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NACAC Removes Recruiting Rules From Code Of Ethics And Professional Practices In Light Of DOJ Investigation And Potential Litigation And Signs Consent Decree
The National Association for College Admission Counseling (NACAC) is a professional organization whose members consist of high schools and their guidance counselors, and colleges and their admissions personnel who assist students transitioning from high school to college. NACAC maintains a Code of Ethics and Professional Practices (CEPP) that sets forth mandatory rules governing how its members are permitted to engage in college admissions.
On December 12, 2019, after a two-year investigation, the U.S. Department of Justice (DOJ) filed an antitrust complaint against NACAC alleging that the CEPP contained three recruiting rules that restrained competition between colleges for the recruitment of first-year and transfer students in violation of the Sherman Act, which prohibits activities that unreasonably restrain interstate commerce and competition in the marketplace. The three CEPP rules at issue include (1) the Transfer Student Recruiting Rule, (2) the Early Decision Incentives Rule, and (3) the First-Year Undergraduate Recruiting Rule (Recruiting Rules). The DOJ asserted that the Recruiting Rules “substantially reduced competition among colleges for college applicants and potential transfer students and deprived these consumers of the benefits that result from colleges vigorously competing for students … [and] denied American college applicants and potential transfer students access to competitive financial aid packages and benefits and restricted their opportunities to move between colleges.”
The Transfer Student Recruiting Rule prevented colleges from recruiting transfer students unless the student first initiated a transfer inquiry or the colleges first ensured (1) that the student was not currently enrolled in a college or (2) that the student attended a college that permitted transfer recruitment from other colleges. The DOJ alleged that the rule prevented students from learning about transfer opportunities at potentially lower-priced or higher quality colleges and restrained competition for transfer students among colleges.
The Early Decisions Incentives Rule prevented colleges from offering any incentives, such as scholarships, preferential housing, or early course registration, to students applying under early decision. An early decision is an application in which students “commit to a first-choice college and, if admitted, agree to enroll and withdraw their other college applications.” The DOJ alleged that the rule prohibited colleges from competing for early decision students and prevented students who elected to apply through an early decision from receiving possibly valuable benefits.
The First-Year Undergraduate Recruiting Rule prevented colleges, beginning on May 1 of each year, from improving their recruitment offers to first-year students. Specifically, the rule prohibited colleges from knowingly recruiting or offering “enrollment incentives to students who are already enrolled, registered, have declared their intent, or submitted contractual deposits to other institutions.” The rule also prohibited colleges from offering or implying that additional financial aid or other benefits were available to students who had not withdrawn their applications unless the student first affirmed that they were not enrolled elsewhere and were still interested in discussing fall enrollment. The DOJ alleged that the First-Year Undergraduate Recruiting Rule significantly restrained a college’s ability to compete for first-year students, which also deprived students of receiving potentially beneficial offers from colleges.
In September 2019, NACAC’s Assembly of Delegates voted to delete the Recruiting Rules from the CEPP effective immediately in light of the DOJ’s investigation and potential litigation.
Simultaneously to the DOJ’s civil lawsuit, the DOJ Antitrust Division filed a proposed consent decree between the DOJ and NACAC, under which NACAC agreed to remove the Recruiting Rules from the CEPP, not to establish or enforce similar rules in the future, and to increase its antitrust compliance training with employees and members. The consent decree has been submitted to the United States District Court for the District of Columbia for approval. Upon the court’s approval, the consent decree will resolve the DOJ’s claims against NACAC.
In a press release issued on December 12, 2019, NACAC stated it “continues to believe that the now-deleted provisions provided substantial aid and protection to students in their process of choosing and moving from high school to college. However, the association understands its obligations under the decree and intends to strictly implement and abide by its provisions.”
United States of America, Plaintiff, v. National Association for College Admission Counseling, Defendant., 2019 WL 6790660 (D.D.C.).
The changes to the recruiting rules in the NACAC Code of Ethics and Professional Practices provide a good opportunity for colleges and universities that are NACAC members to review and update their recruitment policies and practices for first-year and transfer students.