The U.S. Department of Justice on Monday announced a $95.5 million settlement with the Education Management Corporation to resolve allegations that it defrauded the government. The Huffington Postreported on the settlement over the weekend.
The agreement ends a long-running lawsuit that accused the for-profit college chain of illegally paying bonuses to admissions recruiters based on the number of students they enrolled.
Those allegations were brought to light in a whistle-blower lawsuit by a former employee in 2007. The Justice Department, as well as another former employee, joined the suit in 2011.
The Education Management Corporation owns the Art Institutes, Argosy University, Brown Mackie Colleges and South University chains. The company was taken private last month amid falling enrollments and revenue.
Loretta Lynch, the U.S. Attorney General, called the settlement "historic," noting that the payment would be the largest false-claims payment by a for-profit institution in history. EDMC's actions were "were not just a betrayal of students' trust," Lynch said, "they were a violation of federal law."
Thursday was also the day for the Million Student March, which led to rallies at many campuses to call for free public higher education, the cancellation of current student debt and a $15 minimum wage.
Teaching assistants at the University of Wisconsin at Madison are planning to protest next week over a proposed restructuring of their working conditions and compensation. The students say they were not consulted, but rather learned of the plans to cap their maximum workload at 20 hours from emails directed to faculty members and administrators. The Teaching Assistants’ Association alleges the changes constitute a violation of the university’s promise to uphold its labor contract even after 2011 legislation pushed by Governor Scott Walker challenging public employee unions.
“The proposal to restructure graduate student worker pay is a nonstarter,” association leaders said in a statement. “University administrators' calls for more ‘flexibility’ and a reliance on ‘market forces’ will actually translate into fewer positions and workplace protections for graduate employees. This means that graduate students are going to lose their jobs, along with their paychecks and health insurance.”
John Lucas, a university spokesman, said the student association is wrong in asserting that the changes -- which don’t take effect until 2017 -- will have any impact on their take-home pay or benefits. Rather, he said, the university’s plans relate almost exclusively to a change in the administrative process by which the graduate research assistant stipends are set. “The change will have no impact on the take-home pay or benefits” for research assistants, he said. Lucas said the proposed 20-hour cap applies to international students and is designed to comply with federal requirements.
Submitted by Paul Fain on November 12, 2015 - 3:00am
A recently announced experiment by the U.S. Department of Education will allow a handful of nontraditional providers -- including boot camps and online course providers -- to team up with accredited colleges on academic offerings that will be eligible for federal financial aid. Applicants for the program are required to bring in an outside "quality-assurance entity," which will serve as an alternative form of accreditation.
Entangled Solutions, a higher education consulting firm, said this week that it is seeking to be one of those quality-assurance entities. The company released a white paper describing its philosophy on measuring quality in higher education. Those principles include a focus on outcomes -- including assessments of student learning.
"We intend to focus measurement on the value that each program claims it is providing students and match that with what students are in fact 'buying.' If, for example, a program claims to provide a career benefit, we will measure that benefit relative to the program’s cost, assess how the program’s benefit compares to alternative options, and report on what students say they wanted and received from the program," the paper said.
The new entity's quality-review standards -- and the findings from those reviews -- will be open and publicly available. Entangled Solutions is working with a few college partners to apply to participate in the federal experiment.
Paul Freedman, a principal consultant for the company, said the ultimate goal will be for the new form of accreditor to become an independent, nonprofit entity. The result would be a quality-review process and a set of standards without an owner.
"It would be better to have more of an open marketplace," Freedman said. "That's what we ultimately would like to happen."
Submitted by Paul Fain on November 11, 2015 - 3:00am
The Obama administration this week announced several new efforts it said would help veterans of the U.S. military get more out of their college educations. The White House said it was unveiling a redesigned version of a federal GI Bill Comparison Tool, drawing new data from the broader College Scorecard to give veteran-specific data on graduation and retention rates. (Since the Post-9/11 GI Bill's creation in 2009, the U.S. Department of Veterans Affairs has spent more than $57 billion on education benefits that 1.5 million students received, the White House said.)
