The Washington Post: University of Phoenix sale clears a crucial hurdle

January 24, 2017

The Higher Learning Commission, a college accreditation agency, has cleared the way for the $1.1 billion sale of Apollo Education Group, owner of the University of Phoenix, Western International University and College for Financial Planning, to a group of investors.

The commission notified Apollo on Monday that it voted in favor of an application filed by the for-profit colleges to ensure they remain accredited after investors assume control of the parent company, according to a regulatory filing. All three institutions must submit quarterly reports to the commission detailing such things as enrollment, quarterly financials and student retention rates.
“With the receipt of this approval, we have obtained all educational regulatory approvals required,” Apollo said in the regulatory filing. The company anticipates completing the deal in February, subject to satisfying all other closing conditions.

The purchase of one of the largest for-profit education companies has been met with criticism because of the involvement of Vistria Group, a private equity firm run by former president Barack Obama’s friend Marty Nesbitt and former deputy education secretary Tony Miller. Vistria is among a consortium of investors bidding to take the publicly traded Apollo private, but its ties to the Obama administration sparked controversy over the Education Department’s objectivity in approving the deal.

The Obama administration made holding for-profit colleges accountable for poor student outcomes and abusive practices a cornerstone of its higher education policy. Phoenix, like other for-profit schools, has been battered by government investigations, heightened federal regulation and poor enrollment.

In December, the Education Department sent the presidents of Phoenix and Western a litany of conditions that must be met by the new owners for the schools to remain in the federal student aid program. Chief among them is a request that investors provide a letter of credit from a bank assuring the availability of as much as $385 million, roughly 25 percent of the federal loans and grants the schools receive. The letter is meant to protect students and taxpayers if the school is unable to cover federal student-aid liabilities.

Education officials also said the schools will not be allowed to add any new programs, must cap enrollment levels, submit projected cash flow statements, produce monthly student rosters, alert the department to any investigations and commit to a recruitment standard, among other things. Many of the requests would essentially place the same demands on the soon-to-be private company as a publicly traded outfit.

In a statement, the Higher Learning Commission said its board approved the application with the conditions imposed by the Education Department in mind. The commission is also requiring each school to host a peer review visit within six months of the transaction closing.

Almost a year has passed since Apollo first announced that a group of investors, including funds affiliated with Apollo Group Management and Najafi Cos., were offering $9.50 a share in cash for the outstanding shares of the company. The group upped the acquisition price to $10 per share in May, which represents a 52 percent premium over Apollo’s closing price on Jan. 8, 2016, when the board of directors said it was considering its options.

The deal has been blessed by Apollo’s board and shareholders. Once the transaction is completed, Miller, chief operating officer of Vistria, will become chairman of the Apollo board. He served as deputy secretary at the Department of Education from 2009 to 2013.

Direct link to article:

The University of Miami School of Law: The Implications of the Regulatory Assault on For-Profit Colleges and the Light at the End of the Tunnel

January 24, 2017

Gabriel A. Lievano – For the past 6 years, the Department of Education has waged war on for-profit colleges. The Department justifies the regulatory assault in the name of protecting students from predatory colleges. The reality is that the regulatory model not only threatens the closure of many for-profit colleges, but also leaves the taxpayers to pay the bill, and non-traditional students without alternative education options.

Since its early days, the Obama administration sought to rein in for-profit colleges, amid a sharp rise in students dropping out and defaulting on loans. In 2010, the administration proposed a plan to penalize vocational schools that leave students with large debt. After a long court battle with the private college industry, the plan went into effect in 2015. The plan proposes to cut off federal aid for career-training schools if their alumni’s earnings are low relative to their student-debt burden. The administration also completed rules that make it easier for borrowers to discharge their student debt, under a law known as “borrower defense” or “defense to repayment.”

Hundreds of for-profit college programs are in danger of closing, as most of them rely on access to federal student loans and grants for most of their revenue. One of the most notable closures was Corinthian Colleges in 2014, which resulted in taxpayer cost of about $350 million. Taxpayers may receive a similar bill for ITT Technical Institute’s closure in September as government officials have estimated that former students could seek forgiveness on as much as $500 million in federal loans. Overall, the Department of Education estimates that the plan will cost taxpayers between $9.5 billion to $21.2 billion.

