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Strapped for students, nonprofit colleges use for-profit recruiting tactics

BY   August 3, 2016 at 3:45 PM EST
File photo of a campus tour by Ann Hermes/The Christian Science Monitor via Getty Images

File photo of a campus tour by Ann Hermes/The Christian Science Monitor via Getty Images

ORLANDO, Fla. — In a convention hall echoing with words like “leads” and “starts” and “business” — all, in this case, meaning “students” — Vivek Zaveri is describing how he helps colleges and universities drum up customers.

Zaveri’s company, Lead Mantra, operates websites with names such as “CollegeFinder” to which consumers are steered when they search online for information about various careers. Getting a degree in health services “is an intelligent choice for those seeking steady employment with a constant flow of income,” one reads. Promises another: A business degree “can be the boost that your career needs to propel you to the heights of the business world.”

The sites collect web users’ email addresses, phone numbers, fields of interest and veteran status, among other things. Entered into a form called “Use Our Steps [to] Find Your Degree,” that’s then handed over to college and university clients targeting those kinds of prospective students, or that the consumers choose themselves from lists provided on the sites. In sales circles, this is known as a “warm transfer.”

It’s a tactic that has until now been largely limited to private, for-profit universities and colleges, which have massive enrollments to maintain, high turnover and unrelenting shareholder demand for profits.

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Like many of those schools, it’s also controversial. Middlemen called lead generators have faced public criticism and legal action for doing such things as running fake job ads to bait prospective students. And the people they go after often don’t know how they actually work.

Now lead generators have a new market: conventional nonprofit colleges and universities trying to beef up sagging enrollment and lower their recruiting costs.

“Some nonprofit and even state institutions are taking cues from for-profits in ways that do not serve students well.” — David Halperin, attorney and critic of some lead generators

“That conversation is starting,” said Zaveri, who was in this expo hall to pitch his services at the annual convention of the Career Education Colleges and Universities, or CECU. While that group is made up mostly of for-profit institutions, he said he’s talked to several major nonprofit universities and colleges, and has already had at least one as a client.

The move to more aggressive strategies like these comes after four-and-a-half years of overall enrollment declines at U.S. universities and colleges. And while private, nonprofit schools have managed to maintain a fairly level number of students, they’re finding that harder and more expensive to do.

More than 300 colleges and universities ended the admission season this year with vacancies remaining for freshmen and transfer students, the National Association of College Admission Counseling reports. That number has been steadily increasing, up from about 240 in 2010.

“For the nonprofits, missing your freshman class has a four-year implication,” Vince Norton, managing partner of the higher-education marketing and advertising company Norton Norris, said outside the CECU exhibit hall. A result is that, at some of the most hard-hit nonprofit schools, he said, “resistance is diminishing” to using strategies such as lead generators.

What those schools have traditionally done to market themselves — printing and mailing glossy color catalogs to huge mailing lists of prospects, traveling to college fairs, producing personalized ads and high-end videos, using social media — is increasingly expensive, exactly at a time when higher education is looking for ways to cut costs.

Private, nonprofit colleges and universities now shell out an average of $2,232 to attract a single student.

Private, nonprofit colleges and universities shell out an average of $2,232 to attract a single student, public universities $578, and community colleges $118, according to the higher-education enrollment consulting firm Ruffalo Noel Levitz. And nearly 40 percent of the freshmen they recruit drop out before their sophomore years, the National Student Clearinghouse reports.

The problem is particularly acute at small, second-tier private, nonprofit institutions in regions including the upper Midwest and New England, “where the [college-aged] population is draining away and they’re really fighting for market share,” said Kim Reid, a principal analyst at Eduventures, another higher-education consulting firm. “They’re having to go to these tactics that we think of as very sales-y.”

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That includes using lead generators, which rely on websites, unsolicited emails, late-night TV ads, and telemarketers to collect names of and information about prospective students, then sell it for from $3 a head to more than $100, several people who follow the industry say.

