Guidance for APSCU Members -- The Misrepresentation Rule and Third- Party Vendors

TO: APSCU Members

FROM: APSCU Student Recruitment Task Force - Jim Hutton, Mitch Talenfeld, Peter
Leyton, Dave Wengel, David Meiling, Erin Fitzgerald, Gregory O`Brien, Jason
Pistillo, John Birmingham, Ken Horne, Mark Harris, Roger Swartzwelder, Steven
R. Isaac, Bob Cohen, Katherine Brodie

CC: Art Keiser, Chairman

DATE: October 11, 2011

RE: Guidance for APSCU Members -- The Misrepresentation Rule and Third-
Party Vendors.

This memo transmits the Association of Private Sector Colleges and Universities (“APSCU”) Student Recruitment Task Force (“Task Force”), Guidance for APSCU Members -- The Misrepresentation Rule and Third-Party Vendors. This guidance document concerns the U.S. Department of Education’s (“ED”) misrepresentation rule, which is one of several requirements for institutional eligibility to participate in title IV programs (“Title IV Programs”) under the Higher Education Act of 1965, as amended (“HEA”), and certain third-party vendors (“Third-Party Vendors”). This guidance document is limited to general explanations of compliance responsibilities and potential liabilities under the misrepresentation rule and general guidance
related to advertising and marketing activities.

The APSCU Board of Directors requested that the Task Force develop a guidance document with regard to the regulatory risks that can be posed to members (“Institutions”) by the conduct of third-party vendors retained by Institutions for student recruitment services. The Task Force has developed the attached general guidance to assist Institutions with taking reasonable steps to help to reduce the risks that can be posed by the conduct of Third-Party Vendors, including inquiry (lead) generators, under the misrepresentation rule.

Institutions seeking to become or remain eligible to participate in Title IV Programs must be familiar with the misrepresentation rule. The HEA permits the ED to suspend or terminate from participation in Title IV Programs an institution that engages in “substantial misrepresentation of the nature of its educational program, its financial charges, or the employability of its graduates.” Effective July 1, 2011, new regulations intended to improve the integrity in Title IV Programs amend the requirements for Institutional Eligibility under the HEA related to, among many areas, misrepresentation to define more broadly the nature of such misrepresentations and expand the sanctions that the ED may impose for substantial misrepresentations. That term now includes
any false, erroneous or misleading statement that has the likelihood or tendency to deceive or
confuse without regard to materiality or intent.

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