Chapter 2 Financial Aid and Tuition 33
CHAPTER 2 Financial Aid and Tuition Financial Aid If the admissions process is complicated by contract considerations, financial aid is a minefield filled with legal hazards for the hapless, or reckless, administrator. No bet ter ex ample c an be posed, as t his work go es t o press, t han that of th e University of Phoenix. U.S. ex rel. Hendow v. University of Phoenix, 461 F.3d 1166 (U.S. Court of Appeals, 9th Circuit, 2006). When an edu cational in stitution wi shes to re ceive federal subsidies under Title IV of the Higher Education Act, it must enter into a Program Participation Agreement with the Department of Educa tion (DOE), in which it agrees to abide by a panoply of statu tory, regulatory, and contractual requirements. One of t hese requirements is a ba n on incentive compensation: a ban o n th e i nstitution’s p aying recru iters on a per -student b asis. The ba n prohibits schools from “ provid[ing] any commission, bonus, or other incentive payment base d directly or indire ctly on success i n sec uring enrollments or financial ai d to a ny persons or ent ities engaged i n a ny st udent re cruiting or admission ac tivities or in making de cisions reg arding t he award of st udent financial assis tance.” This requirement is meant to curb the ris k that recruiters will “s ign up poorl y qua lified stude nts who wil...
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