Progressives facilitating the bludgeoning on ITT Tech and Corinthian proclaim themselves as “student-debt liberators.” What they fail to see, however, are the human costs of the regulatory assault: the sweat and tears of students who lose their progress. When colleges like ITT Tech and Corinthian are forced to close amid regulatory onslaught, many students who were not able to finish their course of study are not able to transfer their credits to other institutions. For-profit colleges like ITT serve non-traditional students like single mothers, veterans, and full-time workers, who mostly come from low-income backgrounds and have previously attended community colleges. These students choose for-profit education for the hands-on training, and for the improved student outcomes over the local community college.

Now that the Obama administration has come to an end, for-profit colleges are hoping that the Trump administration is the light at the end of the tunnel. While President Trump has yet to reveal how his administration will handle federal regulations on for-profit colleges, investors are betting on the easing of regulations. President Trump’s pick for Secretary of Education, Betsy DeVos, provides a good estimate of the future as she has pushed for expanding private-sector options in primary and secondary education.

The Obama administration’s targeting of for-profit colleges, while well-intentioned, has had some disastrous consequences. The consequences span further than just closure of institutions. Going forward, lawmakers should relax regulations on the industry, while demanding that for-profits tighten their admissions standards to avoid admitting students who are most likely to dropout or default on their loans.

Direct link to article:

Inside Higher Education: Dear Betsy

January 17, 2017

The record of Betsy DeVos as an activist and advocate on K-12 education has been picked over for more than a month. But relatively little is known about her position on a range of issues that vex higher education policy makers.

Tuesday’s confirmation hearing at the U.S. Senate’s Health, Education, Labor and Pensions Committee will be the first time President-elect Donald Trump’s nominee for U.S. secretary of education has had to answer questions publicly about her thinking on student loan debt, the role of for-profit colleges and accountability in higher education. Democrats on the committee plan to question DeVos about her long history of pursuing policy goals through dark money groups and political donations -- including to members of both parties, but mostly to Republicans. However, Senator Elizabeth Warren, a Massachusetts Democrat, in a letter this week wrote that she was concerned about DeVos’s “paper-thin record on higher education and student debt.”

Inside Higher Ed asked a number of people who work in or closely observe higher education what questions they would like to see DeVos answer.

Justin Draeger, president and CEO, National Association of Student Financial Aid Administrators
Often, higher education gets overshadowed in confirmation hearings with the focus being on elementary and secondary education. That’s a shame because the U.S. Department of Education has become the fifth-largest holding company in the U.S., with nearly $1.2 trillion in total assets. What in Ms. DeVos’s background and experience has prepared her to oversee this enormous lending operation and provide the appropriate oversight over the Office of Federal Student Aid, the chief operating officer and the strategic objectives of that organization?

Given the amount of interaction between financial aid administrators and the department’s Office of Federal Student Aid, recent inspector general and Government Accountability Office reports, and congressional hearings and investigations, we would like to know what DeVos has planned to improve the financial aid process implemented by Federal Student Aid. Is she open to taking a wholesale look at restructuring FSA to better serve students, schools, borrowers and other stakeholders? Is she open to exploring, with Congress, ways to ensure that this agency -- which disburses some $150 billion a year in financial aid -- is held more accountable to the public and other stakeholders? What ideas is she bringing to the table to improve the financial aid process, including the financial aid application, funds disbursement, loan servicing and the myriad other arcane processes that add little value to students or taxpayers, but add a significant amount of complexity?

Finally, a common complaint among policy makers and higher education stakeholders is that the department can do much better in providing data about student aid programs, student outcomes and benefit utilization rates. Recently, a government watchdog questioned the budgetary estimates of income-driven repayment plans, and we expressed concern over the incredibly low number of borrowers currently on track for Public Service Loan Forgiveness. How does Ms. DeVos view the department’s obligations on data transparency to the public, and what will she do to improve the data coming out of that agency?

