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Guaranty agency buys half of Corinthian Colleges and forgives $480 million in student debt

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ECMC closes deal to buy 53 Corinthian campuses, earning praise from federal agencies and some consumer groups for deal to forgive $480 million in students' private loans.

Wisconsin Gov. Wants to Cut For-Profit Regulatory Board

The budget proposal from Wisconsin's Republican governor, Scott Walker, would eliminate the regulatory board that oversees the state's 244 for-profit institutions, the Wisconsin State Journal reports. The Education Approval Board sought tighter regulation of the sector two years ago, but that plan died quickly. Walker wants to cut the board to "decrease the regulatory and fiscal burden" on for-profits, according to the newspaper.

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Essay on the significance of the Super Bowl being played in the University of Phoenix Stadium

With all the Super Bowl hype (and there was plenty before the game, given Deflategate), little attention has been paid to the irony of where the actual game was played in Arizona: the University of Phoenix Stadium. Yes, really. 

Is there anything we can learn from the Super Bowl’s location for those of us toiling in the weeds of higher education?

The University of Phoenix, which boasts online enrollment in excess of 200,000 students at present (a decline from only several years ago when they had well more than half a million students), offers hundreds of degree programs at the undergraduate and graduate levels. Its Web site promotes a variety of tutoring and support programs, and the university has actual physical locations for classes in 39 states, although most courses are offered online.  

There is one thing the University of Phoenix most assuredly does not offer: intercollegiate athletics. Why would an institution of higher learning have a stadium named after it when that institution has no athletic offerings?

So, here’s a brief quiz as to possible explanations for why the University of Phoenix agreed in 2006 to pay $154.5 million over 20 years for the right to have its name used in perpetuity on the then new stadium in Arizona. Pick a, b, c, d, or e:

a. The university and its parent company, Apollo Education Group (enterprise value of $2.11 billion) could afford it. Compare this amount to the size of the 15th largest university endowment (Duke University) --  $6 billion in 2013.

b. It provides excellent ongoing marketing of the university, with its name promoted as part of the events held at the stadium, which include one of the most highly viewed sports events in the world. (Note: It’s the site of the Final Four in 2017.) Aren’t all higher education institutions investing in ways to market themselves better?

c. The stadium is big, holding up to 72,200 people with room for expansion, paralleling the university’s expansive approach to online learning that can serve thousands of students. What college is not looking to grow enrollment?

d. The construction of the stadium involved many partnerships, including with the Arizona Sports & Tourism Authority, and the University of Phoenix also just partnered with historically black colleges. Which institution is not seeking increased revenue or savings through partnering?

e. All of the above.

The answer, of course, is all of the above.

Now, for the bonus question: Who is the star high school running back who indicated he considering attending the University of Phoenix (actually, if the truth be told, he might likely want to play in its stadium for the Cardinals a year or two after he starts college)? The answer is Soso Jamabo, who is cleverly taking a swipe at the absurdity of college recruiting by conducting interviews against a backdrop containing the names of institutions he might ostensibly choose to attend -- including the University of Phoenix. By the by, the University of Phoenix tweeted that it was accepting Jamabo as a student.

Here’s a more deliberative take on all this. The very questions raised by the Super Bowl’s location are emblematic of the issues facing higher education: developing unique marketing opportunities to improve student enrollment and institutional name recognition; sorting through complex fiscal choices including strategies for developing auxiliary revenue streams; assessing the role, quantify and quality of online learning for students; addressing the challenges and cost of intercollegiate athletics; identifying partnership opportunities that improve the student experience and reduce costs or increase revenue; and determining what new construction merits the expenditure and accompanying borrowing. 

University of Phoenix Stadium brings to mind the Shakespearean question, “What’s in a name?” spoken by Juliet. The answer here is this: nothing and everything.

Karen Gross is the former president of Southern Vermont College.

 

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Corinthian Sale Postponed

The proposed sale of 56 campuses of the for-profit Corinthian Colleges chain to ECMC, a student loan guarantor, has been postponed until next month, Corinthian said in a corporate filing. The deal, which the U.S. Department of Education brokered, had been scheduled to close in January. It was pushed back earlier this month, and now moved to February.

