Massive For-Profit to Nonprofit Conversion being Reviewed by Feds and Accreditors

In March, The Dream Center Foundation announced its plan to purchase the majority of campuses owned by the struggling Education Management Corporation. The Los Angeles based philanthropic organization currently funds programs across the country for under privileged people. The Education Management Corporation (EDMC) was once one of the largest for-profit college chains in the country, with more than 150,000 students. According to Randall Barton, managing director of the Dream Center Foundation, the acquiring of EDMC aligns with the foundations desire to use education as a means of transforming lives.

The move would be one of the largest for-profit changeovers into nonprofit schools on record. The campuses being bought include Argosy University, South University, and the Art Institutes.  In the coming months, it will be up to the Federal Education Department, under new Secretary Betsy DeVos, and EDMC’s institutional accreditors to determine the fate of the deal.  According to the Higher Education Directory, Argosy University is accredited by the Western Association of Schools and Colleges, while South University is accredited by the Southern Association of Colleges and Schools.  With multiple accreditors, EDMC’s conversion to a nonprofit entity will be that much more complicated.

This past week, 30 consumer, student, and veterans’ groups wrote an open letter to Secretary Devos, urging her to impose conditions on the sale of EDMC.  The letter states, “Congress has vested authority in you, as the Secretary of Education, to approve changes in ownership and control for institutions of higher education that wish to continue to participate in federal student loan and grant programs. Given the deeply troubling past performance of EDMC, the proposed transaction should not be rubber stamped behind closed doors.”  The letter also asks the approval be conditioned based on three questions:

  • Whether the operations of the schools going forward are likely to avoid the predatory practices that plagued the company previously.
  • Whether the claim of a nonprofit control structure is justified and will set and maintain a path for the schools that is in the best interest of students and taxpayers.
  • If taxpayers are adequately protected against financial insolvency that could trigger immense public costs.

Many are concerned that the Dream Center will continue to operate the institutions for sale in the same manner as before. The letter notes that if change of ownership is approved, it should be done on a provisional basis, and that the Department of Education has the opportunity to “prevent another repeat of the scandalous mistreatment of students and taxpayers.” The decision made by the Department of Education is expected this summer, and will set an important precedent for how the Trump administration approaches the issue of for-profit to nonprofit college conversions.

April President’s Report

Higher Education Publications, Inc. – April President’s Report


Highlights include:   

  • Baylor Appoints its First Female President: Baylor University has appointed Dr. Linda A. Livingstone, dean at George Washington School of Business, as its 15th president.  Livingstone will replace interim President David Garland on June 1st.
  • University of Arizona Approves New President: Dr. Robert Robbins has been approved by The Arizona Board of Regents to a three-year contract as president at the school.  Robbins will take over for Dr. Ann Weaver Hart, who announced she will step down on June 1st.
  • William and Mary President to Retire After a Decade of Service: Mr. W. Taylor Reveley has announced that he will retire at the end of next year from the College of William and Mary. Revely said, “Serving as president of a college or university is one of the most challenging but meaningful jobs anyone can possibly have.” He continued with, “It has certainly been so for me. And it has been a rare privilege to lead this magnificent school. All parts of the William & Mary family, working together, have taken crucially important steps forward. I’ll leave the Brafferton in June 2018 with confidence that W&M’s momentum will keep rolling, while I enjoy the Elysian Fields of retirement at long last.” Revely has served as president since 2008.

To see the full report visit our website HERE.

Schools Taking New Approach to Course Placement

A new movement across college campuses is emerging to rethink – and revise – the single test, single cut score approach that places new college students into remedial or credit-level courses.  Several state systems and institutions are beginning to use additional indicators to gauge a student’s college readiness. Studies show that taking into account multiple measures could be a more accurate way for students to succeed in college-level courses, and reduce the chance they will be placed in remedial courses.

Recent studies from the Community College Research Center (CCRC) found that a student’s high school GPA is often a better indicator of future college level performance rather than only using their standardized test scores (such as the SAT or ACT) or general placement exam scores.  Prior to using multiple measures, North Carolina released a report prepared by the CCRC, that revealed nearly one third of its students were being severely misplaced, resulting in significant costs to both students and the system.  With these findings, the state of North Carolina established a system, based on a hierarchy, that first looked at students’ high school GPA when considering placement.

At least 15 states and college systems now incorporate multiple measures to determine a student’s initial course placement.  These measures include GPA, high school English and math grades, diagnostics exams, previous college courses, and student self-placement.  In Ohio, the placement policy allows campuses to look at writing assessments, high school GPA, and other indicators­ – such as previous college coursework.  Hawaii is experimenting with using grades in specific high school courses as an indicator on whether or not students are placed into credit-bearing courses.

