Middle States Considers Interfering with Institutions’ Use of Agents

07Apr '17

Middle States Considers Interfering with Institutions’ Use of Agents

The means by which institutions use agents has re-emerged in the public debate with Middle States Commission on Higher Education (MSCHE) proposing changes to its Policies, Guidelines & Procedures around international student recruitment.  MSCHE seems to tie international practice to the same rules that affect national practice, bypassing the provision in Title IV that exempts foreign activity. This is the same old canard which was put to rest four years ago following close to a decade of national debate. As one who has spent many years on both sides of this market (school and agent) I can tell you that passing such a resolution will create tremendous problems for MSCHE and its membership. Just when MSCHE institutions are facing new recruitment challenges due to revisions to U.S. immigration and trade policies, MSCHE is threatening them with rules which will damage their efforts and cause material harm to many institutions which are already on shaky financial ground. Bearing these issues in mind, I submitted the following comments to MSCHE:

April 7, 2017

Proposing that a segment of US institutions can set the terms for a well-established commercial practice worldwide will likely lead to disastrous consequences for Middle States member institutions.  If you look deep into the deliberations of the NACAC Commission on agents, you will discover an in-depth discussion on the various payment schemes and what exists as standard practice.  What you will learn is that there is no standard; each source market has certain practices as does each destination market.

Regulation in the source countries is constantly changing as these nations look to protect their citizens from misrepresentation by the foreign schools coming to their countries to recruit their students.  Like it or not, agent practice is very commonplace worldwide and regulation is the responsibility of the source country.  Foreign residents have little in the way of consumer protection and rights in the United States.  It is the same for Americans overseas.

As the NACAC investigation discovered, people come to agents because they trust the agents.  The families that can’t afford consultants to assist with their search find that the finder’s fees schools pay to agents gives them free service because there is no other trusted source of free advice.  If you look deep into EducationUSA, you will find that their staff is specifically prohibited from offering advice.  Families go to agents for advice.

By dictating how agents will be paid, you impose American values on foreign countries and foreign business operations.  You can be certain that this will cause material harm to many who operate in today’s status quo.  By prohibiting the primary method that agents get paid you will open yourself to great legal risk and possibly be in violation of WTO (World Trade Organization) regulations.  The highly regulated Chinese market for example might well draw the Chinese government to complain to the WTO that the regulations you propose are an economic barrier and this might trigger a trade war over education

Your proposed action will disadvantage one class of U.S. institutions – those based in Middle States territory. It will have no impact on institutions in other regions, which are accredited by other accreditors. Those institutions will fill the vacuum caused by MSCHE, and will eat the lunch of these disadvantaged institutions.

There are a number of American-based agents and imposing restrictions on how they and their institutional clients do business may be a violation of the Sherman Anti-Trust Act.  While you may think you are immune, you may encounter a stream of individual legal complaints that could result in class action.  Such class action has potential dire consequences to your organization and its membership. 

Lastly, having worked in the field, I can tell you that the USA is already a hard sell in the agent community.  The proactive approach to agents that the Australian, Canadian and British governments have adopted have put those destinations at the top of the global market-share of the tuition paying international student market.  You are naive or arrogant if you feel that a collection of 20% of the US market can change the time-tested, well established worldwide practice in education marketing.  Choose to force a change on how your membership can cost-effectively recruit worldwide and your members will lose what to some is a vital source of tuition revenue. Enact this policy, and even if it holds up in court, you will see that agents will adjust their portfolios to avoid serving Middle States institutions as there are choices everywhere else in the world.   If you action forces even one vulnerable, small private school into insolvency, think – what have you accomplished?

The comment period ends April 17.  Stakeholders as well as the public are welcome to comment to MSCHE, you can do so here.

There has been some media coverage, if you would like to read more on the issue: