded in that country, someone who knows the culture, someone who knows the language, someone who knows the education system.”

The Rise of the Agent Model

Notice the terminology – the right, i.e. good agent, versus the bad agent. The ability to distinguish the good agents from the bad is the premise of a standards-setting organization like AIRC, which certifies agencies that have successfully completed a process akin to accreditation, complete with self-study and site visit. “This was the missing link,” says John Deupree, AIRC’s executive director. “Before there was no standards process or quality assurance process. In our view, the biggest barrier to the use of agents has been removed.”

AIRC’s number of member colleges climbed past 100 this month. Its members are predominantly small, tuition-dependent private colleges and regional public universities, with a few larger research universities and community colleges thrown in. The most elite colleges are not represented. Many larger, more well-known institutions, both public and private, can recruit effectively on their own. They can invest funds to send their own admissions officers to Beijing or Bangalore, and spend enough time there to build contacts with high schools and prospective students.

While not every college will use agents, “the receptivity has grown startlingly fast” -- including from the corporate world, says Mitch Leventhal, AIRC’s chair and president, and vice chancellor for global affairs for the State University of New York system. “I have seen a very significant increase in interest from private companies in a variety of fields, as well as private equity firms, that are either looking for places to invest their money or looking to tap into what they see as a potentially large new industry in U.S. higher education, that is, the recruitment space.”

“I’ve been visited by at least eight companies, either in private equity or related fields, who have come specifically because they’ve observed the heating up of this market and are trying to figure out if they can serve it in some way. That’s a really significant change that’s happened in the last 12 months,” says Leventhal.

He adds: “It’s early, it’s changing quickly, and there’s opportunity. Truthfully, in five years there will probably be some major players who have established themselves, and they may not be companies that exist yet or that we even know are going to be in that spot.”

Two companies that are vying to be in that spot are IDP and Hobsons, Australian and British companies, respectively. IDP, which is AIRC-certified, has moved most quickly in building a portfolio of universities, and now has agreements to recruit students for 60 colleges in the United States – including, to take a sampling, Bellarmine University, in Kentucky; Colorado State University; Dean College, in Massachusetts; Duquesne University, in Pennsylvania; Embry-Riddle Aeronautical University, in Florida; Guilford College, in North Carolina; John Carroll University, in Ohio; the Johns Hopkins University Global MBA Program; Lipscomb University, in Tennessee; Lyon College, in Arkansas; Mary Baldwin College, in Virginia; Thomas College, in Maine; and the Universities of Hartford, North Dakota and San Diego.

One year into IDP’s efforts on this front, “The U.S. school perception of what we do is a lot more open-minded than I was expecting it,” says Mark Shay, the company’s regional director for the United States. “That’s been tremendously encouraging.”

Also one year in, Hobsons, which is an applicant for AIRC certification, has signed up 27 U.S. universities as partners, and, at the upcoming NAFSA: Association of International Educators conference (which begins today), it plans to start signing up the next 25 or so (Hobsons, unlike IDP, has not released its list of clients).

“We’re being cautious because we want to make sure we get this right," says Jeremy Cooper, president of Hobsons Integrated Marketing Solutions. “We feel as though we’ve had some key successes this year. For us, it’s just about continuing the pace.” Hobsons’ ultimate goal is to build a broad-based, representative portfolio of 150 to 200 U.S. universities that its network of agents can refer students to; IDP, in five years, hopes to represent 500 U.S. colleges. The partner colleges will pay a flat fee, in IDP’s case, and a proportion of tuition, in Hobsons’ case, after the students are settled on campus (after the first add/drop date for IDP, and the final withdrawal date, for Hobsons).

The results for colleges that have contracted with these companies, in terms of increased or diversified international student enrollments, are still to be determined; stay tuned until fall 2011. Many institutions, however, have high aspirations for growth, and see the use of agents as a key component of their growth strategy.

Using agents, Leventhal would like to grow the international enrollment of the 64 SUNY campuses from the current figure, 18,164, about 3.9 percent of the 465,000 students enrolled, to 31,500, which, assuming current enrollment levels, would represent an increase of the proportion of foreign students to 6.8 percent.

The University of Mississippi, which has contracted with IDP, has goals of increasing its international enrollment, currently at 3 percent, to 4 to 5 percent, over a growing student body, says Greet Provoost, director of the office of international programs. “We’re very growth-driven,” she says. Provoost adds, however, that the growth in international enrollment is two-pronged. “Number one, yes, it is increasing the brand recognition of the university, which has a lot to do with marketing and putting out tentacles that are working on your behalf, like IDP for example. But I also see it very much as a result of an effort to do what we do internally better as well, to be able to enroll more of the students who apply and who are admitted.”

Reservations about the Agent Model

Ethical questions regarding the use of agents, however, are by no means settled.

“There is no question that we are seeing more corporate entanglements when it comes to recruitment of international students,” says Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. “We certainly have no objection in the abstract to arrangements that may involve a profit motive. Certainly the bookstore has been outsourced to profit-making companies and the cafeteria has been. But we have misgivings when it comes to what we view as a fairly core component of the university mission. I think that’s the real crux of our objection and concern, is that unlike the cafeteria, unlike the bookstore, this has to do with one of the most fundamental academic functions of the university. Outsourcing this or subjecting this to the profit motive may well be crossing a threshold we don’t want to cross.”

Nassirian cites what’s happened in Australia by way of warning. While Australia is often described as a huge success story when it comes to cross-border higher education – having increased its international enrollment from 228,119 students in 2002 to 491,565 students in 2009 – its system has been strained by the rapid growth. A recent review of the international education sector was spurred partly by collapses of shaky for-profit vocational colleges and investigated a range of complaints involving unscrupulous providers offering low-quality education programs and false and misleading information provided by education agents.

In regards to agents, a government report published in February demonstrates the possibility for abuse when colleges are not conscientious: “During the review some [higher education] providers indicated monitoring their offshore education agents’ activities was difficult and there were suggestions the Australian Government should directly regulate the activities of their education agents. Other providers indicated a disturbing abrogation of their responsibilities, a lack of good business sense or a thorough understanding of the complexities of operating an export business…. It is most concerning to hear that some providers do not believe their education agents are accurately representing them and yet they are taking no action to either cease using such agents or ensure their education agents act in an ethical manner.”

On the one hand, says Leventhal, of AIRC, Australia, long a leader in international recruitment, may now have a lesson to learn from the United States – rather than attempt to regulate overseas recruitment agencies through legal measures, the country could turn to a voluntary system of accreditation or certification (per AIRC’s model). On the other hand, says Nassirian, of AACRAO, perhaps the United States still has lessons to learn from Australia’s growth pains: “We may kill the goose that laid the golden egg. American higher education enjoys the highest prestige in the world in terms of desirability mostly because American institutions have been so meticulous in their approach to international students.”

The other national association representing admissions professionals, the National Association for College Admission Counseling, includes a blanket prohibition in its standards of good practice against commission-based recruiting; it makes no distinction between domestic and international recruitment. This has long been the case. That said, the association’s admissions practices committee is now considering the issue, with the intention of clarifying its stance specific to the payment of commissions in international student recruiting, says David Hawkins, NACAC’s director of public policy and research. “There needs to be some clarity as to NACAC’s position one way or the other,” he says.

Marjorie S. Smith, associate dean and director of international student admission at the University of Denver, remains an interested skeptic; she still has a lot of questions about the use of agents. “This may be naivet√© on my part, but I don’t see why we would pay an outside agent to find students for us overseas, when we don’t pay outside agents to find American students,” she says. “To me, there’s no mystery to recruiting international students. It’s not like these companies know how to do what we don’t. It takes a professional staff, just as it does for domestic recruitment, and just as you do for domestic recruitment, you need to know the market, you have to get to know the counselors and you have to make yourself available to students.”

Whereas, she says, “When you pay [an outside agent] to enroll a student, you lose some control and you run the risk of misrepresentation. You could get slimed.”

“I’m going to watch the growth of AIRC, and their efforts to control the potential negative aspects, and applaud for them and root for them as loudly as possible,” Smith says. “But in the meantime, we’re going to make our investment more directly through scholarships and recruitment travel and social media, and our ever increasing Web presence, and we’ll also continue to work with the dozens of agents that we do – but these are agents who work for the family and not for us.”

Much of the recent rhetoric about the use of agents, paid by the college via commission, suggests that those institutions that don’t jump on board the bandwagon will be left behind. But as several professionals point out, institutions don’t have to use agents. At American University, “it’s not our policy to do so but there’s also no need,” says Evelyn Levinson, American’s director of international admissions and chair of NAFSA’s Knowledge Community on Recruitment, Admissions and Preparation (she stresses that she is stating her personal views and is not speaking on behalf of either American or the NAFSA group). “We’re doing a great job on our own.”

“From experience, I can say that universities can do really well by using internal expertise,” adds Negar Davis, director of global relations and promotion at Pennsylvania State University, another institution that does not use agents. “They can still be successful and still attract quality students to their campus, who truly understand what they’re coming into.”

 

 

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