The University of Maryland's distance-learning college has been paying a headhunter in Taiwan to sign up doctoral students there under a commission-based contract that critics say is troubling.
Officials of the University of Maryland, University College point to their new branch campus in Taipei as evidence that their 90,000- student operation -- recognized as a global leader in online degrees -- is showing entrepreneurial nimbleness at a time of intense competition.
But some higher education experts say UMUC's use of a commission-payment arrangement in Taipei raises ethical questions and might undermine students' interests with a profit motive.
"This is not happy news from my perspective, because UMUC is a fine institution, but this may be pushing the envelope," said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers, which develops ethics guidelines for admissions practices.
"We happen to believe that admissions ... has to be completely divorced from incentive compensation, particularly in the form of outright commission," Nassirian said.
The federal Higher Education Act generally prohibits campuses from paying recruiters based on their success in getting students to sign up for a degree program. But the law does not apply to foreign students attending offshore campuses of U.S. universities, a fast-growing segment of the higher-education market.
UMUC President Susan C. Aldridge, who worked with the same overseas recruiting firm at her previous campus, Troy University in Alabama, defended the payment arrangement as commonplace and above reproach.
"There's nothing unique that UMUC is doing in this area," Aldridge said.
University System of Maryland Chancellor William E. Kirwan praised UMUC's relationship with the recruiter as "good business sense."
"This is a reputable company used by a number of universities around the world," he said.
Stephen B.W. Sim, the president of ST International Co. Ltd., the recruiting firm, did not return repeated telephone calls seeking comment.
UMUC's foray into "offshoring" -- the exporting of U.S. degrees to foreign nationals in their native countries -- offers a case study of the lightly regulated trend's promises and potential risks.
Under the university's contract with STI, the Taiwanese firm advertises the doctoral program, pre-screens applicants and guides them through the application process. Admission decisions are made in Maryland, though about 80 percent of applications referred by STI have been accepted, officials said.
STI receives as much as 25 percent of each Doctor of Management student's tuition -- about $43,000 over three years of part-time study -- provided the recruiter delivers to UMUC a minimum number of students.
In exchange, STI provides administrative services to the students, who do most of their coursework online. At the start of each course session, a UMUC faculty member flies to Taipei to lead a week of classes with the students at an STI facility in downtown Taipei.
"We are confident that STI is handling its recruitment assignment in Taiwan with the utmost professionalism," said university spokesman James Hambright.
Many faculty members at UMUC who have taught the Taipei students agree with that assessment, but the method used to recruit those students would "not be appropriate" in this country, according to David Hawkins, public policy director of the National Association for College Admission Counseling.
David Bergeron, a senior official in the U.S. education department, said, "It seems to us that kind of incentive system would encourage someone to take steps that really aren't in the best interests of students." Bergeron emphasized that he was talking about incentive compensation generally, and not specifically about the UMUC program.
In addition to taking a sizable chunk of each Taiwan-based student's tuition, STI requires them to pay their entire anticipated costs upfront, a practice Nassirian called "highly unconventional."
"I don't think you could with a straight face, here in America, ask students to cough up the entirety of their projected tuition upfront and not think there's something odd going on," Nassirian said.
Interim UMUC Provost Lawrence E. Leak said that when he learned this year about the upfront collection, he believed it exposed the university to "unacceptable liabilities."
"If STI folded or went away, I was worried ... [about the] risk to the university and our obligations to the students," he said. "We have no assurances from STI in terms of our financial exposure, and that's of concern to me."
A similar concern has soured relations between STI and the public University of North Alabama, said Kerry Gatlin, dean of that college's business school. The public university runs a master's program in business administration in Taipei with STI and recently learned that the company has been pocketing their students' entire anticipated tuition upfront.