The U.S. Department of Education will halt collections on student loans for roughly 40,000 former Corinthian students who are in default, Reuters reported. A group of former Corinthian students has asked a federal bankruptcy court judge to temporarily suspend debt payments for up to 350,000 students who attended the collapsed for-profit chain during the last five years. A lawyer for the group last week told Reuters that the department would not collect on defaulted loans for 120 days. During that time the lawyer said he hopes to negotiate debt relief for all former Corinthian students.
Robert Shireman, who founded the Institute for College Access and Success and engineered the Obama administration's overhaul of student loan programs and increased regulation of for-profit colleges, has found a new home from which to work on higher education issues. The Century Foundation, which has focused its work on higher education on issues related to college access for low-income students, announced Friday that Shireman will become a senior fellow there as Century expands its education and labor policy teams.
Shireman has had a hand in most of the major higher education policy issues of the last decade, through work in Congress (as an aide to the late Senator Paul Simon of Illinois), the White House (as a member of President Clinton's National Economic Council), in the foundation and think tank world (at the Aspen Institute and at TICAS and its Project on Student Debt), and then as deputy under secretary of education in President Obama's first term. More recently, he has worked on college access, funding and community college issues at California Competes, a nonprofit group.
The Higher Learning Commission removed the University of Phoenix from "on notice" status effective June 25, according to corporate filings published Thursday. The status is a sanction that indicates the institution is moving in a direction that could place it out of compliance with the accreditor's requirements.
In a statement to Phoenix staff and faculty, President Tim Slottow and Provost Meredith Curley wrote: "We are appreciative of the work done by the HLC staff and the independent peer review team made up of professionals in higher education and their recognition of the efforts undertaken by everyone at University of Phoenix to satisfactorily resolve all concerns identified in 2013. But our work in this area is never done. We will host a comprehensive visit again in 2016-17 where we intend to demonstrate the university's further progress and continued compliance with all of the criteria for accreditation."
Moody's Investors Service has downgraded the credit rating of Laureate Education, a for-profit chain with a large global footprint. The credit ratings agency also downgraded Laureate last year. In both cases it cited the company's expansion, which has contributed to debt levels. Laureate now enrolls more than one million students at 80 campus-based and online institutions.
"Laureate's aggressive growth has created persistently high leverage and has strained the company's liquidity," said David Berge, a Moody's analyst, in a written statement.
The primary trade group for the for-profit sector, the Association of Private Sector Colleges and Universities (APSCU), said last week that it will appeal a federal court ruling over the Obama administration-led gainful employment rules, which went into effect this month.
A federal court in 2012 largely invalidated a previous version of the regulations. But last month a federal judge rejected a legal challenge by the for-profit group to the new rules, which require vocational programs at for-profits (and nondegree programs at community colleges) to meet minimum thresholds with the debt-to-income rates of graduates. A different federal court also upheld the rules in response to a legal challenge by a for-profit association in New York.
APSCU said it would appeal, arguing that gainful employment “needlessly complicates the efforts of new traditional students to achieve a career-focused education that helps them get jobs, and we will continue to fight to keep opportunities open for students who are often struggling to juggle family, work and school.”
Community Care College, a small institution located in Tulsa, Okla., that offers certificates and associate degrees in health care and business education, shifted to nonprofit from for-profit status on Wednesday, the Tulsa Worldreported.
The college is now called Community HigherEd. Its founder, Teresa Knox, told the newspaper that she wants the college to continue being evaluated on student outcomes, graduation rates, job placement rates and student loan default rates. The so-called gainful employment regulations, which do just that, and apply primarily to for-profits, took effect the day Community Care College made the switch.
“‘For-profit is periphery to our primary mission and purpose and minimizes our long-term goal,” Knox said in a written statement. “Our strategy is to increase the number and amount of scholarships offered to students in order to reduce student loan debt and expand educational and career opportunities to those that need it most."
The nonprofit Center for Investigative Reporting this week published an article alleging that the University of Phoenix “sidesteps” an executive order by the White House that seeks to prevent for-profit colleges from paying for preferential recruiting of students who are recipients of the Post-9/11 GI Bill. The article said Phoenix has paid the U.S. military $250,000 over the last three years to sponsor 89 recruiting events, including concerts, a chocolate festival and a fashion show.
Officials with the Apollo Education Group, which owns Phoenix, said the center portrayed the university unfairly. In a written statement, the company said it supports and has "devoted significant resources to ensure compliance" with the executive order. It also defended its outreach to veterans, saying the "work of the university and Hiring our Heroes, including its presentations, stand above reproach and should serve as an example of exactly the type of information and services our nation’s war heroes need as they transition into the civilian workforce."
Education Affiliates, a for-profit chain with 50 campuses, has settled with the federal government over false-claim allegations, the U.S. Department of Justice said. The Maryland-based company agreed to pay $13 million in response to allegations that it received aid payments from unqualified students, some of whom the for-profit admitted by creating false or fraudulent high school diplomas. Education Affiliates also referred prospective students to diploma mills, according to the feds, and falsified students' federal aid applications.
“The various cases that were settled here include numerous allegations of predatory conduct that victimized students and bilked taxpayers,” said Under Secretary of Education Ted Mitchell, in a written statement. “In particular, the settlement provides for repayment of $1.9 million in liabilities ordered by Secretary of Education Arne Duncan that resulted from EA awarding federal financial aid to students at its Fortis-Miami campus based on invalid high school credentials issued by a diploma mill. Secretary Duncan made clear that such abusive behavior would not be tolerated, and we will continue to work with the Justice Department and other federal agencies to ensure that postsecondary institutions face consequences when they violate the law.”
Apollo Education Group, the publicly traded company that owns the University of Phoenix, announced continued enrollment and revenue declines in its third-quarter corporate filing, which Apollo released Monday.
Phoenix saw its revenue decrease $379.3 million, or 18.8 percent, during the nine-month period that ended May 31. The university's enrollment of degree-seeking students declined to 206,900 students by the end of May, a nearly 15-percent dip from the same time last year.
In the filing, Apollo also said it was laying off approximately 600 employees, "most of whom were enrollment counselors," as part of measures to reduce costs and to streamline services.