May 8, 2001
Dr. Dallas Martin
National Association of Student Financial Aid Administrators
1129 20th Street, N.W., Suite 400
Washington, DC 20036-3489
Dear Dr. Martin:
Thank you for your letter on behalf of the National Association of Student Financial Aid Administrators concerning guidance on the applicability of the prohibition on incentive compensation payments under the Higher Education Act of 1965, as amended, and the implementing regulations. In your letter, you request that the Department thoroughly review the issue and publish comprehensive guidelines to address the variety of practices being used and the diverse inquiries being made by the higher education community.
Over the last several months, Departmental staff has been reviewing this issue and the guidance that has been developed and disseminated since publication of the regulations in 1994. We understand and appreciate the concerns and questions raised by the higher education community with respect to incentive compensation payments. We also recognize that this is an issue that needs to be reexamined and clarified in light of changing circumstances and the interpretations the Department has issued since 1994. I welcome the involvement and participation of institutions of higher education and their representatives as we undertake a fundamental review of this policy. As a result of this review and consultation process, I would hope that we could determine cooperatively whether there is a need for further guidance, either through policy interpretation or regulation.
I look forward to working with you on this issue.