The American Federation of Teachers released a report Wednesday examining ways the Education Department can handle failing for-profit institutions.
"Students routinely leave for-profit institutions worse off than when they enrolled," said Randi Weingarten, president of the AFT. "They're ripped off financially and academically, which is a toxic combination. This report addresses how the department could develop stronger regulations for for-profit colleges, facilitating early intervention the moment it discovers financial trouble and limiting liabilities faced by students and taxpayers."
The report, "Regulating Too-Big-to-Fail Education," describes six ways the department can better regulate these institutions. The department should limit provisional certification and close a loophole that allows the agency to extend that status beyond three years. So if an institution hasn't become financially responsible after those three years, the department should eliminate the provisional certification and mandate an additional 50 percent letter of credit.
The report also advised that the department should create enforcement mandates that would automatically trigger a 10 percent letter of credit requirement. A group of federal agencies would also help the department to decide what type of event qualifies as a trigger.
A third recommendation in the report is for the department to restrict institutional spending for those colleges that fail to show financial responsibility and prohibit the institutions from creating new programs or opening new campuses.
AFT also recommended that institutions post letters of credit from their owners instead of being allowed to pay banks to post on their behalf. Finally, the report recommends calculating the letters of credit on actual risk. These letters of credit are calculated based on an institution's most recent year of revenue. AFT recommends that the department require letters of credit that accurately reflect the expense of closed school discharges and borrower defense claims over multiple years.
As Donald Trump and his supporters have sought to change the subject from Trump University, they have seized on reporting from Inside Higher Ed and other news outlets about Bill Clinton's ties to Laureate Education, which paid him $16.5 million in the honorary role of chancellor of Laureate International Universities from 2010 to 2014.
But the Republican presidential candidate's backers have also suggested -- incorrectly, it seems -- that Hillary Clinton directed tens of millions of dollars in State Department funds to the for-profit higher education company. "As secretary of state, Hillary Clinton laundered money to Bill Clinton through Laureate Education, while Bill Clinton was an honorary chairman of the group. Clinton's State Department provided $55.2 million in grants to Laureate Education from 2010 to 2012," Trump's campaign said in a statement Tuesday. "This is yet another example of how Clinton treated the State Department as her own personal hedge fund, and sold out the American public to fund her lavish lifestyle. Laureate made money by racking up student debt on vulnerable students."
The statement is factually wrong on several accounts. The State Department has not made any grants to Laureate. The statement appears to be conflating grants that the State Department made to the International Youth Foundation, a nonprofit group focused on preparing young people worldwide for work, whose president and CEO, William S. Reese, tried to correct the record in a recent letter. Reese noted that Douglas S. Becker, Laureate's founder and CEO, is the chairman of the foundation's volunteer Board of Directors -- he did not "run it," as some news reports suggested. Reese also pointed out that the organization received more grants during the administration of President George H. W. Bush than it did while Hillary Clinton was secretary of state.
An analysis of key actions 10 institutional accrediting agencies took over five years found a "highly uneven and inconsistent system of sanctions." The report from the Center for American Progress, which has previously chided accreditors for their oversight of poor-performing colleges, found that national accreditors are more likely to sanction their member colleges, but that regional agencies keep institutions on sanction for longer periods of time. The group recommended "clearer, common rules of the road about sanction terminology, definitions and use."
University of Arizona President Ann Weaver Hart has opted not to pursue an extension of her current contract, a decision coming months after she drew flak for deciding to join the board of for-profit college company DeVry Education Group.
Hart, who took over as Arizona’s president in July 2012, still has two years left on her contract. She’s slated to step down from the presidency on June 30, 2018. Her decision came after she realized she’s been a university president for 14 years, she said in a statement. Hart was previously president at Temple University and the University of New Hampshire.
“I look forward to returning to full-time faculty work as a teacher, scholar and citizen of the university,” she said.
Hart’s decision, announced Friday, comes after she was sharply criticized in March for joining the Board of Directors for Illinois-based DeVry Education Group, which operates DeVry University. The criticism followed the Federal Trade Commission filing a lawsuit against DeVry, alleging it made deceptive claims about job placement rates and graduate wages.
Arizona alumni, employees and students’ parents complained about Hart joining DeVry, and she was questioned by Arizona’s Faculty Senate. But she defended her role, saying she would advocate for quality at DeVry and try to make education available to students who cannot attend Arizona.
The Arizona Board of Regents plans to start a national search for Hart’s replacement this fall. The board came out in support of her decision not to seek a new contract, with Chairman Jay Heiler releasing a statement.
“President Hart has conferred with me and others throughout the spring regarding her plans and her contract,” it said. “The decision not to seek an extension is hers, and true to her character she has made it in full consideration of both her personal aspirations and her institutional commitments.”
The U.S. Department of Education wants ITT Technical Institutes to increase its letter of credit from 10 percent to 20 percent after the institution's accreditor questioned its integrity, according to a department letter sent Monday to the for-profit institution.
Because of the increased risk of ACICS revoking accreditation, the Education Department determined the surety on file from ITT must increase from $79,707,879 to $123,646,182, according to the letter to ITT's chief executive officer, Kevin Modany. A letter of credit is collateral the government asks colleges to set aside when officials have concerns that an institution may be unable or unwilling to pay back money it owes to the government. The letter of credit would assure the government that if ITT Tech closes or terminates classes, funds will be available for refunds, teach-out facilities and institutional obligations to the department.
American Career Institute, a now-closed for-profit institution that operated in Massachusetts and Maryland, admitted to engaging in deceptive schemes and violating state law, according to the state's attorney general. The AG's office sued ACI in 2013, and a consent judgment was issued last week.
"Our office has achieved an unprecedented result against a predatory for-profit school that we hope will yield long overdue relief for thousands of ACI students in Massachusetts," said Attorney General Maura Healey in a news release. "We look forward to working with the U.S. Department of Education to secure immediate loan forgiveness for those affected and will continue to pursue institutions who engage in this illegal and unfair conduct."
ACI falsified student records, misrepresented graduation and job placement rates, deceived prospective students about employment, and unlawfully enrolled and collected tuition from students who did not qualify for federal loans and who didn't meet the minimum education requirements.
The AG's office is requesting the Education Department cancel all federal loans that were taken out by students who attended ACI from at least January 2010 to when the institution closed in January 2013. They estimate that more than 1,400 students are entitled to loan discharges.
The judgment against ACI also called for more than $25 million in penalties, fees, relief and restitution. However, the amounts are largely uncollectible and suspended as a result of the school's insolvency, according to the AG's office. The office was able to obtain more than $2 million in discharges of private student debts owed to ACI in a separate court action, which is expected to help more than 700 former students.
The Association of Private Sector Colleges and Universities (APSCU) has changed its name to Career Education Colleges and Universities. The governing board for the group, which is the for-profit sector's primary trade association, voted for the change Monday in Orlando, Fla., where the association is holding its annual meeting. Six years ago, APSCU was dubbed the Career College Association.
Many colleges and companies in the for-profit sector have struggled with slumping enrollments and revenue, while several face investigations or lawsuits from states and federal agencies. APSCU also has been buffeted by the industry's problems, announcing last year that big changes were on the way -- beyond the name change. For example, the new CECU said it will court nonprofit colleges as members (a handful of nonprofits currently belong to the group).
The rebranded group will seek to represent any college that works on career education, said Steve Gunderson, CECU's president and CEO.
"Our sector and our association will be even more focused on career education and the necessary work in government relations, leadership, research and communications," he said in a written statement. "We will be the voice and vision of postsecondary career education.”