forprofit

For-Profit Settles With Illinois Attorney General for $15M

For-profit, Colorado-based Westwood College has reached a $15 million agreement with the Illinois attorney general, according to a report from a Chicago ABC News affiliate.

The college voluntarily agreed to pay $15 million to wipe out loans criminal justice students have obtained through Westwood since 2004. However, the credit does not cover the students' federal loans.

Illinois Attorney General Lisa Madigan launched the lawsuit almost four years ago after receiving complaints from students and former students about the "exorbitant costs, poorly accredited programs and failure to get a job in the field their degree was in."

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'The Good Wife' tackles for-profit colleges and student debt

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A fictional Corinthian-like institution and a debt strike get very close to nonfiction on the CBS show.

Owner of For-Profit College Hired PI to Follow Reporter

A for-profit college owner hired a private investigator to follow a Miami Herald reporter who has written critical articles about the sector, according to court documents given to the South Florida newspaper.

The paper learned last week that reporter Michael Vasquez had been followed by a private investigator hired by Ernesto Perez -- the founder and majority owner of Dade Medical College. The situation was brought to light following a lawsuit by the private investigator against Perez for allegedly failing to pay the $4,971.87 contract.

Vasquez began covering the college's business practices in 2013.

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Another For-Profit Becomes a Public Benefit Corporation

Stratford University, a for-profit institution based in Virginia, this week announced that it has become a public benefit corporation. That move, which a handful of other for-profits have made recently, is a legal change to a company's charter, which allows it to focus more on activities that do not generate a profit -- including actions that are aimed at benefiting the public.

"Stratford has a student-first mentality, and as a benefit corporation we have the liberty to make sure we are providing students with the best education in the best environment,” Richard Shurtz, the university's president, said in a written statement.

The university holds national accreditation. It offers credentials in information technology, hospitality, culinary arts, business administration and health care.

Senate Democrats Criticize Nonprofit Conversions

A group of Democrats in the U.S. Senate sent a letter Friday to Education Secretary Arne Duncan and Internal Revenue Service Commissioner John Koskinen urging them to stop for-profit colleges from converting to nonprofit status.

Those colleges, they argue, are looking to evade federal income taxes, gainful employment regulations and the so-called 90/10 rule, which restricts for-profits from receiving more than 90 percent of their operating revenue from federal student loans and grants.

"These sham nonprofits make a mockery of traditional nonprofit governing and accountability structures with incestuous leadership arrangements, troubling debt structures, while continuing to make hefty profits for those in charge with questionable results for students," the senators wrote in a news release. "As the agencies responsible for granting nonprofit, tax exempt status and protecting students, the [IRS] and [Education Department] must work together to better assess these conversions based on the priorities and authority of both agencies."

The senators were spurred to action following a recent report from the Century Foundation's Robert Shireman, a former Education Department official who joined the foundation as a senior fellow. Shireman described how several for-profits became nonprofits, arguing that they did so to avoid federal regulations. He also wrote that the IRS and the Education Department haven't cracked down on these entities because of a "regulatory blind spot," so each agency assumes the other is doing the monitoring.

Delaware Senator Tom Carper, Ohio Senator Sherrod Brown, Illinois Senator Dick Durbin, Massachusetts Senator Elizabeth Warren, Rhode Island Senator Jack Reed and Connecticut Senators Chris Murphy and Richard Blumenthal signed the letter.

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Senate Republicans Question Probation of U of Phoenix by Pentagon

Three Senate Republicans on Thursday wrote to the U.S. Department of Defense to question its recent decision to temporarily suspend the University of Phoenix's eligibility for military tuition benefits.

The Pentagon's sanction of the for-profit chain was due to allegations about Phoenix improperly sponsoring recruiting events and using the Defense Department's seal on commemorative coins. Newly enrolling students may not use military tuition assistance at the university. Roughly 4,000 Phoenix students currently receive the benefit, which active-duty members of the military are eligible to receive.

