South Carolina university pays $25 million over student recruiter incentive compensation

by Ben Vernia | February 18th, 2019

On February 9, the Department of Justice announced that North Greenville University in South Carolina has agreed to pay $25 million to resolve allegations that the school unlawfully provided incentive compensation to a company that recruited students for the school.

North Greenville University (NGU), based in Greenville, South Carolina, will pay $2.5 million to resolve allegations under the False Claims Act of submitting false claims to the U.S. Department of Education in violation of the federal ban on incentive-based compensation, the Justice Department announced today.

Title IV of the Higher Education Act (HEA) prohibits any institution of higher education that receives federal student aid from compensating student recruiters with a commission, bonus, or other incentive payment based on the recruiters’ success in securing student enrollment.  The incentive compensation ban protects students against aggressive admissions and recruitment practices that serve the financial interests of the recruiter, rather than the educational needs of the student.

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The settlement resolves allegations that between 2014 and 2016, NGU hired Joined Inc., a company partially owned by NGU, to recruit students to NGU and compensated Joined based on the number of students who enrolled in NGU’s programs, in violation of the prohibition on incentive compensation.

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The government announced that the whistleblower who brought the case, a co-owner of Joined, will receive $375,000 (a very low 1.5% relator’s share; which probably represents a discount due to the relator’s co-ownership of the company the school had unlawfully compensated).

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