I teach at a small (1000 students) liberal arts college, and we faculty are not allowed to work plagiarism cases out amongst ourselves. If we spot it, we are required by our contracts to investigate and report to the Dean; if, in the Dean’s opinion, plagiarism has occurred, then the student loses all points on the assignment and half a letter grade in addition to that from his/her semester grade if it’s the student’s first offense. If it’s the second offense, the student is expelled. Period. We don’t cut deals unofficially with students — we are not allowed to. (And I wouldn’t, even if I were allowed to.) And the punitive decision is not made from a body of campus representatives; it’s the Dean’s call, with input from the faculty.

I have a friend who teaches at a large state university and things are a little more like what you describe above, because if the Dean had to deal with all those plagiarism cases, s/he’d never get any other work done.

But every student should become THOROUGHLY familiar with not only what constitutes plagiarism at his or her school but also what the process is if a person gets caught and what are the punishments.

There’s a real easy way to cut down on this problem: separate teaching from testing. Your papers/homework/test are graded by professors in another state, who don’t know you and have no personal contact. Wouldn’t solve the plagiarism problem for papers, though.