Senators John McCain, Lamar Alexander and Jeff Flake, all Republicans, wrote to Defense Secretary Ashton Carter, asking him to "examine and reconsider" the decision. They said the move was unfair and based on vague, technical violations the university has worked to fix. The senators also wrote that the Pentagon's sanction was motivated by partisan congressional critics of for-profits, and criticized that the Defense Department cited ongoing investigations of Phoenix by the U.S. Federal Trade Commission and California's attorney general as part of the justification for the decision.

"We strongly believe that these earned benefits and educational opportunities for our service members should not be jeopardized because of political or ideological opinions of some members of Congress regarding the types of institutions that provide postsecondary education to our troops," they wrote.

Education Department steps up its scrutiny of ITT Tech

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Education Department tightens its oversight of embattled ITT Tech, citing failures of financial responsibility and federal fraud charges.

ITT Tech Suspends Enrollment at Several Campuses

ITT Educational Services will suspend new student enrollment at several of its 135 campus locations, including campuses in Wichita, Kans., and South Bend, Ind. The embattled for-profit chain, which is facing financial and legal challenges, has closed eight of its ITT Technical Institute locations during the last two years, according to ITT's national accreditor.

The company made the decision to temporarily supend a handful of locations based on its research about local market demands, said Nicole Elam, an ITT spokeswoman. The campus locations "undergoing market assessments" represent 3 percent of ITT's new student enrollment, she said. ITT enrolls roughly 50,000 students.

"There will not be any disruption to ongoing course work for continuously enrolled students as we will continue to teach classes for those students," Elam said via email. "Our primary focus is on our currently enrolled students at those campuses and providing them with the same level of service and education as they pursue their degrees."

The U.S. Securities and Exchange Commission this year charged ITT and its top two executives with fraud for allegedly concealing massive losses in two student loan programs the company backed. The Consumer Financial Protection Bureau has also sued ITT, and the U.S. Department of Education has begun more tightly monitoring the company and its finances.

Colleges alone can't solve the 'skills standoff' with employers (essay)

Can you name 50 U.S. colleges or universities that (i) don’t carry the name of a state and (ii) don’t have a Division I football or basketball team? If you can, you’re an elite reader of Inside Higher Ed. If not, you’re probably suffering from myopia like the rest of us.

Myopia in higher education is the tendency to mistake elite institutions -- the Harvard of Love Story (or really the Harvard of any of Kevin Carey’s favorite films) -- for the whole of our wonderful, diverse system. But this is not the only form of myopia afflicting our sector.

Conventional wisdom on postsecondary education says that the entire enterprise is indistinguishable from the work of colleges and universities. However, a recent report by Tony Carnevale and the Georgetown Center on Education and the Workforce serves as a corrective lens: colleges and universities represent $407 billion of the $1.1 trillion spent on postsecondary education and training, or only 37 percent of the total.

On the other hand, spending on training provided by employers is nearly 50 percent greater than all college and university spending. And broken down by age group, while colleges and universities dominate total postsecondary spending for young adults, they account for less than a quarter of total spending on adult education and training.

Ages

College and University Share of Total Spending on Postsecondary Education

18-24

78%

25+

23%

It appears as if higher education is suffering from double myopia: the first misconception of the system is mistaking elite universities for all colleges and universities. The second is mistaking colleges and universities for all postsecondary education.

As we refocus our vision, the next big opportunity for growth in education may not be in attempting to “do college better,” but rather found in the yawning gap between what we typically conceive as postsecondary education and the world of work.

***

U.S. employers are developing a global reputation for wanting the perfectly qualified candidate delivered on a silver spoon -- or they won’t hire. As Peter Capelli of Penn’s Wharton School astutely notes, “Employers are demanding more of job candidates than ever before. They want prospective workers to be able to fill a role right away, without any training or ramp-up time. To get a job, you have to have that job already.”

He calls it the “Home Depot view of the hiring process,” where filling a job vacancy is “akin to replacing a part in a washing machine.” The store either has the part, or it doesn’t. And if it doesn’t, the employer waits. The result is that while there are over eight million unemployed workers, we have over five million unfilled jobs, and perhaps as many articles featuring employers whining about unprepared workers.