“Get any degree in five weeks with our program!” blares one of these emails. “No examinations! No study! No class!” And in one ad promising to help viewers “get matched for free!” a woman dances in her bedroom with a window washer, rapping: “I knew the thing I needed was to get more knowledge/To really get ahead, I had to get enrolled in college!”

The services are, in fact, free to users. That’s because lead generators sell the names they collect to colleges and universities, something that is usually disclosed somewhere on the websites but is often hard to find, or vaguely worded. And the students are typically directed only to those institutions willing to pay for leads.

“The danger is you think you’re getting independent advice but in fact many websites that style themselves as ‘college search’ or ‘college advice’ get fees to recommend some schools over others, without making that clear,” said David Halperin, an attorney and activist funded in part by nonprofit organizations and foundations to monitor for-profit colleges and universities, and a critic of some lead generators.

One of these businesses, Gigats.com, for example, was accused by the Federal Trade Commission of claiming to screen applicants for nonexistent jobs while actually gathering their information to sell to for-profit colleges at from $22 to $125 per head. Under a settlement, the company agreed to pay $360,000 and clearly disclose when personal information it collects is being sold to a third party.

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Consumers “plug into a search engine that they are interested in Medicaid benefits or they are interested in food stamps, or they would like a job,” Nathan Blake, an assistant attorney general in the Iowa Department of Justice, which has cracked down on practices like this, told an FTC meeting. Soon, he said, “they start getting hundreds and hundreds of calls bombarding them to start up at various colleges and universities.”

Still, nonprofit universities are moving resolutely in this direction, Amy Sheridan, founder and CEO of the lead generator Blue Phoenix Media, told the same FTC event.

“The not-for-profit institutions are coming out gangbusters [over] the last three years,” Sheridan said. “Reputable institutions that are, you know, anything from Yale to UCLA to Notre Dame are some of our clients.” (Sheridan said in an interview that those schools were clients in 2015. Asked to confirm this, Notre Dame said it couldn’t find a record one way or the other; UCLA and Yale didn’t respond to repeated inquiries.)

Conventional universities are sensitive about their use of lead generators, given some of these controversies and considering how closely the practice is associated with for-profit schools. Lead generators wouldn’t discuss their nonprofit clients.

The way those colleges have traditionally recruited students has included buying pools of names from someone else: the nonprofit companies that administer the SAT and ACT exams, which ask test-takers to indicate the majors and institutions they’re considering. Observers say this process makes it clear that universities and colleges may contact the students, who are inviting them to see their scores.

“It’s pretty above board in the sense that students have known that’s how it works,” said Reid. “You take the SAT and then you start getting mail from everybody.”

But the advent of the Internet as the first place people go to search for almost anything, and get answers instantaneously, has gradually made those slow-moving campaigns less effective, she said.

Lead generators have pounced on that shift in behavior.

Online searches now often first bring up new players such as Fastweb, an offshoot of Monster.com that promises help with finding scholarships, internships and colleges.

“Members become winners,” Fastweb exclaims on its home page, with photos of happy students and the amounts of scholarship money they’ve received. It, too, sells users’ information to colleges and universities, though only if they click a box to give consent, according to its privacy disclosure. A Fastweb spokeswoman said the company would not discuss its business model.

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On sites like these, said Reid, “That’s the fine print that students probably don’t read: ‘Would you like to be contacted by the school?’”

Such sites “gather a lot of profile information from students and they say, ‘Based on what you told us, you might want to consider these 10 schools,’” Reid said. “They want to portray to this traditional market that they’re actually not biased toward these particular schools. But if you’re a college and you want to show up at the top of the results or have an ad or have content on the site, you can pay that service to do that. Then they sell the students’ information to those schools.”

Nonprofit universities and colleges appear especially interested in using lead generators to fill money-making adult-education and graduate programs, Norton said.

Halperin worries about them going down that path at all.

“It looks to me as if some nonprofit and even state institutions are taking cues from for-profits,” he said, “in ways that do not serve students well.”

This story was written by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Read more about higher education.

PBS NewsHour coverage of higher education is supported by the Lumina Foundation and American Graduate: Let’s Make it Happen, a public media initiative made possible by the Corporation for Public Broadcasting.

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