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N.Y. Governor Vetoes Scholarship Aid for For-Profits

New York Governor Andrew Cuomo vetoed legislation Tuesday that would have extended the state's tuition-free scholarships to for-profit institutions.

The legislation would have allowed for-profit institutions to participate in the Enhanced Tuition Award that the legislature adopted earlier this year in response to concerns that the state's tuition-free program for New York's public colleges would put nonprofit, private institutions at a competitive disadvantage.

"This bill, had it passed, would have been a stark departure from New York's record of leadership in protecting students and consumers," said Yan Cao, a fellow at the Century Foundation, in a statement. "The difference between for-profit and not-for-profit colleges in New York is crystal clear. Evidence shows that New Yorkers who attend for-profit schools are twice as likely to default on student loans compared to those who attend not-for-profit schools. And New Yorkers have filed thousands of claims of predatory practices at for-profit schools."

However, the Association of Proprietary Colleges called Cuomo's decision unfair to women, veterans and people of color.

"Governor Cuomo turned his back on nearly 40,000 New York college students who are earning associate, bachelor's, master's and doctoral degrees at state Board of Regents-certified proprietary colleges by vetoing a measure that would have allowed them to apply for the state's new Enhanced Tuition Award," said Donna Gurnett, president and chief executive officer of the association, in a statement. "Excluding these students is extremely shortsighted, as they are exactly the type of student New York needs and should be empowering."

The APC says nearly 70 percent of its institutions' students are women and 41 percent identify as black or Hispanic, according to Gurnett.

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For-Profit Music College Closes Suddenly

The McNally Smith College of Music, a small for-profit institution in Minnesota, announced Thursday that it is shutting down all operations at the end of this semester, The Star Tribune reported. College officials cited declining enrollments and revenue and said they could no longer meet payroll. Officials said the college had been trying to convert to nonprofit status. An outpouring on social media from students and alumni suggested many viewed the college as offering a high-quality education and were stunned by the abrupt closure.

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Democratic AGs Sue DeVos on Borrower Defense

Four Democratic attorneys general filed separate lawsuits Thursday seeking to compel Education Secretary Betsy DeVos to grant debt relief to students defrauded by for-profit colleges.

California Attorney General Xavier Becerra filed a lawsuit in the Northern District of California arguing that delays in approving borrower-defense claims of defrauded Corinthian Colleges students violate federal law. A separate lawsuit filed in the D.C. District Court by the attorneys general of Massachusetts, Illinois and New York argues that the Department of Education has illegally delayed review of pending claims and improperly rejected group discharge for thousands of borrowers who were misled by for-profit institutions.

Borrower-defense applications allow student loan borrowers to apply for loan discharge when they are misled or defrauded by their institution. Tens of thousands filed the debt-relief claims after the collapse of Corinthian in 2015 and ITT Tech in 2016. Although the Department of Education granted 28,000 claims between 2015 and Jan. 20 of this year, the Trump administration stopped processing the claims this year as it re-examined the existing process for ruling on applications. More than 95,000 borrower-defense claims, meanwhile, are pending review by the department.

Earlier this week, the department's inspector general called for review of the claims to resume while also recommending the Office of Federal Student Aid take steps to better document the legal memorandums it uses to justify discharges and establish clear policies on review of unique claims, among other changes.

Becerra's lawsuit argues that the department has provided no reasonable or adequate justification for the delay in reviewing pending claims, which it says are indistinguishable from already approved claims. And DeVos, he argued, has evinced hostility toward the borrower-defense process.

"After having their American dreams stolen by a so-called higher education institution, Corinthian students are now being denied critical relief by a secretary of education hostile to their plight," he said in a statement. "It is hard to believe that we are forced to sue the Department of Education to compel Secretary DeVos to carry out the department's legal duty and help these students rebuild their lives."

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Borrower defense

Kaplan Buys For-Profit College From Apollo

Kaplan Professional Education recently signed an agreement with Apollo Education Group to purchase the College for Financial Planning for an undisclosed amount.

CFFP offers financial education and training to students interested in becoming certified financial planners. Kaplan Professional Education is owned by Kaplan Inc.

"This opportunity is beneficial both to the College for Financial Planning and Kaplan and will help us continue providing the high standard of education in financial planning that we have offered for decades," said John Sears, president of the college, in a statement. "We are proud of the important role we play in supporting professional development in the financial services industry and this transaction brings together the resources and institutional experience of two of the most significant education providers in the sector."

The sale is expected to close next year and requires approval from CFFP's accreditor, the Higher Learning Commission.

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Inspector General: Resume Processing Borrower-Defense Claims

The Department of Education's inspector general said Monday that review of student loan relief applications known as borrower-defense claims should resume after months without a single ruling from the Trump administration.

The Office of Inspector General also recommended that the department establish a time frame for reviewing claims and either issuing a denial or discharging the loan.

Democrats seized on the report as evidence that the Department of Education under Secretary Betsy DeVos has harmed tens of thousands of student borrowers by halting review of the claims by students who allege they were defrauded or misled by their institutions.

"Now Secretary DeVos has absolutely no excuse -- it’s time to cancel these fraudulent loans," said Senator Elizabeth Warren, a Massachusetts Democrat, in a statement.