King Alexander, president, Louisiana State University

In order to stop the federalization of public higher education (which has been occurring for nearly three decades), what role does the Department of Education have in ensuring that states do not completely abandon their financial responsibilities to fund their public colleges and universities?

Walter Kimbrough, president, Dillard University

Will you commit to strengthening the Pell Grant program, including restoring summer Pell, raising maximum Pell and indexing Pell permanently to account for inflation?

What is your understanding of the role of historically black colleges and universities in American higher education, and do you have ideas on how to invest in HBCUs?

Steve Gunderson, president and CEO, Career Education Colleges and Universities

The current Department of Education pursued an ideological war against the postsecondary career schools. In doing so, they shut down over 870 such schools, reducing enrollment by over 1.4 million. Can you assure the committee that your department will not conduct a similar war against any element of higher education?

Do you believe there should be one set of outcomes metrics for all schools where taxpayer dollars are invested?

Mark Huelsman, senior policy analyst, Demos

For several decades, per-student funding has stagnated or declined in nearly every state, and with it tuition has continued to rise at public colleges and universities -- the institutions nearly three in four students attend. Rising prices and student debt impact students of color and working-class students more acutely -- affecting aspirations and relegating some students to greater unmet need, debt and risk of noncompletion. What, specifically, do you believe is the role of the federal government in addressing the decline in state funding and lowering the net price of college at public institutions -- particularly in an era of stagnant income and wealth for most families? Do you approve of proposals to provide sufficient grant aid to low- and middle-income students at public institutions so they can pay for college with a part-time or summer job? Is there a federal role in rewarding institutions for graduating high numbers of low-income students while keeping prices low, and if so, what is that role?

Amy Laitinen, director for higher education with the education policy program at New America

The federal government spends hundreds of billions of dollars every year to help students go to college. And while there is no question that college is worth it on average, there are too many low-quality programs that leave students either degree-less in debt or with credentials that leave them stuck in poverty-level jobs. What will you do to make sure that taxpayer dollars are spent at institutions that provide students a quality education? Do you believe students have the right to know outcomes from specific programs at specific colleges so they can make informed choices about where to spend their valuable time and money?

David Schafer, student body president, University of Michigan

I’m specifically interested in how Betsy DeVos would respond to questions around the Obama administration’s Dear Colleague letters from 2011 and 2016, in which they outlined how universities and colleges should respond to sexual assault and protect transgender students. Does she plan to maintain these guidelines? What does she believe is the role of the Department of Education in addressing and mitigating instances of campus sexual assault?

Bob Shireman, senior fellow at the Century Foundation, former deputy under secretary of education under President Obama

Do you believe that there is a discernible unit of measure -- let’s call it a “learning outcome” -- that can be counted and compared across students and classes? If so, is the measure capable of comparing across topics and disciplines, such as whether a history class produced more learning than a biology class?

Rudy Fichtenbaum, president, American Association of University Professors; economics professor at Wright State University

It’s a little hard to know in a sense what to expect from DeVos with respect to higher education since nearly her entire track record has to do, really, with supporting privatization of public schools. I’d want to know what kind of plans she has for providing support for low-income students through Pell Grants. I’d like to know if she has any concern about the fact that over half the people teaching in higher education are part-time and are working for what amount to poverty wages.

Mark Schneider, vice president and institutes fellow at American Institutes for Research

What’s the role of private lending going to be?

Which regulations are the ones that are going to survive and which ones need to go away? What’s going to happen to gainful employment?

What’s going to happen to borrower defense?

Those two to me, they’re ripe for revisiting.

What are we going to do about endowments and the incredible concentration of wealth in the hands of so few universities?

What do we do when we have high failure rates in open-admission schools?

What’s the role of risk-adjusted metrics?

What is the role of information in advising students better?

Madeleine Kunin, former governor of Vermont and deputy secretary of education under President ClintonDo you support public education and the mission of the department?

Title IX and Title IV?

