Reversing its earlier position, the U.S. Department of Education announced on Friday, Nov. 27 that it will no longer ban colleges and universities from compensating recruiters based on students’ graduation from, or completion of, educational programs. At the same time, the Department stood by its existing ban on recruiter compensation tied to enrolling minority students.

The graduation-based reversal comes in response to a 2014 court decision in the case APSCU v. Duncan, which held that the Department hadn’t adequately explained or supported its prohibition on this kind of incentive compensation. In a rulemaking notice issued on Nov. 27, 2015, the Department explained that it changed its mind because it lacks sufficient evidence showing that schools use graduation- or completion-based incentive compensation as a proxy for enrollment-based incentive compensation, which Congress has banned by statute.

Delving into whether it would allow colleges and universities to reward recruiters for enrolling minority students, the Department continued to say “no.” The Department professed its support for efforts to recruit diverse students and acknowledged its blanket ban on enrollment-based incentive compensation could negatively impact diversity efforts. Nonetheless, it refused to carve out diversity programs from the general rule that schools can’t reward recruiters based on enrollment numbers.

What this means to you

Institutions of higher education should continue to monitor the ways they’re compensating recruiters, with a special emphasis on ensuring they do not provide prohibited enrollment-based incentive compensation. The Department’s decision opens doors to incentivizing recruiters for bringing in students who complete their programs; schools should consider whether offering this permissible kind of incentive compensation supports completion goals and institutional mission.