About 95,000 borrower-defense claims are pending review by the department, administration officials have said -- roughly 65 percent of those filed by former students of for-profit Corinthian Colleges institutions.

While Democrats and student advocates have repeatedly sought answers on the lack of progress, the department has said it is working to set up a process for adjudicating claims.

Department spokeswoman Liz Hill said the OIG report confirmed "the previous administration did not establish an adequate adjudication process for borrower-defense claims."

"The desire to avoid denying claims or adjudicating complicated claims left thousands of students in limbo," she said. "That’s why the department, under the leadership of Secretary DeVos, has been working diligently to put a process in place that provides a consistent and reliable way to adjudicate pending borrower-defense claims, provide fair relief to defrauded students, and also protect taxpayers."

The inspector general's report, though, found that Federal Student Aid's Borrower Defense Unit had clear criteria for review of claims, even though it recommended clearer documentation of legal memoranda used to justify discharges and establishing clear policies on review of unique claims, among other changes.

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DeVry traded to private small company

Once a large for-profit institution, DeVry is now being handed over to a company that runs a small college with 600 students. Experts see the move as a sign of the times.

DeVry Under New Ownership

Adtalem Global Education, the company that owns DeVry University, announced Monday that ownership of the for-profit institution would transfer to Cogswell Education LLC. The transfer deal also includes Keller Graduate School of Management.

The agreement would still need federal and accreditor approval before being finalized.

"I am thrilled for DeVry University and its students as it enters this new phase in its history," said Lisa Wardell, president and chief executive officer of Adtalem, in a news release. "Cogswell Education is the right partner to fuel DeVry's mission and commitment to its students, ensuring high-quality programs that help students achieve their career goals."

The agreement includes an "earn-out" for Adtalem based on DeVry's future performance over multiple years.

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Education Department Signals Possible Changes to Gainful-Employment Rule

In documents released this week ahead of a negotiated rulemaking session on the gainful employment rule, the Department of Education signaled potential limits to Obama era regulation that went into effect last year.

The gainful employment regulation was written to weed out poor-performing career education programs that produce too many graduates with debt they can't repay. To hold programs accountable, it ties access to federal student aid funds to performance on a debt-to-earnings metric.

For-profit colleges sued twice to block the rule, but it went into effect last year and the first set of full data for career programs subject to the rule was released in January. However, Education Secretary Betsy DeVos said in June that she would appoint a rulemaking panel to overhaul the rule, taking account of many of the complaints from colleges. 

Materials provided to negotiators ahead of the first rulemaking session next week signal an interest in applying the regulation in whole or in part to all higher ed programs. That fits the priorities of for-profit groups like Career Education Colleges and Universities. It also wouldn't be possible under current law without making gainful employment simply a transparency measure by removing accountability measures -- another question raised by the materials for negotiators.

Virginia Foxx, the Republican chair of the House Education and the Workforce committee, is a longtime critic of the rule. Legislation expected from her committee this week would prohibit future action on the gainful employment rule by the department, according to reporting by the Wall Street Journal. The legislation, a reauthorization of the Higher Education Act, will instead propose a new tool tracking program-level data on completion, earnings, and average debt, the Journal reported.

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Gainful Employment

Calif. Attorney General Sues For-Profit Ashford

California Attorney General Xavier Becerra on Wednesday announced a lawsuit against for-profit Ashford University and its parent company, Bridgepoint Education. 

Becerra alleges that Ashford made false promises and provided faulty information to students to persuade them to enroll. The lawsuit also alleges the institution used illegal debt collection practices while students struggled to pay their bills. 

"No school should ever steal the American Dream from its students but that is exactly what Ashford University did," Becerra said, in a news release. "Ashford University preyed on veterans and people of modest means. This for-profit college illegally misled students about their educational prospects and unfairly saddled them with debt." 

The suit further alleges that Ashford's salespeople made false and misleading statements to potential students about enrollment growth, how much financial aid students would get, how many prior academic credits would transfer into the school and Ashford's ability to prepare students for careers. Becerra also said Ashford misled investors and the public in filings with the U.S. Securities and Exchange Commission by inflating the percentage of working alumni who reported that their Ashford degree prepared them for their current jobs. 

The attorney general's office is seeking restitution for students, civil penalties and a permanent injunction prohibiting similar activities in the future from Ashford. 

The embattled for-profit institution recently suspended new enrollment of veteran students who receive the Post-9/11 GI Bill as part of a long-running dispute between Ashford, the U.S. Department of Veterans Affairs and an Iowa state regulator. 

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Report: For-Profit Looking to Sell 2 Law Schools

For-profit law school chain InfiLaw is looking to sell its two remaining law programs, The Wall Street Journal reported over the weekend.

Arizona Summit Law School was placed on probation in March by its accreditor, the American Bar Association. Florida Coastal School of Law, meanwhile, was warned by ABA in October that it was "significantly out of compliance" with accreditation standards.

A third InfiLaw program, Charlotte School of Law, shut down in August after it failed to win renewed access to Title IV federal aid programs and its state regulator rejected a request to extend its license to operate. The Obama administration had cut off Charlotte's access to Title IV funds last year after the ABA put the law school on probation.

The Journal reported that InfiLaw is in discussions with nonprofit law schools to take over operations of its two remaining programs, according to Donald E. Lively, the president of Arizona Summit.

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