Corinthian said the closing of most of the campuses included in the purchase agreement is now scheduled for February 2. A second closing for the remaining campuses will follow.

"Although the company and the purchaser have made substantial progress towards the satisfaction of conditions to closing," Corinthian said, "and expect to satisfy the remainder soon, not all of such conditions were satisfied in time to conduct an initial closing."

The deal has been controversial. Some consumer groups have opposed the sale to ECMC, calling the nonprofit agency a "troubled entity" and saying the arrangement will be bad for students. The department, however, has defended the sale, saying it averts "disruption and displacement" of 40,000 students and strengthens their "education prospects."

ECMC on Wednesday issued a written statement about the delay.

“While we continue to make good progress, the enormity of the transaction and the regulatory approvals needed prior to close have extended our target closing date to early in February," the guaranty agency said. "We are pleased with all we’ve been able to accomplish over the last several weeks, especially given the holiday timing, and are continuing to move full steam ahead with our plans to make a difference as a nonprofit provider of career school education driven to promote the long-term success of our graduates.”

(Note: This article has been changed from an earlier version to include new information from ECMC and a Corinthian corporate filing.)

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Western Governors' deepening partnership with StraighterLine creates a new path to completion

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Western Governors University steers rejected applicants to StraighterLine, an online course provider that acts as a low-risk way for students to prepare to earn a degree.

Kaplan Settles Texas Whistleblower Suit

Kaplan Higher Education, a for-profit chain, on Monday agreed to a $1.3 million settlement with the U.S. Attorney for the Western District of Texas. The civil settlement resolves whistleblower allegations that Kaplan employed unqualified instructors at its campuses in Texas, the U.S. Attorney's office said in a written statement. The agreement did not include a finding of wrongdoing by the company. The for-profit settled to avoid the "expense of protracted litigation," a Kaplan official said in a written statement. 

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Herzing, Longtime For-Profit Institution, Goes Nonprofit

Herzing University, a midsized chain of for-profit colleges, has converted to a nonprofit institution, The Milwaukee Journal-Sentinel reported. Herzing has 6,000 students in campuses in eight states. Herzing is among the institutions that said new federal regulations on "gainful employment" would make it hard to operate.

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Career Education Corp. to Sell Le Cordon Bleu

Career Education Corp. on Thursday said it plans to sell Le Cordon Bleu, a chain of 16 culinary campuses. The company, which is one of the largest publicly traded for-profits, said in a written statement that the planned sale would allow it to "reallocate funds across our portfolio." Le Cordon Bleu is one of Career Education's better-known brands. With a current enrollment of 10,100 students, the culinary schools brought in $178 million in total revenue last year.

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Groups Oppose Corinthian Sale to ECMC

A coalition of 46 student, consumer, veterans and civil rights groups on Wednesday wrote to the Obama Administration and U.S. Department of Education to oppose the proposed sale of 56 Corinthian Colleges' campuses to ECMC, a nonprofit student loan guarantee agency.

"The terms of the proposed sale to ECMC would not give students the choice of completing or a fresh start, while leaving the campuses in the hands of a troubled entity with no educational experience," the groups wrote. They called on the department to exercise more flexibility in allowing Corinthian students to seek loan discharges. The letter also suggests stricter terms for an ECMC deal, such as requiring that the campuses meet "gainful employment" regulations for seven years.

The sale, which department officials back, is expected to close in January.

 

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Oregon Loses Appeal of Apollo Lawsuit

A U.S. appeals court on Tuesday sided with a lower court's decision to dismiss a class-action lawsuit the State of Oregon had filed against the Apollo Education Group. The suit alleged that Apollo, which owns the University of Phoenix, had made misleading statements about its enrollment and revenue growth. As a result the state's pension fund lost $10 million, according to the lawsuit. But the courts -- including the U.S. Court of Appeals for the Ninth Circuit, which ruled Tuesday -- have rejected those claims, finding that Apollo's statements were lawful "business puffing." 

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