NACAC prepares to cut its losses in antitrust investigation with changes that could supercharge recruiting competition.

LOUISVILLE, Ky. — Cracks appearing in higher education’s predominant admissions model loomed large as the National Association for College Admission Counseling opened its national conference Thursday.

The exhibit hall bustled with vendors, as always. NACAC leaders listed the usual long string of corporate and university sponsors. But early sessions contained many nods to the high-profile Varsity Blues admissions scandal, simmering legal issues and votes scheduled for Saturday to try to resolve a federal antitrust investigation.

“This year, the issues we faced together weren’t necessarily the ones we anticipated when we signed up for board service,” said Stefanie D. Niles, NACAC president, at the conference’s opening general session. “Yet together we did our best to navigate the rocky terrain. We made some very tough decisions.”

As many as 215 voting delegates from NACAC’s 23 affiliates now have an important decision before them. Saturday they will vote on whether to remove several sections from the association’s Code of Ethics and Professional Practices. Those sections restrict colleges from offering incentives for early-decision applicants, prevent them from recruiting first-year undergraduates who have committed to another college and limit how they recruit transfer students.

NACAC members who don’t comply with the code can face penalties including loss of membership or being unable to participate in college fairs. NACAC currently has in place a moratorium on enforcing the code, however.

Removing the sections from the code of ethics is a step toward NACAC signing a consent decree in order to resolve a two-year Department of Justice antitrust investigation. Saturday’s vote is generally expected to endorse the provisions’ removal and make other changes so that NACAC leaders will be able to negotiate a consent decree, despite some members’ reservations and plans to protest.

NACAC leaders have pushed to reach a consent decree rather than fight antitrust charges in court because of the high cost of litigation, the time it would take to fight charges, the possibility of affiliates or member institutions being ensnared in a continuing investigation and the possibility that an extended investigation would harm the association’s reputation. So far, the investigation has cost NACAC financially “in the high six figures,” and fighting the matter in court could run into the “mid- or upper seven figures,” said Jeff Miles, senior counsel at Baker Donelson and NACAC’s legal counsel, in a Sept. 12 webcast on decisions members are making at the annual meeting.

“Given all this, we decided the best thing to do, in effect, was to cut the losses,” he said.

NACAC has other reasons for wanting to settle that Miles did not disclose.

“If those reasons became public and if there were worse subsequent litigation over the provisions, my talking about those would hurt NACAC’s position and hurt it very seriously,” Miles said during the webcast.

Some NACAC members feel strongly that the code of ethics provisions in question protect students. The provisions prevent students from being badgered by colleges that they’ve decided not to attend, for example. And they give rising freshmen time after the traditional May 1 admissions deadline to prepare for classes at the college they’ve chosen.

The Department of Justice believes the provisions are unlawful restraints on competition, according to NACAC leaders. Critics can read them as preventing colleges from offering larger financial aid packages in order to lure students who’ve chosen to enroll elsewhere. The provisions could also be interpreted as chilling the market for transfer students.

Admissions officers disagree over whether the removal of the provisions will spark more competition in the admissions market. Institutions could theoretically resist changing their processes, recruiting practices and deadlines.

NACAC leaders have suggested members can continue to abide by the provisions, even if they are stricken from the Code of Ethics and Professional Practices.

“All the decree requires is for individual institutions to make their own decisions as to whether they believe these provisions are in student interest and whether they are going to follow them,” said Joyce E. Smith, NACAC’s CEO, during the Sept. 12 webcast. “As long as they make their decision on whether to abide by the provisions on a completely individual basis without any type of understanding with others, they are perfectly free to make that choice or not.”

Smith, who plans to retire next summer, still emphasized the gravity of the situation during that webcast.

“In the history of the association — and I’ve been with NACAC since 1991 — we have never faced a legal threat such as this,” she said.

The early 1990s happen to be when the last major antitrust investigation of college admissions practices was resolved. That case offers an example of how antitrust investigations can lead to drawn-out fights and unexpected outcomes.

In 1991, the eight Ivy League colleges and universities agreed to a consent decree calling for them to stop sharing student financial aid information; they also agreed not to work together when increasing tuition. The Massachusetts Institute of Technology did not sign the decree and went on to settle the case in 1993 in a deal that created guidelines under which institutions could coordinate financial aid practices.

Federal law expanded upon the MIT settlement, carving out a limited antitrust exemption for colleges and universities practicing need-blind admissions. They can establish common principles for evaluating financial need and use a common application form for institutional aid, although they cannot discuss students’ individual financial aid packages. Subsequently, the 568 Presidents Group of elite institutions taking advantage of that carve-out was created.

Today, a contingent of NACAC members thinks the association would likely win against the Department of Justice in court. They feel resource constraints, not principle, is the driving force behind the push for a consent decree.

Some have argued that no one is required to join the 15,000-member association of admissions and counseling professionals, so its rules aren’t being forced on the marketplace.

Meanwhile, others say the antitrust investigation is wide of what should be the mark. They wonder if it is focused on creating a competitive market for the largely well-off group of students who have traditionally been most attractive to colleges — instead of making it easier for low-income students or students from groups who have not traditionally entered college in large number to enroll at an affordable price.

“How does it actually get to the students who have been left out of opportunities?” asked Annie Reznik, executive director for the Coalition for College, a group focused on higher education access.

College leaders across the country are watching the antitrust investigation’s resolution closely.

“The deck has been stacked in a particular way for a long time,” said Daniel G. Lugo, president of Queens University of Charlotte, in North Carolina. “I have no idea if they move on any of this. But if they do, it will create an opportunity for the most agile and smartest ones among us.”

The antitrust investigation was far from the only crack in the admissions model discussed at NACAC’s annual conference. The Varsity Blues admissions bribery scandal drew frequent mention and was on the schedule as a session topic for today. And colleges’ admissions practices geared toward enrolling diverse classes are under scrutiny in numerous court cases, including the closely watched case challenging Harvard University’s affirmative action policies in federal court.

One session Thursday afternoon delved into the intricate legal issues surrounding colleges considering race, ethnicity and sex in admissions. But speakers also worried that higher education has not effectively communicated about its practices in order to win widespread public support.

“I think the court of public opinion is as critical for us as the court of law,” said Art Coleman, managing partner and co-founder of EducationCounsel, an education consulting firm based in Washington, D.C.

Despite the challenges, NACAC leaders tried to put forward an optimistic face. Thursday’s opening general session included a keynote presentation from Randi Zuckerberg, the former director of marketing development for Facebook. Smith, NACAC’s CEO, told attendees the Code of Ethics and Professional Practices is just words on a page.

“Those things aren’t going to define our future,” Smith said. “I hope that all of you will have faith and confidence that NACAC professionals will hold this process together.”

Source: NACAC conference opens as key vote on recruiting standards looms