March 2010    Volume 23, Issue 2
  International Education Intelligence   
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The Use of Recruiting Agents in the United States

By Nick Clark, Editor, World Education News & Reviews

Higher education in the United States has long been attractive to international students, and universities have historically been able to attract those students on little more than name and reputation alone. However, as smaller, less well-known institutions seek to increase their recruiting efforts abroad the name-brand approach has become less viable, especially in the face of increased competition from a growing crop of education-destination countries around the world. As a result, a steadily increasing number of U.S. colleges and universities are employing – or looking to employ - the services of commission-based, in-country recruiting agents, a practice that has, until now, been viewed with considerable skepticism.

This opening up to the offshore recruiting industry has been hastened to a degree by current economic conditions – with institutional recruiting budgets being cut to the bone – and the establishment of a new standards-setting body. However, there remains strong and vocal opposition to the practice, especially among professional associations that represent and set standards of ethical practices for international education professionals.

On the surface and in the current economic climate, the practice of engaging agents appears a logical move for U.S. colleges and universities in terms of their return on investment, as the commission model compensates agents once a student is enrolled and on campus. In addition, the pressure from abroad is significant. US institutions of higher education have seen their market share dwindle over the last decade as other countries such as Australia and the United Kingdom have capitalized on the aggressive use of agents.

However, there is much more to the story than cost and expediency. There are issues related to ethics, institutional reputation and brand, transparency, commercialization of higher education, conflicts of interest, trust, and the list goes on.

With passionate and legitimate arguments on both sides of the issue, the decision on whether or not to employ commissioned agents as part of an institution’s international recruitment strategy is a serious matter. In this article, we seek to frame the positions on either side of the divide to help inform that decision-making process.

International Academic Mobility by the Numbers

According to a recent report from the Observatory on Borderless Higher Education (OBHE), a British education-research organization, the U.S. position as the world’s top recruiter of international students appears to be in jeopardy, especially as relates to its competitiveness.

The report states: “The widespread U.S. reluctance to use offshore agents, in particular, appears to be having an adverse impact on the competitiveness of the U.S. in the international student recruitment market.”

According to the Institute for International Education, a record 671,616 international students were studying at approximately 4,000 colleges and universities in the United States in academic year 2008/09 – easily the highest total number of any education-exporting country. By contrast, there were a total of 389,330 international students enrolled at approximately 300 UK institutions of higher education in 2008 (excluding further education colleges), according to the British Council, and a total of 223,508 students at Australia’s almost 200 higher education providers.

So while the United States has 13 institutions of higher education for every one in the United Kingdom, and 20 for every one in Australia, its share of the market for internationally mobile students was just 19.7 percent in 2007 (down from 25 percent in 2000) compared to the market shares of the United Kingdom and Australia, which sit at 11.6 percent and 7 percent respectively. Not surprisingly then, there is a huge difference in the concentrations of international students in each country, with international students accounting for 25 percent of total higher education enrollments in Australia, approximately 15 percent in the United Kingdom, and just 3.5 percent in the United States.

While these imbalances - in and of themselves - are nothing necessarily to be concerned about, they do reveal the extent to which the United Kingdom and Australia (among other countries) market themselves as study destinations when compared to the United States. And it would be fair to assume that the acceptance of overseas recruiting agencies has much to do with that, given the reliance that each country has on agents when it comes to recruiting abroad.

Agents, Advisers and Fees

Agent Referrals Growing Globally

The number of international students referred and placed by agents has been growing rapidly in recent years and is forecast to continue increasing. According to the 2007 findings of an annual survey by international education research group i-graduate, 880 agents collectively placed more than 60,000 students at institutions abroad in 2006, and a majority expected to send more abroad in 2007. In the 2008 edition of the survey, the ICEF Agent Barometer, nearly 1,100 agents from 119 countries responded, with 66 percent of respondents stating that for undergraduate referrals they are currently placing students in the United Kingdom, followed by the United States (57 percent) and Australia (53 percent). Similar numbers were reported at the graduate level.

