Controversial For-Profit Accrediting Body Restored by Devos

Education Secretary Betsy Devos has signed an official order retaining the status of the Accrediting Council for Independent Colleges and Schools (ACICS) as a federally recognized accrediting agency.  Citing a “flawed” decision-making process, Devos’ order comes on the heels of a federal district judge’s ruling that previous secretary, John King, failed to consider key evidence and used a flawed process before removing the recognition of ACICS in 2016.

ACICS, a historically for-profit accreditor, has fought for its accreditation reinstatement since the Obama administration eliminated its recognition in 2016.  King removed ACICS’s recognition after citing “pervasive compliance” problems with schools that had attained accreditation under the council. Shuttered schools such as ITT Tech, The Corinthian Colleges, and other for-profit institutions “routinely failed to adequately police schools under its oversight,” according the Education Department. However, in March a federal court found that ACICS’s 36,000 pages petitioning for recognition had not been entirely examined by Education Department officials in leu of revoking ACICS’s status.

While temporary, with restored recognition more than 100 colleges under ACICS will again be eligible to receive federal student aid. The department’s announcement does not entirely reverse the Obama era ban but allows ACICS continued recognition for an additional 12 months while the department “conducts a further review of ACICS’s 2016 petition for recognition.” Devos also said she would review the 2016 documents and allow ACICS to submit further information to prove its future compliance. According to the order, ACICS must file written submission and “provided additional evidence that is relevant to these issues” by May 30th.  The Education Department will respond to said submission by July 30th.

 

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March Madness Success Boosts College Applications, Awareness, and Revenue

The NCAA Division I Men’s Basketball Tournament is set to begin a little less than a month from now and a successful run can pump up more than a school’s spirit. According to a study of past tournament wins by Moody’s Investor Service, schools that were successful in the NCAA men’s basketball tournament directly correlated with a surge in student applications. “Enhanced demand can result in increased applications, higher net tuition revenue and greater fundraising,” the New York ratings agency said in their report.

Following the University of Connecticut’s two national championship wins in 2011 and 2015, applications at the school increased 27 and 35 percent in those respective years. In 2011 Virginia Commonwealth University was able to reach the final four as a double-digit seed, becoming only the third team in history to do so. As media coverage and homepage visits to the school’s website grew, so too did VCU’s freshman application numbers—by more than 15 percent from the previous year. Back in 2010, Butler saw a 43 percent boost in applications after a loss to Duke in the national championship game.

Long term, being consistent in the NCAA tournament can benefit schools beyond applications. Gonzaga University first made an unlikely run in 1999, when it advanced to the Elite Eight. Since then, the school has made the tournament eleven times, including the national championship game last year vs. North Carolina. In that time, Gonzaga’s enrollment has nearly doubled, undergraduate applications have grown 300 percent, and the school’s endowment has multiplied to $212 million. Gonzaga President Thayne McCulloh said, “I think it’s fair to say there have been many initiatives…and the success of the basketball program has played a significant role in our ability to raise funds.” Over the past two decades, Gonzaga has also worked to increase financial aid, update infrastructure, and develop new programs for an evolving workforce. “Basketball has certainly been a major factor these 20 years in terms of people’s awareness of the university. We’ve certainly not missed the opportunity to capitalize on the success of the team and the appearance they’ve had on the national stage,” McCulloh said.

While Moody’s report identifies that the increase in applications may be temporary, it notes: “the publicity provided by the tournament can reach more potential students than a university might otherwise have the resources to pursue.” According to a report by economists Devin and Jaren Pope titled “Understanding College Applications Decisions: Why College Sports Success Matters,” the awareness provided by a sports victory to out-of-state students can be significant financially. For VCU the results of a final four run directly impacted enrollments and tuition revenue. In 2008, 92 percent of freshman were from Virginia. In 2012, in-state enrollment rates had decreased to 85 percent. Based on VCU’s 2012 admission’s rates, out-of-state students added an additional $3.4 million in tuition revenue.

In Gonzaga’s case, making the tournament helped spark the beginning of the university’s long-running success and branding. And as schools face the reality of seeking new solutions to funding shortages, a Cinderella run in March Madness may not be the complete answer, but it can certainly help.

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Higher Ed Sexual Assault

DeVos Sued over Sexual Assault Policy in Higher Ed

Education Secretary Betsy DeVos is being sued by several civil rights organizations about how her agency is investigating sexual assaults on college campuses. This past fall, the Education Department dropped Obama-era policies and issued new rules on how colleges deal with sexual assault and harassment claims. The new instructions now require that universities use higher standards of evidence to proceed with campus judicial action in the case of an allegation.

Civil rights advocacy groups argue that previous Obama-era guidelines offered critical protections for survivors of sexual assault and that the new rules, under DeVos, create a system which discourages sexual violence and assault victims from using the campus process to come forward “leading to further reductions in reports of sexual violence and assault.” According to Stacy Malone, the executive director of the Victim Rights Law Center, “They (survivors) fear they are no longer able to get a fair shake.” The actual lawsuit alleges a “Myriad of statements and actions by the Department’s leadership reveal a discriminatory viewpoint. Thus, not only does the Department’s 2017 Title IX policy fail to meet the reasoned decision and other requirements of the Administrative Procedure Act, it also violates the Fifth Amendment’s equal protection guarantee. Plaintiffs therefore respectfully request that the 2017 Title IX policy be vacated.”

Secretary DeVos announced the changes to Title IX in September, saying the previous system “lacked basic elements of due process and failed to ensure fundamental fairness.” She continued with, “There’ve been too many students wronged in a well-intentioned attempt to ensure that this issue is not swept under the rug and not in back rooms of schools any longer.” The Department of Education said it plans to enact the new guidelines after a public comment period.

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Massive Spending Gap Between Athletes and Academics

This year’s national championship between Alabama and Georgia was a nail-biter of a game, with a deep pass to seal the win for the Crimson Tide. The competition on the turf seems to align off the field as well, as the average amount spent per year on a single player by both teams was between $300,000 and $350,000.

According to a recent study performed by the Knight Commission on Intercollegiate Athletics, annual spending on sports by public non-profit universities in the largest ‘big six’ conferences, has surpassed $100,000 per athlete—around 8 to 12 times the amount spent on academics per full time student. Twenty plus schools spend more than $200,000 per football player, including all of the ten top-ranked FCS programs.

The increased spending on student athletes comes at a time when many college and universities are struggling to fill the gap with funding needs. According to the Center on Budget and Policy Priorities, state spending on public higher education is now at lower levels than pre-recession rates. A recent study from the CBPP highlights that funds allocated to colleges and universities for the 2017 school year were almost $9 billion below the 2008 level.

Concurrently, spending on athletics has grown immensely since the recession. According to the Knight Commission data, major conferences (Big Ten, SEC, ACC, Pac12, Big12) have seen growth in player spending of around 30% and as high as 42%, since the recession. In a report by the American Association of University Professors, average pay of head basketball and football coaches almost doubled from 2006 to 2012. The average salaries for fulltime professors grew at a rate of 4 % at top doctoral level institutions.

University presidents face the reality of seeking new solutions to funding shortages, and athletics can be a tempting source for increased revenue. However, in doing so they must not lose overall sight of their purpose: educating their student body. According to an NCAA report, officials argue that only around two dozen of the 300 plus Division I athletic departments are truly self-sustaining—with revenues exceeding or breaking even with overall costs.  As state schools increase funding to their athletic departments to compete, many are having to balance their budgets by increasing student fees and tuition at alarming rates. As institutions spend more on athletes at vastly disproportionate amounts compared to their average students, they risk undermining themselves, and in turn perpetuating the public’s increased weariness of the higher education system itself.

 

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New Tax Reform and Higher Education

On December 20, 2017, Congress passed a tax reform bill that revised the nation’s tax code and will ultimately result in significant changes to higher education. Most notably will be a new tax imposed on excess compensation and investment income of the highest endowed private institutions. The legislation also modifies certain rules in relation to charitable deductions while excluding many of the highly publicized proposed provisions, such as taxing graduate school waivers.

New tax on large university endowments

  • A 1.4 percent excise tax will be added to private universities with endowments greater than $500,000 per student.
  • Will affect around 35 higher education institutions.

Excise tax imposed on executive compensation

  • Non-profits will be taxed 21% on compensations over $1 million paid to employees.
  • According to The Chronicle of Higher Education, the tax would be imposed on 158 private, nonprofit college employees (based of tax filings from the 2015 calendar year).

Eliminates the exemption for “advance refunding bonds”

  • Previously allowed non-profits to refinance old bonds earlier to take advantage of lower interest rates and postpone upcoming debt payments.

Doubles the standard deduction for tax filers

  • Will likely cut the number of people who itemize charitable contributions to colleges and universities by providing less incentive to donate.

Eliminates the charitable deduction for college seating event rights

  • Donations made to universities will no longer be deductible federally if the donations are made in exchange for an opportunity to buy tickets.
  • Tickets prices are likely to increase at colleges and universities with larger, more competitive athletic programs.

Tuition waivers for Graduate students will remain tax-free

  • The original House bill would have taxed graduate students’ tuition waivers as income.

