Dave Datars and I will be representing Sparkroom at the BMO Back to School Conference next Thursday, September 16th in New York City. It will be extremely interesting to take the temperature on the market-funded education industry after a year of radical change on the regulatory and rhetoric front.

Reach out to either Dave or myself if you are interested in meeting at the conference.

The Sparkroom team will be exhibiting at the Career College Association Annual Convention & Exposition aka CCA in Las Vegas from June 9th to June 11th. Come find us at booth #904. We are looking forward to connecting with customers, prospects and great friends in the industry. And to hearing Bill Clinton speak on “Embracing Our Common Humanity.”

Earlier this week, I attended CCA’s annual Hill Day and Policy Forum in Washington, DC. It was a great event, with over three times the number of attendees of previous years. This turnout wasn’t entirely surprising, considering the legislative issues unfolding in Congress and the Department of Education right now. Regardless, it was great to see the career college community come together and show such a strong, unified front. It was also great to have a chance to meet up in person with peers and friends from across the country.

When I returned from the event, a colleague asked me to explain the issues and concerns around the Department of Education’s rulemaking on Federal financial aid programs. I thought I’d just send her a link, but I couldn’t find a site that pulled the relevant details together in one place. So, for anyone who is trying to understand these issues, I thought I’d share the summary I pulled together.

A Primer on the Department of Education’s Negotiated Rulemaking for Title IV Programs

1. What is negotiated rulemaking?
   When a government agency (ie. The Department of Education) proposes a change to a regulation, it is usually develops the proposed changes without public input and then publishes them in the Federal Register for comment by the public. In some cases, an agency is required to use a process called “negotiated rulemaking” which allows those parties that will be most affected by the regulation/rule change to participate in the development of the proposed rules before they are published in the Federal Register. The Department of Education is specifically required by law to use negotiated rulemaking for Title IV, Higher Education Act (HEA) programs.

   A complete FAQ on the negotiated rulemaking process is available here: http://www2.ed.gov/policy/highered/reg/hearulemaking/hea08/neg-reg-faq.html

2. Why did the Department of Education establish a negotiated rulemaking committee?
   The Department of Education established two negotiated rulemaking committees for 2009-2010 – one to develop proposed regulations governing foreign schools, and the other (which is the one we are concerned with) was established to develop proposed regulations to maintain or improve “Program Integrity” in the Title IV, HEA programs (Student Assistance programs). The goal of this committee is basically to prevent abuse of the federal financial aid programs. A more complete explanation by Robert Shireman, the Deputy Undersecretary of Education, can be found in the transcript of a call with Career College representatives held on May 29, 2009 ( http://www2.ed.gov/policy/highered/reg/hearulemaking/2009/call-career-colleges.pdf )
   
3. What issues are the “Program Integrity” negotiated rulemaking committee addressing?
   The committee is negotiating on 14 rules/rule changes in the following areas:
   Definition of High School Diploma; Ability to Benefit; Misrepresentation of Information to Students; Incentive Compensation; State Authorization as a Component of Institutional Eligibility; Gainful Employment in a Recognized Occupation; Definition of a Credit Hour; Agreements Between Institutions of Higher Education; Verification of Information Included on Student Aid Applications; Satisfactory Academic Progress; Retaking Coursework; Return of Title IV Funds: Term-based Programs with Modules or Compressed Courses; Return of Title IV Funds: Taking Attendance; Disbursements of Title IV Funds

   A full explanation of each of these issues can be found here: http://www2.ed.gov/policy/highered/reg/hearulemaking/2009/integrity-session3-issues.pdf .

4. What issues are the most contentious and why?
   The two issues causing the most concern for career and community colleges are around the definition of “gainful employment” and the issue of “incentive compensation”. An explanation of each follows.

   Gainful Employment: Most for-profit, career and community colleges & universities are eligible for federal aid based on their ability to “prepare students for gainful employment in a recognized occupation.” The proposed goal of the negotiated rulemaking was to define/create a standard for what is considered “gainful employment”. The final proposal for defining gainful employment involves capping annual debt repayments at no more than 8 percent of a program graduate’s expected salary over 10 years.

   Serious concerns were raised with this approach. First, it singles out students attending proprietary career, technical, and vocational colleges. Many of these programs serve predominantly adult learners, single parents, and low-income students who need the flexibility that for-profit career colleges can provide. These students are also the most in need of Title IV funding. If the real concern is with the high debt burden incurred by some students, any proposed changes should affect students attending non-profit and public institutions as well. Other concerns raised during the negotiations include a potentially “slippery slope” of price controls for all higher education institutions; the significant work/time required to implement this on a program-by-program basis; and concerns with whether the DoE has the necessary authority to regulate on this issue. More details on this issue can be found here in an article in Inside Higher Ed.
   