With her financial support of conservative candidates, can she be a nonpartisan secretary?

Or, more bluntly, does she believe the department should be eliminated?

What will she do to reduce high student loan debt?

Margaret Spellings, president, University of North Carolina System; former education secretary under President George W. Bush

As an education reformer, there is much Ms. DeVos can do to encourage accountability and high standards, but achieving those goals will depend on winning the support of stakeholders across the country. I think she can build that support because her focus as a reformer is squarely on students -- what works best for them, what gives them the best shot at a quality education and the opportunity to excel.

Ann Larson, organizer, the Debt Collective

Most for-profit schools would not survive without federal student aid. Do you believe that for-profit colleges should continue to receive federal funding?

Student debt cancellation would immediately improve nearly 40 million Americans’ lives and help the economy. Under what conditions would you support a jubilee of student loans?

The Debt Collective organizes with many people of faith who are united in their opposition to usury. As secretary of education, at what point would you consider education debt to be usurious?

You have supported using public funds to create private religious education. Would you support taxpayer-funded schools run by Muslims?

If not, how would you decide which religious views can be supported with taxpayer dollars?

Beth Akers, senior fellow, the Manhattan Institute

Since DeVos doesn’t have a real track record on higher education, it’s going to be tough to get a true sense of what we can expect from her down the road. But given her staunch support of choice in K-12 education, a notion based firmly in market-oriented thinking, I’d expect her to be sympathetic to both eliminating gainful-employment regulations and reintroducing private lenders into the federal student loan program, both of which are bad ideas. I’d like to see the committee press her on these issues, which would give us a good sense of whether she’s done her homework on higher education.

Gail Mellow, president, LaGuardia Community College

If asked to define a typical college student, most Americans describe a recent high school graduate, going to a four-year college and living on the college campus. However, this represents only a portion of our nation’s college students. Nearly half of all U.S. college students are enrolled at a community college. And community college students are disproportionately among the neediest disadvantaged groups -- living in poverty, minorities, new immigrants. Paradoxically, community colleges serve the most academically and financially challenged students in our nation, while private research colleges receive five times more funding per student.

Given this disparity, does Ms. DeVos think community colleges are in danger of becoming separate and unequal institutions of higher education? How would she address the relative lack of funding for community colleges, as compared with other sectors of higher education?

Rohit Chopra, former student loans ombudsman, Consumer Financial Protection Bureau

As secretary, you’ll be the CEO of a trillion-dollar student loan bank that impacts more than 40 million borrowers, with more assets than Goldman Sachs. Oddly, the bank hands out contracts to big student loan companies to collect from borrowers, while also policing them to make sure borrowers aren’t getting cheated. Do you think it is realistic that the nation’s top education official can have the expertise to play this role effectively? Or should these roles be transferred to other agencies, like the Department of the Treasury, the Consumer Financial Protection Bureau and the Federal Trade Commission? In other words, is it time to break up the trillion-dollar bank?

Eloy Ortiz Oakley, chancellor, California Community Colleges

During the presidential election, large numbers of voters made it known that they were not connected to the economy and feel they are losing ground in the era of globalization. America’s community colleges are the most powerful engines of social mobility in our nation, providing people from all backgrounds with the ability to prepare for meaningful and good-paying jobs. How can this administration and your department empower community colleges to do even more to prepare students for the jobs of today and tomorrow?

The California Community Colleges are the largest system of higher education in the country, and tens of thousands of our 2.1 million students participate in Deferred Action for Childhood Arrivals. What will you and the Department of Education do to ensure that these students, some of whom have served our nation in the armed forces, will continue to pursue their educational goals and contribute to the communities in which they were raised?

President-elect Trump has made clear that he wants America to embark on projects that modernize our aging infrastructure, which will create job opportunities for a broad spectrum of skilled workers. Under your leadership, how will the department work with America’s community colleges to invest in the types of career technical education programs that will align with the infrastructure plans envisioned by the administration? The success of such a large-scale public infrastructure program will depend, in large part, on the ability of employers and colleges to achieve labor supply and demand equilibrium, which will require close coordination and support by the Departments of Education and Labor.