North Carolina and California’s community colleges and most schools in Connecticut, Massachusetts, and Texas have recently required the use of multiple measures for course placement.  Although many states still use single standardized testing to determine placement, research has shown the move toward multiple measures could lead to fewer students being directed toward remediation and far more completing their degree.

Don’t Take the Bait: Phishing Scams on College Campuses

New phishing scams are targeting colleges and students nationwide.  Reports from Amherst College, Louisiana State University, Dartmouth, and more say students have reported multiple types of online phishing schemes in recent weeks.

Phishing scams are usually performed online, through email.  One scam features emails that contain fake job opportunities and request student’s personal information.  The Department of Homeland Security reports that scammers use email pretending to be interested in hiring a person. The email then asks for critical information, such as one’s address or social security number.  Once the information is obtained, scammers are able to access bank accounts and personal information.

Several thousand students at Dartmouth received emails that appeared to come from President Phil Hanlon.  In reality, the messages were linked to malware designed to steal information.  At LSU, IT Services Communications Officer Sheri Thompson said spam bots were impersonating the university’s help desk.  She said, “Be skeptical, be skeptical about any links that you get, any request for information that you get. Even if it says it’s coming from an LSU person, be skeptical.”  Wellesley college recently alerted students of fake versions of its student login page.  The school’s IT department said, “This scam copied our login page, even using our Wellesley College Images! What set the scam website apart was that it was not located at and wasn’t a secure website.”

University Employees have also been targeted through scams. Institutions across the country are experiencing a phishing fraud with an email that indicates a change in their employee’s human resource status.  The email then directs the employee to a fake login page.  If employees provide login information, their login can be stolen and paychecks can be rerouted to the scammers.

As attackers continue to impersonate emails and web portals, it is important that faculty and students take extra precautions to protect themselves.  The Research and Education Networking Information Sharing and Analysis Center (REN-ISAC) warns that these attacks are particularly prevalent during both calendar and fiscal end of year financial wrap ups.  Users should be cautious when accessing email and never send account information to others.  In addition, students receiving unsolicited emails should remain skeptical, and be alert to poor spelling and demands for a rapid response.  To report phishing emails, forward them to – and to the organization, company, or college impersonated in the email.

Student Loan Defaults Grow in 2016

New data released by the U.S. Department of Education indicates that millions of Americans are currently defaulting on Federal Direct Loans.  These loans are serviced through companies, hired by the federal government, to help students in debt.  In 2016 alone, 1 million Federal Direct Loan borrowers defaulted.  The end of 2016 resulted in 4.2 million total Federal Direct Loan borrowers defaulting.  The number is up from 3.6 million in 2015.

Rohit Chopra, Senior Fellow at the Consumer Federation of America is quoted as saying, “3,000 preventable student loan defaults each day in America is 3,000 too many.”  He went on to say, “Our broken system works well for the student loan industry, but is failing borrowers, taxpayers, and our economy.”

According to the Consumer Federation of America, the data validates recent claims made by federal regulators that service providers are putting borrowers at higher risk by purposely failing to help them find the best repayment plans for their needs.

Four major servicers are contracted by the US Department of Education to collect payments on loans.  The report notes that Navient, formerly Sallie Mae, has the lowest percentage of loans being paid using the PAYE and REPAYE plans, which are designed to help struggling borrowers.  Navient was sued in January by the Consumer Financial Protection Bureau for making it more difficult for borrowers to repay loans.  Navient has disputed all charges, and The Department of Education has declined to comment.

As the cost of student’s tuition has risen, so has student debt.  In 2013, the average student borrower owed $26,300.  Since then, the average owed per borrower has jumped 17%, to $30,650.  One positive is that less people are defaulting for the first time.  However, the number of individuals defaulting for the second or third time is up.

Many are wondering why such a rise in defaults given the strengthening labor market, lower unemployment, and higher wages.  Research shows that many borrowers in default never graduated and haven’t found consistent work.  One reason for the rise in the overall balance owed may be that more graduate students are borrowing.  The typical graduate school loan is much higher than undergrad.

The Obama administration tried to reduce debt defaults by highlighting plans that set borrowers’ monthly payments as a share of their incomes, and then ultimately forgive part of their balances.  Enrollment in the plan has grown steadily in the past few years.  President Trump proposed to offer a similar version of income driven repayment plans during his campaign.  So far, the administration has yet to announce details of such a plan.