In presenting the findings at the January 2009 ICEF conference in Berlin, i-graduate director Will Archer summed up some of the broader implications of these findings by noting, "While the USA is the largest market for international students, it has not previously had a particularly commercial approach. The use of education agents is not common with many institutions...However, this is soon set to change as universities in the USA are developing and implementing international student recruitment strategies and an increasing number of universities are appointing agents to recruit on their behalf. [This], combined with the fact that agents still consider the USA as an unbeatable study destination, is likely to have an effect on UK recruitment of international students as institutions in the USA begin to market themselves more fiercely in a bid to attract a greater share of international students."

What is an Agent?

An “education agent” has been defined by Marisa De Luca as “an individual, company, or organization that provides educational advice, support and placement to students in a local market who are interested in studying abroad.” (IIE Networker, 2007). However, it might be useful to rework that definition to include terms of compensation. For the purposes of this article, we refer to an agent as someone who is contracted by an institution abroad to refer students from a local market, and who is compensated by that institution on either a commission, per-head or retainer basis.

An adviser or consultant we classify as someone who is working exclusively for the customer (student/parent) with no financial incentives from institutional clients. The use of independent educational consultants is common in the United States. Students and families that contract the services of a consultant will typically do so to help guide them through the university admissions process in an effort to find the best institution and academic program possible based on a student’s particular abilities and desires. As defined by the Higher Education Act, it is illegal for schools accepting federal assistance, including students on federal grants, to offer enrollment incentives to advisers and consultants. Typically, therefore, consultants are paid directly by the family and work exclusively for them.

Internationally, this arrangement is also common. An adviser or consultant will be contracted directly by a family to help them through a range of issues related to university choices and applications, travel, insurance, visa assistance and/or accommodation. If paid directly by the family, there should be no conflict of interest. However, if an adviser is also accepting compensation from client institutions based on referrals or enrollments, there could be a conflict of interests, and so the debate into the sometimes murky world of international student recruitment begins.

The case of the ethics of agents working both sides of the deal was bought into the limelight in May 2008 when the New York Times ran an article detailing the practice, among others, that many in the United States find unethical, if not illegal. The scene-setting example in the article is that of a Chinese student who paid a recruiter $3,000 to help her find and enroll at a large university in the Midwest that also paid the recruiter $1,000 as an enrollment commission.

Commissions are the most common form of compensation for agents who represent foreign institutions in their local markets. Typically, agents will be paid a percentage of the first year’s tuition, which ranges from 10-15 percent at universities and colleges, and up to 25 percent for shorter programs. Other arrangements include a flat per-head fee or a retainer fee for representation over a set period of time.

Is There a Sea Change Afoot?

According to the OBHE report, Leading the horse to the water, there may soon be a change of momentum with regards to the use of agents by U.S. institutions of higher education. The report predicts that because of the U.S. slide in recruiting competitiveness, institutions may begin to employ the services of the agents that its rivals in the international student marketplace have been using effectively for many years.

The report states that, “some American colleges' officials now believe that the use of offshore recruiting agents makes increasing sense. Foreign students are recognized as an important means to internationalize their campuses and to close their budget gaps through the higher tuition fees these students often pay.”

And this reasoning seems particularly cogent in the current economic climate of shrinking university budgets.

One might argue then that a newly formed standards development organization has timed to perfection its move to regulate – and by extension promote – the use of agents. Established in 2007, the American International Recruitment Council (AIRC) has introduced standards of ethical recruiting practices, including a certification framework for recruiters and recruitment agencies, the first eight of which were certified late last year.

Ensuring Standards Among Commissioned Recruiters

The AIRC launched its pilot program in June 2009 and certified eight candidate agencies in December. Among those agencies, only one – World Education Group – is headquartered in the United States; the other seven are from Australia, China, Denmark, Germany, India, Thailand and the United Kingdom. Among the 19 agencies in the current round of certifications, there are 10 agencies from India, four from Australia, two from China, two from Nepal, and one with headquarters in three Gulf countries.

The AIRC’S pilot certification process included an evaluation of the agencies’ financial sustainability and management, the openness of their business practices, and their knowledge of the U.S. education system. The standards-setting body’s certification practices were developed in conjunction with the Center for Quality Assurance in International Education (CQAIE), a transnational training and advocacy group in the field of educational quality assurance. The CQAIE will also assist in the administration of the AIRC’s certification procedures, which have been modeled to a significant degree on the process used to accredit US institutions of higher education.