Throughout the nation, College Promise partnerships have brought communities, businesses, philanthropic organizations and education partners together to promote college-going cultures and make community college more affordable. From Tennessee to Long Beach, Calif., these partnerships have enabled communities to make powerful commitments to students and families who want to use public higher education as a way to improve their lives. What will the incoming administration do to continue the proliferation of these partnerships that are showing positive results?

Wick Sloane, instructor at Bunker Hill Community College and Inside Higher Ed contributor

What will you do to equalize need-based federal subsidies for college students?

Federal subsidies to college students vary wildly. A federal Pell Grant for the lowest of the low-income students is a maximum of $5,775. All students at wealthy colleges such as Williams, Yale, Princeton and Harvard, by federal tax policy alone, receive subsidies of at least $30,000 per student, regardless of need. This is from tax-free endowments and tax-deductible donations that colleges are free to spend for sports sky boxes and indoor golf nets. How will you work with the Treasury and the IRS to remedy these inequities?

How quickly will you put in place a federal free and reduced-price lunch program for eligible low-income college students? If not, will you support Senator Warren’s proposal for an immediate General Accountability Office study on college hunger? As you know, the available data on hunger is alarming. Federal policy agrees that nutrition is essential for learning in K-12, and the federal government provides eligible students with free and reduced-price lunch and often breakfast. Yet these same students lose these meals when they continue on to higher education for a professional credential or a degree. The same students often lose a bus or a subway pass. Does this make sense to you?

Direct link to article:

Sun Sentinel: Government decision could put for-profit colleges' accreditation in jeopardy

By Caitlin  R. McGlade, Contact Reporter

January 12, 2017

Dozens of for-profit colleges in South Florida could lose accreditation after a federal decision to strip authority from the agency that approved them.

Schools, including the Florida Technical College, Digital Media Arts College and the Lincoln Technical Institute, must agree to increased government oversight and apply to a new accreditation agency if they wish to keep their status.

That label is required to continue receiving federal student aid. Accredited schools also are more likely to attract high-quality faculty and students and are more likely to get permission to add academic programs than those that are not, said Curtis Austin, director of Florida Association of Postsecondary Schools and Colleges.

Students who finish their diplomas within the next 18 months will not be affected as long as their colleges agree to additional monitoring, transparency, oversight and accountability measures. The move will not compromise the quality of their diplomas, according to the U.S. Department of Education.  

About 250 institutions receiving federal student aid earned accreditation through the agency determined unfit to oversee them. More than 100 career colleges in Florida bear the agency's seal of approval, Curtis said.

The U.S. Department of Education said the agency, the Accrediting Council for Independent Colleges and Schools, failed to properly monitor the institutions it approved and was too lax on student achievement standards, among other violations.

"What this decision reflects is the fact that ACICS was an agency that for years was little more than a rubber stamp for some highly problematic colleges," said Ben Miller, senior director for postsecondary education at the Center for American Progress.

His Washington, D.C.-based organization released a report in June that found 90 instances when the agency named campuses or colleges to its honor roll about the same time the state or federal government was investigating them.

That included FastTrain College in Miami. The U.S. Department of Justice filed a complaint against the institution in 2014, saying that it hired strippers and attractive women to persuade men to enroll. The former president was later convicted of stealing millions in federal financial aid, according to the report.

"It gets named on [the agency's] honor roll, and a year later it's being raided by the FBI for fraud," Miller said.

The council also accredited Corinthian Colleges, which was ordered in March to pay more than $1 billion for defrauding its students.

The agency appealed the Department of Education's decision, but Secretary John B. King Jr. rejected it, writing that the council "is not capable of coming into compliance within 12 months or less." It has appealed the decision in federal court. 

Advocates for the agency argue that the decision is an unfair slight on the for-profit college industry that will shutter independent schools across the nation.

Colleges under the agency's watch do not automatically lose their status: they have 18 months to find another agency to accredit them before the government cuts off their financial aid as long as they agree to follow federal requirements in the meantime.

Florida Technical College, for example, is currently pursuing accreditation through a different agency, said James Michael Burkett, president.

But Steve Gunderson, president and CEO of Career Education Colleges and Universities, said many schools won't be able to earn accreditation in time.

Getting new accreditation costs up to $50,000 per campus, a price tag that may doom some institutions on its own, he said.

And theres's no guarantee that they'll secure the status. Other accreditation agencies will be overloaded with requests from schools searching to regain their status, he said.

"Because of the number of schools accredited by ACICS, there is no way that all of these schools can transfer their accreditation during an 18-month period," he said.

Colleges may also not get approved for re-accreditation or may have to make changes to meet standards that differ from agency to agency, Gunderson said.

Miller argued that will result in tighter controls on federal spending.

"Taxpayers are the ones paying for the federal financial aid students are using at these schools and so if there is not sufficient oversight, then we're wasting other people's hard-earned money," Miller said.

Direct link to article:  

Inside Higher Ed: ACICS- Accredited Colleges Meet Federal Deadline

January 10, 2017

The U.S. Department of Education last month finalized its decision to terminate the Accrediting Council for Independent Colleges and Schools, a controversial national accrediting agency that oversaw Corinthian Colleges, ITT and other failed for-profits.

Before the end of December, all remaining ACICS institutions filed paperwork with the department to retain their federal aid eligibility for 18 months while seeking a new accreditor, the department said this week. The roughly 245 colleges collectively received $4.76 billion in federal aid during 2015.

Ted Mitchell, the U.S. under secretary of education, said in an interview that he was encouraged by the transition process so far for ACICS-accredited colleges.

“The institutions are taking their responsibilities seriously,” he said. “We’re working to make this transition as successful as possible.”

Most of the colleges have begun seeking approval from the Accrediting Commission of Career Schools and Colleges, a national accrediting agency. Michale McComis, the commission’s executive director, said last week that 180 ACICS-accredited institutions have formally initiated the process. He expects that number to grow to 210 colleges by the end of January.

Some experts on for-profit higher education have predicted that substantial numbers of ACICS-accredited institutions will fail to find a new agency home within 18 months. One higher education lawyer said that challenge remains, and that the department had overplayed its celebration of ACICS institutions successfully completing their federal aid extension paperwork.

Mitchell, however, said the process of getting roughly 245 institutions to sign provisional Program Participation Agreements was complex and required collaboration between the feds and ACICS-approved colleges. The agreements include monitoring and reporting requirements the department said are intended to protect taxpayers and students.

In addition, Mitchell said he was confident that well-run institutions among the group “will have the time to secure accreditation.”

ACICS has sued to block the department’s decision to de-recognize the accreditor. A judge last month denied a request from ACICS for a temporary injunction.

It’s unclear if the incoming Trump administration would be able to overturn the department’s move to eliminate ACICS, or if it would seek to try.

Direct link to article:

CECU Press Release: CECU Statement on the Release of Gainful Employment Rates

January 9, 2017 – Washington, DC – Following the U.S. Department of Education’s release of gainful employment rates, CECU president and CEO Steve Gunderson released the following statement

“The Department’s action today is disappointing and disrespectful. While the Department has every right to share debt-to-earnings rates with schools, the Department should provide every school with the 14 days to file a notice of appeal, the 60 days to file the appeal, and the appropriate time for the Department to review such evidence and rule on the appeal before any public disclosure is made.

“The Department’s decision to publish a list of schools failing their initial calculations before the process is complete makes clear this is all about political motivations and harming institutions, and has nothing to do with expanding higher education access and opportunity or creating sound public policy. We had hoped this Department would comply with the timelines and procedures it had established.  Unfortunately we should not have expected even this minimum level of decency from them.

“Despite the Department’s attempts to obscure the truth, the fact remains: students that attend career education colleges and universities graduate at three times the rate of their peers attending 2-year public institutions and default at lower rates. It is time to stop the war. Community colleges and career colleges each have an appropriate and important role in serving our postsecondary students.” 

Direct link to article: