Laureate sells several global assets

Global education giant Laureate sells off some international institutions and refocuses on emerging markets. 

New U.S. data show lower student borrowing after surge in Pell spending

U.S. report shows undergraduate borrowing was down in 2015-16 from four years earlier, across nearly all types of institutions. Meanwhile, the proportion of students receiving grant funding rose.

Former ITT Students Closer to $1.5B Settlement

A group of former ITT Technical Institute students reached an approved settlement Wednesday that would allow them to participate in bankruptcy proceedings with the institution's parent company.

The agreement allows the students to claim $1.5 billion and cancel nearly $600 million in debts for students who attended ITT between 2006 and 2016. It would also return the $3 million students paid directly to ITT after the company declared bankruptcy.

The students filed a lawsuit in the Southern District of Indiana last year to be named as creditors in ITT's bankruptcy proceedings. The lawsuit alleged that ITT engaged in deceptive practices, violated consumer protection laws and enrolled unqualified students to generate revenue from federal and private student loans.

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Beauty School Owner Sentenced to Prison for Fraud

The former owner and chief executive officer of Alden's School of Cosmetology and Alden's School of Barbering, Alden Hall, was sentenced to 30 months in federal prison last week for a scheme to defraud the U.S. Department of Education and steal Pell Grant funds.

The court also ordered Hall to make restitution payments of about $276,000, and she will be under mandatory supervision once she's released from prison.

Hall was found guilty last year by a jury of three counts of theft of government funds, one count of fraudulently obtaining financial assistance funds and one count of money laundering through the Louisiana-based institution.

"This defendant -- over several years -- systematically used her position of authority and trust with her students to fraudulently steal funds meant to educate underprivileged students," said Corey Amundson, acting U.S. attorney, in a news release. "Today she has been held accountable for her fraudulent scheme and her efforts to conceal her criminal conduct. It is our hope that this sentence strikes a chord with anyone else who may be tempted to steal from the Department of Education."

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DeVos Waters Down Disclosure Requirements of Gainful-Employment Rule

The Department of Education last week said it was further weakening disclosure requirements in the gainful-employment rule.

Under the new 2018 gainful employment disclosure template, career education programs would no longer be required to disclose median earnings data of graduates or charges for room and board. The template also allows those programs to list the job-placement rate from multiple accreditors.

Last year, weeks after saying she would launch a regulatory rewrite of the gainful-employment rule, Education Secretary Betsy DeVos told those programs that they would have until July 2018 to disclose to prospective students information on graduate employment rates or typical graduate debt levels -- a year later than originally scheduled.

The Obama administration crafted the gainful-employment rule to hold career education programs accountable for producing too many graduates with student debt they couldn't repay. It tied access to federal student aid to performance on a debt-to-earnings metric. But additional transparency and disclosures to potential students were also significant components of the rule.

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Few Details on Tougher Borrower-Relief Standards

Department of Education officials said Monday that they do not have any estimates of how many borrowers would clear new, tougher standards proposed for claims of loan relief when a student is defrauded or misled by their college. The department’s proposed language would require a student borrower to demonstrate clear and convincing evidence that their college intended to deceive them or had a reckless disregard for the truth in making claims about job-placement rates, credit transferability and other outcomes.

The language was offered ahead of the second round of negotiated rule making to produce a new rule governing how students can seek forgiveness of federal student loans if they are misled by their institution, known as a borrower defense. Negotiators representing student advocates pressed the department repeatedly Monday for details on how students would make demonstrations of evidence under the new tougher standard and for estimates of how many current applicants would clear the new standard.

Department officials said they could provide neither -- partly because borrowers have never been asked to provide evidence of intent under existing standards.

The student advocates on the panel argued that requiring borrowers to demonstrate intent or knowledge of misrepresentation on the part of a college would effectively mean no student gets relief on their loans under the rule.

“I really think this would effectively do away with borrowers’ ability to get relief in almost all circumstances,” said Abby Shafroth, a lawyer with the National Consumer Law Center and a negotiator representing student legal assistance organizations.

The new federal standard would apply to borrower-defense claims made on federal loans issued after July 2019. The department’s proposal would also allow for successful claims when a borrower wins a judgment against their college from a court or arbitrator. The existing loan-forgiveness rule bases misconduct findings on violations of state law related to federal student aid. The Obama administration in 2016 issued a borrower-defense rule that for the first time established a federal standard for those claims. But Education Secretary Betsy DeVos blocked the rule last year just before it was to go into effect, setting up the current round of rule making.

Negotiators were unable to reach a compromise Monday on tweaks to the standard for relief but will continue discussing the proposed standard during the four-day rule-making session this week.

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Grand Canyon U again tries to become a nonprofit

Grand Canyon University announces another attempt at converting to a nonprofit, with plans for its holding company to partner with other colleges.

Grand Canyon U tries again to become a nonprofit

Grand Canyon University announces another attempt at converting from a publicly traded for-profit to a nonprofit.

Education Corporation Buys Vatterott

Education Corporation of America, a privately held for-profit chain of colleges, announced Thursday it would buy for-profit Vatterott Educational Centers. The financial details of the sale were not released.

The Vatterott institutions will continue to operate as Vatterott College, Vatterott Career College and L'Ecole Culinaire. The institutions had previously been owned by TA Associates, a private equity firm.

"We are very excited about this acquisition," said Stu Reed, chief executive officer of ECA. "ECA is committed to being the premier provider of postsecondary education with a career focus, and the purchase of the majority of VEC campuses helps us realize that goal. They expand our footprint into key markets in the Midwest and add a range of new trades-oriented programs to our current offerings. We feel it's a great fit culturally as well because both organizations are passionate about helping students transform their lives through career education."

Education Corporation of America owns and operates Virginia College and Brightwood College, among other institutions.

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For-Profit Group Wants Extension for ACICS Colleges

Career Education Colleges and Universities, a trade group for the for-profit college sector, this week called on the U.S. Congress to give colleges that are accredited by an agency the Obama administration terminated more time to find a new accreditor.

Shortly before the Trump administration began, the U.S. Department of Education ended federal recognition of the Accrediting Council for Independent Colleges and Schools, a national accreditor for roughly 270 institutions, most of them for-profits. That move was due largely to the Obama administration's view that ACICS failed to adequately oversee the failed Corinthian Colleges and ITT Technical Institute. ACICS has challenged the decision in court and also sought to have its recognition restored, saying it has fundamentally changed.

In the meantime, the ACICS-accredited colleges have been scrambling to find a new accreditor in the 18-month time frame allowed under federal law. The for-profit group, however, said this week that colleges should be given more time. Other accrediting agencies lack the time and staff to move fast enough to process applications from ACICS institutions, CECU said. A Senate committee in September voted to back an 18-month extension, but that bill has not moved forward.

“Early in this process, a group of accreditors wrote to the department making clear they would be unable to consider all the requests for new accreditation within the current timeline. The only way we can protect the more than 235,000 students attending these institutions is to give the schools and the accreditors more time,” wrote Steve Gunderson, CECU's president and CEO, in a letter to congressional leaders. “Unfortunately, this requires legislative action. We continue to work with the Congress to include such legislation in the Omnibus Appropriations Bill. But that legislation keeps being delayed.”

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