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Do incentives for education agents mean a worse outcome for students?

July 30, 2019

The world of commissions and incentives for education agents can be a complex and, unfortunately at times, controversial one. Commissions help motivate agents to assure quality and strengthen relationships, and other incentives seem to be growing in popularity too. 

But for those outside the education sphere, current practices can also raise questions about whose interests are being best served. Of course, the vast majority of agents and education providers are doing the right thing. But it doesn’t hurt to take another look at the landscape. What’s still relevant? What’s expected? And what does and doesn’t work?

Incentives versus Commissions

In the interest of clarity let’s start with commissions, because although things shift greatly between countries, institutions and over time, the concept is a simple one. 

A quick caveat: situations vary massively across national borders but we’ve done our best to draw in information from various countries. 

While until 2013 commissioned agents weren’t allowed to recruit students – even internationally – to US institutions, since that change they have become par for the course. Fees vary from institution to institution, from hundreds to thousands of dollars. 

This is a key competitive differentiator but also one of the things that can concern prospective students if the figures aren’t transparently disclosed. For a deeper look at commissions, check out our blog from last year.

Incentives are much trickier to define and to find concrete information on from place to place. Often they involve cash bonuses but they can also comprise holidays, iPads and less tangible benefits. They also don’t flow exclusively one way. While it’s easy to imagine education providers offering extra incentives to top recruiters, and the majority in Australia at least do, it’s also becoming increasingly common for agents to offer incentives to students. 

On the institution-agent side, the incentives are usually bonuses on top of commissions while incentives for students are more likely to be technology, scholarships, or “money-back” deals.

Are incentives relevant?

Broadly speaking, it’s unlikely incentives would continue to be offered if they weren’t having at least some effect. 

For agents, various national codes of conduct, combined with professionalism and a desire to keep building strong relationships based on trust are strong incentives on their own to stay focused on their students’ best interests. 

But several experts and organisations have noted the need for improvement around both incentives and commissions. In 2015, an anti-corruption body in the Australian state of New South Wales suggested tying commissions to graduation rates rather than enrolments and splitting them up along the study period. 

Many in the industry assert current arrangements are strong enough but others are opening the door to potential change.

Who is offering incentives?

As mentioned above, the landscape is changing quickly and incentives do play at least a small role in various elements of international education. IAE Study in Australia Brisbane Office Manager Anja Christoffersen notes they have become “normal and expected within the industry” from institutions, but has concerns about them when given to students. 

“Some agents do give incentives to students however we feel that it leads to uncomfortable and unfair situations where students sitting in the same classroom, studying the same program are paying different fees,” she says.

“Over the past few years this has increased as larger corporate players have entered the industry and the education agent market is becoming oversaturated. 

“Agents then fight to try and get as many students as possible as there is so much competition.”

University of Cincinnati director of international services Ron Cushing told Inside Higher Ed last year there were “a lot of incentives being offered out there”.

“Some of the things we hear – from trips to beach resorts to iPads to direct cash bonuses – that’s concerning,” he said.

“Those kinds of things lend to the concern that NACAC [National Association for College Admission Counseling] and a lot of institutions had when this whole agent thing started. Which is: are these agencies going to be pushing students to the right academic fit or are they going to be pushing them where they’re getting the right benefit?”

Commissions on a sliding scale

One key factor in the topic is the way commissions tend to be paid. Certainly in Australia, and commonly in other major education destinations as well, they tend to increase on a sliding scale. 

In Australia, the Tasmanian state government’s reward program, which deals with schools and VET education, starts with a 15 per cent commission for agents bringing in one to five students and jumps to 25 per cent with a $2000 bonus for more than 10 students. Approaches like this are also common among universities and private VET providers to varying degrees worldwide.

“Higher commissions and incentives do not necessarily mean that the quality of education is higher (usually it is the opposite),” Ms Christoffersen says.

“I think overall incentives are motivating for agents. However, it can encourage bad behaviour in agents, where their financial interests take precedence over the best interests of the student (sending students to the place with best incentives and pay off for them, not necessarily to the best fit for the student).”

Who benefits?

For the most part, the system of commissions and incentives can benefit everyone. Agents are more motivated to get students into higher education places and the more lucrative structure can encourage more agents to qualify, both of which benefit students. 

Universities gain the ability to draw students from more far-flung areas in which they could never post dedicated recruiting staff, bolstering student numbers and diversity, while also benefiting students from those areas. And of course, agents are able to build a career out of helping fit these puzzle pieces together. 

But there are also downsides, such as the potential for students to be disappointed by their school or vice versa and the perception of agent favouritism, whether deserved or not. Ms Christoffersen says it can also benefit larger agencies over smaller ones, and quantity of students over quality.

“Some agents are offering incentives to students for students to sign up to study through them. So like, scholarships or get your money back, or free laptops or free iPads or things like that, just so they can try and dominate the market and get the larger market share,” she says.

Students should do their research and make sure they’re happy with their agent and the school that is suggested by their agent.  

There are certainly no signs of incentive practices slowing. So it’s everyone’s responsibility (student, agent and education institute) to ensure that the industry retains trust and everyone’s happy in their job and their study.

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