In his wonderful monograph “Why Good People Can’t Get Jobs,” Capelli says we have a “skills standoff,” with employers dissatisfied with the level of new hire preparation but unwilling to provide training or otherwise engage in skill-building activities with candidates. One major reason? Employers don’t want to risk investing in employees who may leave the company soon after.

And so the supposed skills gap is a byproduct of a trust gap. How can we get employers to trust new hires and engage in training and skill building? Likewise, how can we get candidates to invest in their own skill building -- perhaps even skill building specific to an employer -- so that employers find the “right part in a washing machine”?

***

Bridging the skills gap is not work that employers are prepared to do. In response, over the past several years we have seen a variety of intermediaries emerging at the intersection of higher education and the labor market in an area we call pre-hire training.

Some focus solely on training. Some focus on training and placement or matching services. Others focus solely on matching candidates with employers. In terms of revenue, some seek revenue from job seekers. Others generate revenue from employers. Still others attempt to charge education providers. The result is a matrix that looks something like this:

While these pre-hire training companies are diverse and include boot camps, online training providers, employment brokers, staffing companies, e-portfolio providers, and competency and credentials marketplaces, what they have in common is the following:

  • Pre-hire training is skill specific and often employer specific.
  • Employers are not asked or expected to bear the cost of pre-hire training, or engage in any way until candidates are trained. Rather, the cost of pre-hire training is borne by the candidate or the intermediary. (Even when the intermediary bears the cost of the training, the candidate hasn’t been hired yet, so the employee has skin in the game.)
  • Once intermediaries are successful in aggregating a pipeline of qualified candidates for employers, employers jump in with both feet and are willing to compensate intermediaries for producing employees who will be productive from day one as well as engage in developing and improving training curricula.

Fast-growing pre-hire training intermediaries like Galvanize, eIntern, Credly, ProSky and Portfolium are establishing structures and programs that encourage employers and candidates to trust one another. For example, pre-hire training companies that are confident in their ability to train and place candidates, and thereby attract employers, can guarantee some outcome to candidates to bring them in the door in the first instance. This could be a guaranteed interview, or even a job guarantee if they successfully complete the pre-hire training.

***

While some of this should be the province of colleges and universities, much of it won’t be. Higher education institutions should be in the business of equipping students with general skills like coding or reading a balance sheet -- tangible skills that are directly relevant to thousands of workplaces across the country.

However, I don’t see colleges and universities involved in matching students with employers at the level of the competency -- a proposition that requires institutions to assess students’ competencies and then match, rather than simply arranging job fairs and interviews. Nor do I see institutions engaging in employer-specific training on products, systems and process, so new hires can hit the ground running like an experienced employee. When we get beyond skills-based training to matching students with employers, intermediaries aggregating candidates from multiple institutions and providing matching and training services for multiple employers will be much more productive for students and employers than a single institution: scale matters.

Many institutions (and their students) will benefit from partnerships with these intermediaries. By connecting students with employers, students will have a better sense of the placement and salary outcomes from their program of study. But colleges and universities need to be prepared for the consequences: higher ROI programs will benefit at the expense of low ROI programs; shorter, less expensive programs with credentials that clearly convey competencies are likely to flourish.

The impact of this new generation of pre-hire training companies on students and employers is likely to be more profound. They will provide employers with visibility into a deep pool of future talent, along with the means to engage and attract this talent. And they will provide students with a much clearer road map of the education and training required in order to be considered by employers of choice. While our vision now is still quite cloudy, pre-hire training companies have the potential to restore it to 20/20, and dramatically improve the efficiency of our labor and postsecondary education markets.

Ryan Craig is managing director of University Ventures, a fund focused on innovation from within higher education.

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Federal agencies join forces to regulate for-profit colleges

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Some analysts see an interagency task force to oversee for-profit colleges as the force behind the latest federal investigations into the sector's practices.

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