Today, we announced that TARGUSinfo’s On-Demand Lead Verification and Lead Scoring solutions are now available on the Sparkroom Enrollment Marketing Automation platform. This is good news for us, and great news for our customers. By adding TARGUSinfo to our list of partners, we’re giving our customers access to one of the most widely recognized leaders in verification and scoring – a win all around.

You can read the full announcement here to learn more.

Sparkroom was awarded the Best Lead Management in the education vertical by LeadsCouncil on Thursday, January 6th, 2011. See the press release from LeadsCouncil here. What a superb way to start 2011. We are thrilled to have our product recognized by our clients, prospects, partners and industry experts as the best solution for schools to automate, manage, and optimize all student inquiries from a single, integrated platform.

You can find the Sparkroom press release here.

Happy New Year!

In an environment where transparency and regulatory compliance are crucial, more and more schools are turning to technology to improve and streamline processes.  As we approach 2011, I’m confident that we’ll see more schools follow the lead of GCU and others that are demanding real-time data on every student inquiry, increasing accountability across the board.

We are thrilled to be working with the entire GCU team. Happy holidays.

Reach out to either Dave or myself if you are interested in meeting at the conference.

When I returned from the event, a colleague asked me to explain the issues and concerns around the Department of Education’s rulemaking on Federal financial aid programs. I thought I’d just send her a link, but I couldn’t find a site that pulled the relevant details together in one place. So, for anyone who is trying to understand these issues, I thought I’d share the summary I pulled together.

A Primer on the Department of Education’s Negotiated Rulemaking for Title IV Programs

1. What is negotiated rulemaking?
   When a government agency (ie. The Department of Education) proposes a change to a regulation, it is usually develops the proposed changes without public input and then publishes them in the Federal Register for comment by the public. In some cases, an agency is required to use a process called “negotiated rulemaking” which allows those parties that will be most affected by the regulation/rule change to participate in the development of the proposed rules before they are published in the Federal Register. The Department of Education is specifically required by law to use negotiated rulemaking for Title IV, Higher Education Act (HEA) programs.

   A complete FAQ on the negotiated rulemaking process is available here: http://www2.ed.gov/policy/highered/reg/hearulemaking/hea08/neg-reg-faq.html

2. Why did the Department of Education establish a negotiated rulemaking committee?
   The Department of Education established two negotiated rulemaking committees for 2009-2010 – one to develop proposed regulations governing foreign schools, and the other (which is the one we are concerned with) was established to develop proposed regulations to maintain or improve “Program Integrity” in the Title IV, HEA programs (Student Assistance programs). The goal of this committee is basically to prevent abuse of the federal financial aid programs. A more complete explanation by Robert Shireman, the Deputy Undersecretary of Education, can be found in the transcript of a call with Career College representatives held on May 29, 2009 ( http://www2.ed.gov/policy/highered/reg/hearulemaking/2009/call-career-colleges.pdf )
   
3. What issues are the “Program Integrity” negotiated rulemaking committee addressing?
   The committee is negotiating on 14 rules/rule changes in the following areas:
   Definition of High School Diploma; Ability to Benefit; Misrepresentation of Information to Students; Incentive Compensation; State Authorization as a Component of Institutional Eligibility; Gainful Employment in a Recognized Occupation; Definition of a Credit Hour; Agreements Between Institutions of Higher Education; Verification of Information Included on Student Aid Applications; Satisfactory Academic Progress; Retaking Coursework; Return of Title IV Funds: Term-based Programs with Modules or Compressed Courses; Return of Title IV Funds: Taking Attendance; Disbursements of Title IV Funds

   A full explanation of each of these issues can be found here: http://www2.ed.gov/policy/highered/reg/hearulemaking/2009/integrity-session3-issues.pdf .

4. What issues are the most contentious and why?
   The two issues causing the most concern for career and community colleges are around the definition of “gainful employment” and the issue of “incentive compensation”. An explanation of each follows.

   Gainful Employment: Most for-profit, career and community colleges & universities are eligible for federal aid based on their ability to “prepare students for gainful employment in a recognized occupation.” The proposed goal of the negotiated rulemaking was to define/create a standard for what is considered “gainful employment”. The final proposal for defining gainful employment involves capping annual debt repayments at no more than 8 percent of a program graduate’s expected salary over 10 years.

   Serious concerns were raised with this approach. First, it singles out students attending proprietary career, technical, and vocational colleges. Many of these programs serve predominantly adult learners, single parents, and low-income students who need the flexibility that for-profit career colleges can provide. These students are also the most in need of Title IV funding. If the real concern is with the high debt burden incurred by some students, any proposed changes should affect students attending non-profit and public institutions as well. Other concerns raised during the negotiations include a potentially “slippery slope” of price controls for all higher education institutions; the significant work/time required to implement this on a program-by-program basis; and concerns with whether the DoE has the necessary authority to regulate on this issue. More details on this issue can be found here in an article in Inside Higher Ed.
   
   Incentive Compensation: In order to receive Title IV funding, institutions are prohibited from providing staff with any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid. There are 12 “safe harbors” or types of payment and compensation plans that do not violate this statutory prohibition. The proposed rule changes would eliminate those safe harbors. Although the two sides were much closer at the end of negotiations, according to Inside Higher Ed, issues around language remained.

5. Where do things stand now?
   Following months of negotiations between the DoE and the panel of negotiators (representing two- and four-year nonprofit institutions, for-profit colleges, students, consumer advocates and campus administrators), a consensus was reached on nine of the 14 issues being proposed. On the remaining five issues (including, most notably, the definition of gainful employment and incentive compensation), no consensus could be reached. According to Inside Higher Ed, “Without overall consensus, the department is free to revise all 14 rules as it sees fit before releasing them for a final round of public comment.” The lobbying continues and we’ll wait to see how it all works out.

We are exhibiting this year. Come find the Sparkroom team at booth 213 at the Mirage.

What is going to change for Sparkroom? Our clients should know it starts with “business as usual” with the same great team, same great products, and same commitment to driving innovation in the marketplace. On top of that, we are going to be able to execute against our mission with a lot more resources behind us. Over the coming months, you will see us working closely with CUnet to deliver a broad array of interactive marketing products to the higher education marketplace.

Why does this acquisition make sense? Primarily because CUnet and Sparkroom share a common vision for how marketing will evolve for career colleges. We see increasing investments in interactive marketing together with increasing investments in technology to manage that spend more efficiently. Some schools will want cutting edge technology solutions and we deliver it. Some schools will want performance media and interactive media management solutions and we deliver it. Some will want an integrated suite of products and services delivered on a common platform and we will deliver that as well.

We expect the deal to close in February of this year and the entire Sparkroom team is excited to join the CUnet team. We are looking forward to increasing our investment in our software platform and dramatically scaling our customer base.

*QuinStreet’s fiscal year ends on June 30th

Two key takeaways

1. DeVry is a huge chunk of QuinStreet’s EDU business and it is likely to decline given Starcom’s AOR relationship

2. Actual growth with clients other than DeVry in the EDU vertical has been anemic compared to the market over the past 24 months. They have grown 4% YOY for the past two years vs. 20% for the market.

This data speaks to the importance of the M&A machine to QuinStreet’s future growth.