Johnson Amendment will not be repealed

  • The Johnson Amendment prohibits tax-exempt organizations—churches, nonprofits, charities, foundations—from endorsing candidates running for political office.

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Renewed Effort to Close Loophole Targeting Veterans and Education

A recent report, from Veterans Education Success indicates that for-profit institutions are using a federal loophole to increase revenue and disproportionally target veterans and service members. From 2011 to 2014, tuition payments to for-profit schools from the Department of Veterans Affairs and the Department of Defense increased by 60 percent—to the tune of $1.1 billion—and according to researchers, the number is an understatement since the Department of Education data doesn’t include all G.I. Bill benefit programs. The now closed Corinthian Colleges and ITT Technical Institutes alone, are estimated to have received over $1 billion in G.I. Bill benefits prior to suddenly shutting down in the last year.

The increase is likely due to declining enrollment at for-profit colleges, universities and trade schools as a result of decreased Title IV funding. To offset this loss in revenue, for-profits are using the 90-10 loophole to fill their financial voids. The 90-10 rule was passed in 1992 and bars for-profit institutions from receiving more than 90 percent of revenues from Title IV federal student funds. However, the law excludes GI bill benefits and the DOD’s tuition assistance funds from its figuring. Congressional staff said that GI Bill and DOD funds were not included in the 1992 cap on Title IV revenue because the GI Bill was not generous enough at the time. In 2008, a new Post 9/11 G.I. bill was passed allowing veterans and service members the ability to receive tens of thousands of dollars towards higher education.

This oversight has become known as the 90/10 loophole, and as a result, for-profit schools have been aggressively recruiting and enrolling veterans and service members ever since. According to Holly Petraeus, of the Consumer Financial Protection Bureau, this loophole “gives for-profit colleges the incentive to see service members as nothing more than dollar signs in a uniform, and to use aggressive marketing to draw them in.” According to Time magazine, a civil complaint filed by the state of California expressed concern over Corinthian College’s unauthorized use of the official seals of the United States Navy, Army, Air Force, and Coast Guard in its effort to boost recruitment of discharged servicemen and women. Other for-profits have been accused of similar recruitment tactics—inflated graduate salaries, false job prospects, and misleading graduation rates.

Concerned with the exploitation of veterans, Senators have reintroduced legislation to tighten VA and DOD educational funds to for-profit schools. Introduced last week, the Military and Veterans Education Protection Act, would close the 90/10 loophole in hopes of protecting veterans. According to Senator Tom Carper (D-DE), “Closing the 90/10 loophole and counting G.I. Bill dollars as federal dollars, which they are, is a commonsense fix that will help us improve educational outcomes for veterans and protect taxpayers.” The bipartisan bill is supported by more than 25 senators and endorsed by over two dozen groups and organizations including: Iraq and Afghanistan Veterans of America (IAVA), Veterans of Foreign Wars (VFW), and the National Association of Independent Colleges and Universities (NAICU). Currently, the bill is awaiting the Senate’s Committee on Health, Education, Labor, and Pensions for review.

 

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UNC Under Fire, Accreditation at Risk

UNC Chapel Hill is being investigated by its accreditor, the Southern Association of Colleges and Schools, after SACS found that controversial “paper courses” are now being credited towards graduation.

According the (Raleigh) News & Observer, the Southern Association of Colleges and Schools first confronted UNC over allegations of the questionable classes in 2013, when the school claimed it would not honor the classes towards a degree. For students to receive credit for said classes, the university claimed that students would have to take another course altogether to make up the credits. By agreeing to not recognize “paper” classes, UNC was able to hold off sanctions from the Southern Association of Colleges and Schools.

Released last month, the NCAA’s final report on the scandal contradicts what the university initially told its accreditor with, “Despite the fact that the courses failed to meet, involved little, if any, faculty engagement, and were often graded by the secretary, UNC argued the courses violated no UNC policy. UNC further claimed that work was assigned, completed and graded, and the grades counted towards a UNC degree.” UNC officials previously called the classes “academic fraud” but recently reported the phrase as “a typo.” With UNC up for accreditation next month, the Southern Association of Colleges and Schools is investigating the NCAA’s final report and UNC’s lack of transparency.

 

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Tennessee Promise Program Continues to Grow, Students More Likely to Succeed

Students enrolled in Tennessee’s free community college scholarship, the Tennessee Promise, are showing more signs of success in higher education than their peers not using the program. According to data released by the Tennessee State Board of Regents, 56% of students who started in the Promise program’s first year (2015) remained in school two years later. Only 39% of high school graduates not in the program were still in school during the same time frame.