After submitting an application and due diligence report, agencies are required to perform a self-study using AIRC certification standards (this also includes professional development on the U.S. education system), which is then followed up by a site visit from AIRC members, before a decision is made by the AIRC Certification Board. There are four possible decisions that the Certification Board can hand down: Certification, Conditional Certification, Certification Denied, Certification Revoked.

“The sector is already changing,” says John Deupree, Executive Director of AIRC. “Some larger institutions are beginning to work with agents and agencies, and I’m confident that more institutions will become comfortable doing so in the future.”

The AIRC counts a mix of public and private universities and smaller proprietary colleges from 27 states among its 86 institutional members. While membership of the AIRC does not mean that an institution is using or looking to use paid agents, it suggests concern that the industry be better regulated and that an institution might be interested in learning more about the practice of using agents.

“Membership [of AIRC] shows an interest in increasing professional standards, and institutions have demanded that there need to be better standards,” explains Mr. Deupree. “Institutional representatives sit on certification boards, serve as site reviewers and help develop comprehensive training for agencies and institutions in transparent interactions to ensure a student’s investment in coming to the United States is solid.”

As a point of clarification, Mr. Deupree points out that the AIRC is not “looking to dictate how institutional-agent relationships work, rather we are trying to increase the transparency of the process.”

In a press release announcing the adoption of the certification standards, founding Chair and President of the AIRC, Mitch Leventhal stated, “this is the first time that American postsecondary institutions, or their international recruitment partners, have had consistent and clear guidelines for ethical and best practice. We at AIRC are convinced that through the AIRC certification process, American institutions will be able to make major headway in their global recruiting in the years to come.”

Opposition to Paid Recruiters

Despite the recent efforts of the AIRC to set standards and bring paid international recruiting into the mainstream, there remains significant opposition to the practice among many in U.S. higher education, mainly on ethical grounds. The payment of third-party recruiters, especially on a commission basis, is perceived by many education professionals as unethical because when an agent’s income is dependent on the number of enrollments or leads he or she provides, it is generally believed that the agent’s first priority is likely to be his or her own financial interest, which would influence the advice given to students.

Other concerns center around the issue of image and brand protection. Big and well-regarded schools in the United States might be concerned that the use of agents will dilute their brand, especially if they are represented by someone who might also represent another type or category of school. There is also a ‘bait and switch’ concern where an agent would lure students by promising them admission to well-known and highly desirable schools – with which the agent might not even have a relationship – and then lead them to schools with which the agent has a relationship.

For lower-tier schools these issues may be less of a concern, and anecdotally, it appears that recruitment agencies are finding it easier to sign contracts with schools that are less familiar internationally, and this is especially so with proprietary schools that appear to be the keenest to use agencies to boost enrollments from abroad.

“There has been a history of complacency towards recruiting in this country, especially among larger institutions. The ones currently interested in using recruitment agencies tend to be smaller, private colleges,” says World Education Group CEO Richard Ferrin.

Mr. Ferrin’s agency has been in business for three years and currently represents 30 U.S. institutions – a mix of public and private universities and colleges - in 25 countries around the world. Mr. Ferrin points out that his company not only recruits students, but also offers a package of services for institutions that might not have the resources to meet all the needs of their international student bodies. These include “special scholarships to students,” with whom the agency works, “through arrival, on campus and through graduation - for retention purposes.”

Similarly, IDP Education, which is also among the eight agencies currently certified by the AIRC, has found that it has been easiest to work with smaller private institutions, although not exclusively so.

“I wouldn't say that there is one type of university from which we receive more interest than others. What we have seen is that small, private institutions are able to make decisions quicker, with less parties involved, so we were able to sign contracts with many private schools, especially faith-based universities, right away. The larger institutions and public schools have also shown an interest in enlisting recruitment help, and we have been building relationships with many of them for the last few months, but with more parties involved, the process takes longer, so many of those contracts are just coming in now, or will come in within the new few weeks,” says Matthew Ulmer, Manager of Communications for IDP Education USA.

