The Department of Education has released general guidance in a “Dear Colleague” letter to clarify issues arising under its new Title IV Program Integrity Regulations. The regulations, scheduled to take effect on July 1, 2011, extend the ban on incentive compensation to athletic personnel who engage in recruiting activities for colleges and universities. While the clarification seems to answer some questions, it raises others.  You can read further details in the article “Education Department’s Clarification of New Incentive Compensation Payments Regulations Raises Questions.”

In its October 29, 2010, comments to the final Title IV Program Integrity Regulations, the Department said the ban applies “to all employees at an institution who are engaged in any student recruitment or admission activity or in making decisions regarding the award of title iv, HEA funds.” The Department included athletic department staff in the class of recruiters, stating that “recruitment of student athletes is no different than recruitment of other students.” At the same time, the Department concluded that incentive payments made to athletic personnel based on such factors as “team academic performance” would not violate the ban. This naturally led to questions about whether incentives tied to related factors, such as graduation rates, were equally exempt from the ban.

Unfortunately, the Department’s “Dear Colleague” letter creates more questions than it answers. It is unlikely the Department will offer any additional clarification before the final regulations go into effect. More likely, the issue will play out in audits, enforcement proceedings, and litigation. This offers little solace for institutions that include incentive compensation in their existing coaching contracts. The ambiguity in the Department’s letter surely means the issue of incentive compensation will resurface.