Gainful Employment Rules have been adopted by the Department of Education as of this summer. Some experts are stating that as a result of this ruling up to one third of all programs presently being offered will have to go “on probation.” Subject to a successful legal appeal by APSCU, some schools will start to see “probation deficiency letters” at the end of this year.
A deficiency letter simply states that a given program(s) that you offer does not meet Gainful Employment Guidelines. A deficiency is loosely described as when student loan payments exceed 12% of first year’s gross income. If this happens two out of three years, a school cannot use federal student loan funding. If grad payments float between eight and twelve percent four out of five years, the school loses its funding.
Probation has implications for schools; it is a mess and you need to build a strategy to deal with the possibility. Now.
It’s Just a Cold Sore…
Imagine you were doing the online dating thing and an external government body forced you to put on your dating profile some horrible thing from your past like you went bankrupt 15 years ago, or you had to repeat Grade 5 or something else equally embarrassing. How many emails or phone calls are you going to receive? Not many.
Schools will have a similar problem when put on Gainful Employment Probation. The first thing the DoE will ask you to do is to communicate the following paragraph prominently within ALL of your promotional efforts:
“This program has not passed standards established by the U.S. Department of Education. The Department based these standards on the amounts student borrow for enrollment in this program and their reported earnings. If in the future the program does not pass the standards, students who are then enrolled may not be able to use federal student grants or loans to pay for the program, and may have to find other ways, such as private loans, to pay for the program.” (quote provided by Cooley LLP)
Imagine having to pop this on your website, or having to have your reps speak this into the phone, or having to include this in a letter to the home of your prospective student. What a flippin’ buzzkill. This language is basically an accelerant designed to further push away interest from prospective students. So if one of your programs is on probation, having to deal with this in your marketing makes matters even worse. Or does it…
There Are Always Solutions to Crazy Problems
The easy thing to do if you are put on Gainful Employment Probation is to give up. One Workshop at the recent APSCU Annual Conference suggested shutting down marginal programs in a pre-emptive fashion, chopping off the proverbial hand to save the body.
There are other ways to play around the edges in dealing with this problem. Consider starting up new hybrid programs to replace ones you need to disband. In terms of student loans, request a third party loan from–as an example–a parent, as these loans are not counted in the calculations. There are a number of work-arounds being suggested but at days end it does not address the core problem…
How do we offer More Value for Less Cost
With the help of excellent marketing companies like Fosters and Plattform Advertising, Not For Profit Schools are now being taught Enrollment Management Best Practices traditionally used by Proprietary Schools. The service levels of NFP’s are improving, product delivery is improving and their prices are lower. Due to demographics, learning pools are shrinking. Technological and competitive pressures are also emerging.
When all is said and done, Proprietary Schools “need” to step up and improve the user experience while simultaneously improving efficiencies. It’s a tall order, but it’s in this writers’ opinion the primary way in which to get the regulators to shut up and go away.
Thought Starter #1: Use Online delivery, in a surgical way
Bricks and Mortar Schools have room to use online delivery methods to improve the User Experience and lower costs. Flipping the class room, recording a great lecture once then having Teaching Assistants guiding students to reference points can lower costs significantly, perhaps lowering tuitions 10-15% without hurting quality
Thought Starter #2: Redesign the Admissions Department
The Admissions department within most schools is hugely inefficient. Adding one appointment a day per rep would dilute Admissions overhead by 1/3. How do we accomplish this? Use lead qualification software like Enrollment Resources’ Virtual Advisor, or Lead to Call Applications like Speed to Lead that turn internet leads into phone calls. Work with reps on their Challenge Selling Skills, teaching them how to better work with prospective students, qualify them and accurately guide them on their education journey. There is easily a 25-30% improvement available for most schools just in improving Admissions Processes.
Thought Starter #3: Redesign the Admissions Department Part Two
Some schools are reaching out to Employment Groups that have training dollars available for their staff to go back to school. Convincing an HR Department that your programs are a great fit will open a stream of students and a stream of training financing as well. Put your Admissions Reps to work, winning over the 100 largest employers in your region and positioning, placement and retention streams of benefits will also emerge.