   Incentive Compensation: In order to receive Title IV funding, institutions are prohibited from providing staff with any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid. There are 12 “safe harbors” or types of payment and compensation plans that do not violate this statutory prohibition. The proposed rule changes would eliminate those safe harbors. Although the two sides were much closer at the end of negotiations, according to Inside Higher Ed, issues around language remained.

5. Where do things stand now?
   Following months of negotiations between the DoE and the panel of negotiators (representing two- and four-year nonprofit institutions, for-profit colleges, students, consumer advocates and campus administrators), a consensus was reached on nine of the 14 issues being proposed. On the remaining five issues (including, most notably, the definition of gainful employment and incentive compensation), no consensus could be reached. According to Inside Higher Ed, “Without overall consensus, the department is free to revise all 14 rules as it sees fit before releasing them for a final round of public comment.” The lobbying continues and we’ll wait to see how it all works out.

We ran a webinar on May 14 called “How To Take Control of Your Online Lead Generation”. We discussed how marketers in higher education can utilize software to automate lead delivery and gain business intelligence across all of their online and offline marketing channels, and covered best practices for developing media plans, managing vendors, and evaluating performance.

Thanks to all those who participated. If anyone would like to listen to a recording of the webinar, simply email us at events@sparkroom.com and we will reply with a link.

I spent last Tuesday at BMO’s Marketing and Advertising Thought Leaders conference. Thanks to Pete Stack and Jeff Silber from BMO Capital Markets for the invitation to attend and sit on the EDU panel. Anna Maria Virzi from ClickZ covered the day here.

I shared the stage on the EDU marketing panel with some of the smartest folks in EDU lead gen. The panel was moderated by Jeff Silber and included Michael Platt from Plattform, Doug Brown from All-Star, Greg O’Brien from CollegeBound, and Steve Isaac from Education Dynamics. My notes from the panel:

* for-profit education is counter-cyclical as all of the companies on the panel talked about growing budgets

* there will be a flight to quality as schools increasingly choose the larger, better converting lead providers. Sparkroom tends to agree with this conclusion and hopes that Lead IQ is part of every school’s plan to get smarter about marketing and enrollment

* the not-for-profit universities are going to start marketing more like the career colleges over the next decade; I am not sure about this one — someone on the panel mentioned that Penn State, UMass and University of Maryland have all built large and successful online education divisions — I think it is going to take more than 10 years for a marketing and customer acquisition ethos to permeate the culture of the not-for-profit university

* all the panelists talked about regulation risk — particularly as it relates to the Department of Education regulating marketing education to potential students. One of the panelists did the quick math – $40B in for-profit EDU revenue, 25% of revenue spend on sales & marketing and 80% of the revenue comes from Title IV funding. Ergo, the Department of Education is spending $8B every year (through career colleges) marketing education.

I learned a ton over the course of the day and met some great digital marketing companies. Thanks again BMO for the invite.

We will be exhibiting at the Career College Association 2009 Annual Convention in Orlando, Florida. The show looks great and we are excited to be part of it this year. Come by and visit us in booth #114 to meet the team and see our products in action. We hope to see you there.

Join us on May 14 at 2pm EST. We’ll be discussing how schools can utilize software to automate lead delivery and gain business intelligence across all of your online and offline marketing channels. Improve your marketing efficiency, boost profitability, and better manage your vendors. Get details and register here. Looking forward to seeing you there.

We will be demoing some new product at LeadsCon (www.leadscon.com) next week in Las Vegas. The show begins Wednesday, March 4th and ends Thursday, March 5th. We are being featured in the Private Company Spotlight on Wednesday, March 4th at 11:45 AM. Looking forward to catching up with the industry next week.

Our first webinar happened yesterday, Monday, February 2nd. Thanks to all those who participated. If anyone would like to listen to a recording of the webinar, simply email us at events@sparkroom.com and we will reply with a link.Thanks.

Sparkroom is doing our first webinar in the higher education space. Get details and register here. The date is Groundhog Day – February 2, 2009 at 2 PM EST. Looking forward to sharing our EDU platform with you then.

UPDATE: Thank you to those who attended the webinar. For those who missed the live event, simply email events@sparkroom.com for a link to a recording of the webinar.