To a lesser extent, there are legal concerns surrounding the practice because commission-based recruiting domestically, as defined by Title IV of the Higher Education Act, is illegal for institutions enrolling students that receive federal financial assistance. And while the law does not apply to international students, there are certainly those within U.S. higher education who believe that there should not be a double standard when it comes to the ethics of recruiting.

“Would you do it here?” asks Bamarak Nassirian, Associate Executive Director of AACRAO (American Association of Collegiate Registrars and Admissions Officers), who likens student transactions with commissioned recruiting agents to that of car buyer with car salesman. And there essentially lies the debate from a student-interest perspective: can you trust a commissioned agent’s advice when his or her livelihood is dependent on placing you in a particular school, or are you better served listening to the counsel of a non-commissioned adviser or university representative?

Is it Better to Choose from 4,000 Institutions or 60?

Most recruitment agencies have a range of institutional clients on their books. The goal of most reputable agencies is to achieve a balance in the range of institutions they represent, allowing them to offer the student-customer a paired down range of options comparable in diversity to the broader range of options available across a national system of higher education. And this is particularly important in the U.S. market where the range and diversity of institutions is perhaps the broadest on offer anywhere in the world.

Officials from the U.S. arm of IDP Education have, in earlier articles, been quoted as saying that they are looking to build a portfolio of 60 institutions for the 2010-11 academic year, which is when they are planning to start recruiting for U.S. institutions.

“We have not actively changed our numerical goals, though I am expecting us to surpass them, as we are currently at 44 university partners and look to add at least two a week. Our main focus right now, however, is not on sheer numbers but on diversity — we want to have as broad a portfolio as possible, so we are focusing our efforts on securing certain types of institutions so that we have full, well-rounded representation,” explains Mr. Ulmer from IDP Education.

However, this approach remains problematic for many. Officials at the Institute of International Education (IIE) suggest that no agency portfolio will ever be broad enough to adequately serve the interests of international students. Rather, the New York-based organization promotes collaboration between U.S. institutions of higher education and the U.S. State Department's global network of approximately 450 EducationUSA advising centers, which are tasked with providing objective and unbiased advice on the full range of opportunities and institutions within the U.S. higher education system.

According to Peggy Blumenthal, IIE’s Executive Vice President, in a June interview with InsideHigherEd: "IIE still feels that the student is best served by having the widest array of choices presented to them and as much information as possible on the full range of higher education because each student's need is quite different."

Clarifying the U.S. government’s position on the matter, the State Department in September 2009 issued policy guidelines that prevent EducationUSA offices from working with recruiting agencies that have contracts to represent specific American institutions, stating that they lack the necessary objectivity to properly advise students.

While most will tip their hats to the work of EducationUSA as an invaluable informational service, some suggest that they cannot offer the kind of one-on-one service demanded by students in large source countries like India and China.

Mr. Deupree from the AIRC describes EducationUSA as “a wonderful resource which we applaud and support,” but stresses that a good agency–institution relationship might be a better arrangement for many students because they need so much more help than simply finding the right school, such as navigating the visa process, arranging travel and housing, getting insurance, etc.

Where Do the Professional Associations Stand?

According to the 1992 Higher Education Act:

[An] institution will not provide any commission, bonus, or other incentive payment based directly or indirectly on success in ensuring enrollments or financial aid to any persons or entities engaged in any student recruiting or admission activities or in making decisions regarding the award of student financial assistance, except that this paragraph shall not apply to the recruitment of foreign students residing in foreign countries who are not eligible to receive federal student assistance. (20 USC §1094(a)(20))

It would be fair to say that most professional admissions and advising organizations in the United States currently hold a position that could be considered to be in line with the Higher Education Act; explicitly so with regards to domestic advising and recruiting, and perhaps more implicitly so with regards to the international practice.

The National Association for College Admissions Counseling (NACAC), with 11,000 individual members, essentially takes a page from the HEA in its Statement of Principles and Good Practices (SPGP) in stating that all members agree that they will: “Not offer or accept any reward or remuneration from a secondary school, college, university, agency, or organization for placement or recruitment of students.”