The program was introduced in 2014 and gives students up to five semesters of tuition-free attendance at any of the state’s 13 community colleges, 27 colleges of applied technology, or eligible 4-year institutions offering associate’s degrees. Beyond removing the financial burden, Tennessee Promise offers individual guidance to each participant from a mentor. Mentors help students maneuver through application and financial aid processes, and are mandatory for students to remain eligible for the program. Tennessee Promise scholarship recipients must also complete 8 hours of community service per semester enrolled and keep a GPA above a 2.0.

Tennessee Governor Bill Haslam said, “When we launched Tennessee Promise, one of the legitimate questions was, … ‘Can theses Students succeed?’ I think the results show that these students are succeeding at a decidedly better rate.”  Though drop-out rates are lower for Tennessee Promise students, the data also shows that 44 percent of the program’s first classmore than 5,500 studentshad dropped out of college without a degree by 2017. Officials argue that the number is a sign of progress with over 60 percent of non-Promise students dropping out in the same timeframe, a 17 percent difference. Tennessee’s Promise program also continues to grow, and according to The Nashville Tennessean is up four percentage points from last year with nearly 85 percent of high school seniors applying.

According to Governor Haslam, “A lot of our efforts in the remaining year and a half that we have in office will be around how do we dramatically increase the percentage of students who complete.” As an educated workforce becomes critical to ensuring economic prosperity in one’s local, state, and national communities, it seems that Tennessee’s Promise program—with its positive application, retention and graduation rates—is setting up its students for a more certain future.

 

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Department of Education Backs Controversial Nonprofit Conversions

The U.S. Department of Education has “preliminarily concluded” that it will allow two controversial for-profit institutions to become nonprofits. Purdue University announced its intention to acquire the for-profit Kaplan University system back in April. The acquisition has since been approved by the state of Indiana, but still needed backing from the Department of Education and the Higher Learning Commission, its accreditor. Now, with federal approval, all that is needed to finalize the acquisition is authorization from the Higher Learning Commission. The move has set a major precedent in the integration of for-profits with traditional colleges and universities.

The second deal, that seems to have jumped another regulatory hurdle on its way to becoming a non-profit, is the acquisition of Education Management Corp (EDMC)—parent company of Argosy University, South University, and the Art Institutes—by The Dream Center Foundation, a non-profit created to fund philanthropic programs across the country. The Education Department said “it does not see any impediment to EDMC’s request for approval of the change in ownership or its request for approval of nonprofit institution status.” Many are concerned that the Dream Center, which has no experience running higher education institutions, will continue to operate the schools in the same manner as before. If approved by its accreditors, the move would be one of the largest for-profit to nonprofit changeovers on record.

Critics of the acquisitions cite that nonprofit conversions are being used to skirt regulations and mask hidden financial incentives. Unlike for-profits, nonprofit schools are tax exempt. Nonprofit colleges are also excluded from the 90/10 rule, which prohibits schools from earning more than 90 percent of their revenue from federal student loans. Bob Shireman of the Century Foundation—a think tank that investigates for-profit institutions—told the USA Today that the deals are like a bad restaurant being able to claim new ownership in order to improve its reputation without making any additional changes, and cites that Kaplan has been the focal point of past government investigations and lawsuits.

According to a Department of Education spokeswoman, “the department has preliminarily concluded that, based on the information provided to the department, there are no current impediments to the requests for approval of change of ownership.” For the deals to be finalized, both must be approved by their accreditors. The Dream Center-EDMC deal is a more complicated because it requires the approval of two different accrediting agencies. Argosy University is accredited by the Western Association of Colleges and Schools, while South University is accredited by the Southern Association of Colleges and Schools. The Purdue-Kaplan deal relies on approval from the Higher Learning Commission only. The HLC is reviewing the plan now and is expected to make a decision by November 2017.

 

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Harvard Dean Named Next UVA President

According to the Richmond Times Dispatch, the dean of the Harvard Graduate School of Education, James E. Ryan, is set to become the University of Virginia’s next president. Ryan, 50, is a former alumnus from UVA’s School of Law–where he finished at the top of his class. After working in New Jersey as a public interest lawyer, he returned to UVA as a law professor and served as the School of Law’s academic associate dean from 2005-2009. He left Virginia in 2013 to become the dean of Harvard’s Graduate School of Education. At Harvard, Ryan was a successful fundraiser and made a number of significant faculty appointments. A presidential search committee was formed earlier this year by a select committee of board members, faculty and students after current president, Teresa Sullivan, announced her plans to step down in January of this year. Ryan will begin as president next summer.

 

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