By extension, consider becoming a hybrid training organization.
Thought Starter #4 Radically Reduce Advertising Costs.
Admissions Reps can do a better job at generating PDL’s, Referrals for Corporations, Grads and Students. If they can improve on conversion rates by improving on processes, the need for lead flow can be greatly reduced. Reduced advertising costs can be passed on right through by way of lower tuition without affecting a school’s quality of delivery.
Studies by Velocify LMS indicate the optimum lead per month requirement per rep is only 1 a day in terms of optimizing conversion. If you cut out all of those marginal portal leads, then perhaps you can lower Tuition another 3-4%? Worth exploring…
Thought Starter #5: Reduce the physical plant by up to 1/3
Many schools prior to the Great Recession of 2008, frankly, got greedy to the point of being a bit stupid about it. Here’s an example. Schools started adding their physical plant and fixed overhead to accommodate a 50-mile radius. While travelling to and from school, 50 miles might look good on a planning document. However, if the school leaders themselves tried to hit bus and train connections, traffic snags etc., they’d learn quickly there would be no way on God’s Green Earth that commute have any appeal to a typical student.
The question is: What is the realistic 30-minute commute for students? Twenty miles? Maybe 30? By extension; what is a reasonable intake? Will there be too much empty space? If yes, sublet and pass the savings to your students.
Thought Starter #6: Embrace Gainful Employment Regs and Shine a Big Spotlight on it
In terms of creating effective marketing, scratch lightly and beneath all the tricks and buzz fads (Hello Social Media) you’ll find really good Direct Response Copy writing. Direct Response is the ugly, red-headed step-child in the marketing arena, yet quietly the good communication firms master this skill. One key copy writing tactic is if your offering has a flaw, you attack it within the copy and speak to it fully. Instead of glossing over or hiding the issue, you actually expand on it explain things thoroughly.
While counter-intuitive, we feel this is how the gainful employment disclosure should be dealt with. That little poisonous paragraph on your website should be turned into a full page. If someone has a big pimple on their nose do you ignore it or make mention of it? We say talk about it.
Headline: “Gainful Employment Regulations, What Does it Mean for You?”
- Give a deep background into how the gainful employment rules came about and why they are healthy for the Education space
- Talk about how they are presently organized, full of gaps and uneven analysis.
- Explain why Proprietary Schools are more expensive than Not For Profit Schools and why there is still excellent value in spite of higher costs.
- Explain why the statement is required and why it is in your opinion flawed.
- As an example; explain that a three-year earning average will make out-of-school earnings much higher. Or, in the case of a cosmetology school, how government reported earnings do not typically include the estimated 30-35% in gratuities and tips that industry surveys state go unreported to the IRS, or how those who want to work part time drag down the average.
- GE Paragraph
- State that you have (2 or 4 years to rectify the situation), your program is only 10 months long so there will not be a problem in graduation.
You get the idea; be fulsome in addressing this issue, give balanced and insightful opinions on this GE paragraph. This will go a long way in explaining what is going on.
So, in summary:
Lower your prices 20% by;
- …engaging corporations to share their training dollars in teaching their eventual workers;
- …using online teaching as a blended learning tool, flip the classroom, then cut corresponding overhead;
- …trimming out 40% of your poorest performing internet leads. Have reps replace lead flow by better developing PDL’s and Referrals;
- …reviewing all of your ad copy and lead conversion processes with an eye to improving efficiencies by 20%. Better copy writing, better communication processes;
- …using, as an example, Virtual Admissions Advisor;
- …deeply thickening the response on the GE Probation statement page;
- …spending extra time ensuring new students are locked in and motivated, thus improving grad rates by 5%;
- …radically deepening the testimonial well from employers pertaining to your school;
- …subletting (with the above efficiencies in place) your space;
- …adding programs using a tight geo-target.
Walking into a dark alley is not fun, but by taking iterative steps to improve the lighting first, it’s not so scary after all.