In testimony to a public hearing at the U.S. Department of Education in June of last year, NACAC stressed that its members’ “core principles are intended to serve the student interest in the transition from secondary to postsecondary education. Members will readily acknowledge that the number of students enrolled in a given academic year is a matter of great importance to all institutions of higher education. However, reducing the basis for compensation to the number of students enrolled in any circumstance introduces an incentive for recruiters to actively ignore the student interest in the transition to postsecondary education, and invites complications similar to those that preceded the enactment of the ban on incentive compensation under the 1992 Higher Education Act reauthorization.”

According to David Hawkins, NACAC’s Director of Public Policy Research, the Association’s position on paid recruiters as described in the SPGP and in its testimony to the government last year remains consistent whether at home or abroad, although it is currently under review.

“As it is currently worded, there is no distinction between domestic and international recruitment in that statement. With that said, NACAC’s Admission Practices Committee (the standing committee in charge of oversight and enforcement of the SPGP) is about to embark on a protracted discussion of the issue with our membership and whether there is cause to re-examine that position. We do not have an indication as to whether there will be a change at this point,” explained Mr. Hawkins in an emailed statement.

Like NACAC, the Independent Educational Consultant Association (IECA) is quite clear in its Principles of Good Practice that the acceptance of commissions from schools for the placement of students runs contrary to the organization’s ethical standards: “Members neither solicit nor accept compensation from Schools/Programs for placing or attempting to place students with them. They scrupulously avoid behavior that might be construed as soliciting or accepting compensation.”

According to a November 2009 blog post by IECA Executive Director Mark Sklarow it is quite clear that the Association’s position is not exclusive to domestic advising, even stating that disciplinary action would be taken against members engaging in commission-based advising or recruiting.

“They [agents] may tell a parent that they are helping to find a “good match” but in fact that match is limited to the two, three or ten colleges with whom the agent has a contract and they only suggest colleges who pay them a finder’s fee. That is not consulting. Consultants work independently of colleges and make suggestions based solely on the best interest of the student.”

In a follow-up email Mr. Sklarow points out that his post “both summarizes our opinion and underscores our willingness to take a public stand on the issue,” continuing that the Association is “even willing to publicly ‘scold’ universities that engage in a practice we find unethical.”

The American Association of Collegiate Registrars and Admissions Officers (AACRAO) is in the process of drawing up a general statement of ethics, part of which would address the use of third-party agents and the manner in which they are compensated. The guidelines are set to go out to the Association’s membership for discussion within the next few weeks, says AACRAO’s Associate Executive Director Barmak Nassirian, who explains that there will be two main themes with regards to international recruiting.

“There are two general precepts that are likely to inform the institutional position on paid recruiting. First the Membership generally believes that special populations [which would include international students] should not be recruited to campuses unless adequate resources are available to meet their needs…and two, institutions should not engage in practices of recruitment abroad that would not be considered legal or ethical at home.”

Mr. Nassirian is expecting lively debate from the AACRAO membership when the proposed statement of ethics is put before them, especially on the subject of paid recruiting agents.

“Some of our members use paid recruiters overseas and they think it is okay, otherwise they wouldn’t be doing it. Some members think the practice is problematic to say the least, and some believe it is downright unethical.”

While Mr. Nassirian is not entirely opposed to the notion of overseas recruiters, he draws a line in the sand at the use of agents who are paid on a commission basis.

“You get a bifurcation of interests between the financial interests of the agent and the best interest of the student,” says Nassirian, who adds that, “The academic integrity of the institution is at risk. It is not just the interests of the student that are at stake, but also the reputation of the institution. This person with semi-official status who has your institution’s seal is not incentivized in a manner that meet’s your institution’s core standards. When you lose control of the admissions funnel, no amount of due diligence can allay the problems inherent in this arrangement.”

What do International Students Want?

On both sides of the debate then, there is genuine concern that the needs of the student are met and that unscrupulous, or unethical, practices be eliminated. For those opposed to paid recruiting that means commission-based recruiting should be discouraged, and for those advocating for the industry it means setting and promoting standards of good practice. Either way, if the interests of the student are one of the issues at the heart of the matter, it begs the question, what are the needs of international students wishing to study in the United States, and are those needs currently being met?

In many countries, the United States included, it is commonplace to pay educational consultants, whether to help study for university admissions tests, or to gain an advantage in the admissions process itself, so it seems quite logical that students and parents would seek out the services of placement specialists when looking to apply to universities overseas.

Vijaya Khandavilli, an India-based former EducationUSA adviser and now private consultant explains that, “Indian students (culturally most Indians) like to inquire and gather information from several sources and confirm and reconfirm before they make important decisions. Of course, they recognize the validity and authenticity of EducationUSA centers. At the same time, students also recognize the limitations of an ethical EducationUSA center, one of them being availability of time. Private advising centers are able to provide individualized advising services, of course for a fee. Students who are able to pay and need hand-holding approach these agents. These students go to EducationUSA advisers to confirm the accuracy of the offered advice.”

While not all Indian students attending U.S. universities arrive with the help of agents, a certain sub-section of the Indian student body tends to retain the services of consultants or agents.

“In the spectrum of student quality, students coming through agents are qualitatively different from those who apply directly. Students who engage agents need significant handholding because of their lower academic preparedness, inability to use information resources, language barrier and lower maturity level. However, one should not forget that there is a set of matching universities who would still be willing to take students from this segment,” explains Rahul Choudaha, India specialist and Associate Director of Development and Innovation at World Education Services.

“In essence, agents are an important part of the recruitment landscape. They serve a unique segment of students. Universities who are comfortable in recruiting students from this segment cannot ignore opportunities presented by agents, but they have to be cautious of the potential pitfalls too,” says Choudaha.

So if students are going to seek out the services of agents regardless of how they are perceived in the United States, then shouldn’t the U.S. higher education sector be proactive in regulating the space for students wishing to study here so there are fewer cases of unethical and poor representation? Or is that not the concern of U.S. higher education but something best left to the to industry groups or governments in the sending countries?

The AIRC believes that the United States needs to be proactive in instituting quality standards. In a presentation at the Association of International Education Administrators annual conference in February of this year, the AIRC points to anecdotal evidence suggesting that, “as many as 50% of Chinese undergraduates arrive at U.S. institutions through the use of agents whom the students themselves paid, often at extortionate rates. Student payments to agents of US$5,000 or more are not unheard of.” And these “agents do not necessarily have specific expertise in U.S. education and are operating in a totally unregulated space,” meaning that, “desperate students and parents are vulnerable to unscrupulous practices,” while “American educational institutions have exacerbated a bad situation by not engaging agents and proactively professionalizing the practice.”

Others, such as Mr. Nassirian from AACRAO, believe that if recruiting agents are going to be regulated then it needs to occur locally in source countries through the development of professional associations and better licensing requirements.

Conclusion

No matter where an institution, association or individual stands on the issue of paid international recruitment agents, the fact remains that there are tens of thousands of students coming to study in the United States with the help of a paid agent who has either been compensated on a consulting basis by the family, on a commission (or otherwise) basis by an institution in the United States, or by both parties simultaneously. All indications are that this practice will continue, and most likely grow, in the coming years.

There are many issues of concern regarding the behavior of agents, their professionalism and ethics, and whether they represent the best interests of the student when they are paid commissions by schools based on the number of students that they supply. To a lesser extent there are concerns that the paid-recruiting model is problematic from an institutional branding and reputational standpoint. However, while the reputational concerns can be controlled by institutions willing to undertake the necessary due diligence, safeguards on the student side of the equation appear less easily instituted and enforced, especially if source countries do not adequately regulate local agents.

The AIRC has been proactive in realizing the need for standards and better oversight of agents in its recognition of the fact that the market is growing. This has brought discussion on the topic further into the open, be it in the front pages of the education media, at professional conferences or among institutions and their professional associations.

Ultimately, institutions will make their own decisions on whether or not to employ agents to recruit international students. Smaller and less known institutions with limited international exposure are likely to find using agents a quick way to enter the international student market. However, even if there are some larger public institutions that are beginning to integrate agents into their recruiting strategies, top tier institutions and those that have a history of international experience, by and large, remain disinterested in outsourcing their recruitment efforts.

American higher education is a large and diverse system, with manifold needs and concerns, the solutions to which are as diverse as the system itself. On the issue of paid international recruiters, decision makers are educating themselves, engaging in debate and hopefully making decisions that best meet the needs of their institutions and those of the international student.

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