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.