Pajamas and Online Assessments

Colleges still pay companies to be matchmakers for them with potential students -- so-called “lead generators.” The sometimes-controversial practice remains a big business, despite scrutiny from Washington and accreditors.

Yet lead generation has evolved over time. Smart Degree is one company that appears to include a couple of new twists.

Dale Leatherwood, a veteran of higher-education marketing for both nonprofit and for-profit colleges, came up with the concept three years ago. He said lead generation typically provides only “partial information to both sides of the process.” Potential students know little about the colleges that pay for the web and television ads that pique their interest. And the colleges usually have skimpy information on the students.

“It was a very inefficient and wasteful form of marketing,” said Leatherwood. “Students didn’t know exactly what they were getting into.”

For example, one well-known batch of cable television pitches from Education Connection (a lead generator for various institutions, not a college itself) features a young woman touting the wonders of online degrees. “Thousands of people go to college in their pajamas every day,” she says, while wearing “cute little fluffy slippers” and an outfit resembling sleepwear.

The advertisement does not identify which colleges are paying for access to Education Connection’s pool of leads.

Sen. Dick Durbin, an Illinois Democrat and frequent critic of for-profits, teed off on the ads in 2011. “I don’t believe anybody should fall for that,” he said, calling some of the degrees the company hawked “worthless.”

Around the same time, the U.S. Department of Education strengthened its rules around marketing. Now colleges can be held accountable for “misleading statements” their vendors make. The Association of Private Sector Colleges and Universities, the for-profit sector trade group, also tightened its guidelines for working with lead generators.

The demand, however, is still there. Colleges particularly want to reach more of the 31 million Americans who hold some college credits but no credential.

Leatherwood said Smart Degree tries to tap this market by doing more to vet potential students and to help make sure they succeed in college. And he said the company works only with respected institutions. Its eight partners include the University of Toledo, Tiffin University, Quinnipiac University and the University of Florida.

Cynthia Gallatin, Quinnipiac’s associate vice president and chief operating officer for online programs, said her university largely had quit paying for leads until Smart Degree came along.

“We stopped working with lead-generation companies," she said, "because it was expensive and ineffective."

Novel or Not?

Created just six weeks ago, Smart Degree is a joint venture of Nelnet Enrollment Services and BU Ventures, a wholly owned subsidiary of Bellevue University, which is a private, nonprofit university based in Nebraska.

The process is free to potential students (so far 960 have “engaged” with the company, Leatherwood said). Each student is assigned a mentor after registering. The mentor helps guide them as they decide which degree options to pursue.

Student advisers in lead generation, however, are not new. Big for-profit chains have long relied on third-party companies that have large numbers of advisers on staff, said David Moldoff, the founder and CEO of Academy One, a consulting and software development firm.

“They are mimicking what others are doing in the marketplace,” Moldoff said of Smart Degree, pointing in particular to Zinch, which is a subsidiary of Chegg, the online textbook publisher. Zinch, however, is focused on traditional-age undergraduates, while Smart Degree specializes in adult students.

David Hawkins, director of public policy and research at the National Association for College Admission Counseling, said Smart Degree and other, similar companies are a sort of “online retail store” for higher education. They are “part lead generation, part capitalization on prior learning assessments to give the student an on-ramp to additional higher education,” he said in an email, “and part money-making venture for all involved (save for the student).”

One key question, Hawkins said, is if the mentors are really mentors, rather than salespeople.

Leatherwood said the job of Smart Degree's mentors is to help students. They are full-time employees whose contracts are not connected in any way to students' enrollment decisions. For more distance, Smart Degree brought in an outside firm to manage the advisers.

The company offers more than traditional lead-generation, said Leatherwood, in part because of its student assessments.

These tests seek to gauge a potential student’s academic background as well as career goals. Leatherwood said the assessments are rigorous and “not always fun.” They identify remedial needs, for example, that students must address.

That’s where Bellevue steps in. The university, which has a heavy online and adult-serving focus, offers general education courses to students who register with Smart Degree. At $150 per credit, the courses are self-paced and allow students to bulk up their eventual application to college. Bellevue is also a partner institution, meaning the university can enroll Smart Degree students on a permanent basis.

The combination of low-cost courses and matchmaking services is new, said Mike Echols, Bellevue’s vice president of strategic initiatives.

“I look at it as a bundling of services that otherwise has not been available,” he said.

Saving Time and Money

Students create a profile on Smart Degree's website, which the institutional partners can see. The profiles do not include contact information, but everything else a college would want to know, said Leatherwood. That even means a narrative on why potential students want to go back to college and what sort of support network they have.

Institutions can make enrollment offers based on the profiles. If a student elects to pursue a college, Smart Degree charges the college a fee. That per-student fee is the sole cost for being a partner.

The expense is much less than what the typical lead-generator charges, said Leatherwood, which can be up $3,000 for a solid lead.

“Our goal is not to provide a large number of leads. That’s easy,” he said. “We want to filter out.”

Moldoff, however, was skeptical that the small number of prospective students would allow Smart Degree to reach a big enough scale. And if they do, that growth could draw the ire of accreditors. He cites the example of Ivy Bridge, a defunct joint venture of Tiffin and Altius Education, an education technology company. A regional accreditor essentially shut down Ivy Bridge.

Smart Degree has little in common with Ivy Bridge, said Leatherwood. Most of all it’s a marketing tool, he said, not a degree-issuing institution.

“A student is not tied to Smart Degree for anything,” Leatherwood said.

The company also is not connected directly to Bellevue, but rather to the university’s separate subsidiary, which has its own governing board.

A smaller pool of potential students is a draw for Quinnipiac, said Gallatin. She called Smart Degree an upfront counseling service.

Quinnipiac is looking for “qualified individuals who will be successful,” she said, adding that she hopes Smart Degree will prevent “wasted money and time” for both the university and students.