In addition, the administration said the VA and the Federal Trade Commission have signed a new agreement to "provide enhanced oversight and strengthen enforcement against schools that engage in deceptive or misleading advertising, sales or enrollment practices towards veterans." The FTC is part of a new federal interagency task force that has helped coordinate federal efforts to crack down on for-profit colleges.
The president also called on the U.S. Congress to pass three legislative proposals, with a heavy focus on for-profit colleges. One proposed bill would allow the Secretary of Education to reinstate GI Bill benefits for students whose colleges close midterm. The White House pointed to Corinthian Colleges in citing its support for the legislation.
Another proposal the administration said it supports would change a federal requirement that for-profits get less than 90 percent of their revenue from federal sources. That legislation, which was introduced by Senator Dick Durbin, an Illinois Democrat, would change the so-called 90/10 rule back to its previous limit of 85 percent. The proposal also would count educational benefits for veterans and members of the military toward that federal limit -- a change from current policy.
Companies hired by the U.S. Department of Education to collect federal student loan payments made “deceptive” statements to borrowers, according to the Consumer Financial Protection Bureau.
The consumer bureau said in a report published Tuesday that its routine review of loan servicing companies uncovered “misrepresentations” by federal student loan servicers about late fees. The servicers informed borrowers that they might face late fees on their federal student loans even though the Education Department does not charge such fees, the report says. The CFPB did not name the companies where its regulators found problems. The bureau said it directed the loan servicers to stop making deceptive statements.
An Education Department spokeswoman, Denise Horn, said the issue was a matter of confusion. She said the department's original contracts with its loan servicers required the companies to have the capability to assess late fees but the department never instructed them to actually charge late fees.
“We have never allowed or directed our servicers to charge late fees,” Horn said in an email. “Some servicers have included language on their statements indicating late fees may be assessed. The department was recently made aware of this issue and will be directing all servicers to cease making these representations.”
CFPB regulators also said they found other problems in the student loan servicing industry, including at companies that collect payments on behalf of private lenders. For example, in some cases, the CFPB said, loan servicers applied borrowers’ payments to various loans in ways that maximized late fees or unfairly processed automatic payments.
Bureau officials have said they’re actively exploring new regulations on student loan servicers but have yet to put forward any proposals.
Submitted by Paul Fain on November 4, 2015 - 3:00am
A coalition of 12 organizations, including New America, the Business Roundtable, the U.S. Chamber of Commerce and the Center for Law and Social Policy, on Wednesday released a set of shared principles for policy makers to consider in the run-up to the reauthorization of the Higher Education Act, the law that governs federal aid programs. While the groups have different takes on many issues in higher education, they said the current formulation of the law does not meet the needs of students for high-quality, affordable and relevant educational opportunities.
The groups described seven principles: outcomes are what matter, federal financial aid policies need to be more flexible, higher education needs to do more to connect learning and work, accreditation processes need to be more transparent and rigorous, quality assurance processes should focus more on programs and credentials, policy should encourage innovation and experimentation, and that the Higher Education Act should be better coordinated with other federally funded education and training programs.
"Reauthorization offers the chance to renew our country’s commitment to higher education for all who seek it," they wrote, "while also helping institutions adapt to the fast-paced, technology-driven global economy that their students will face at graduation."
Submitted by Paul Fain on October 30, 2015 - 9:00am
The U.S. Department of Education today announced the creation of an experiment that will seek to encourage the expansion of dual-enrollment programs for students from low-income backgrounds.
Dual enrollment is when students take college courses for credit while enrolled in high school. As a result, they can more quickly and affordably earn a degree once they head to college. Under the newly announced experiment, the department will for the first time allow high school students to receive Pell Grants for these programs. The feds plan to spend up to $20 million next year on the project, which could benefit up to 10,000 students.
“A postsecondary education is one of the most important investments students can make in their future. Yet the cost of this investment is higher than ever, creating a barrier to access for some students, particularly those from low-income families,” Education Secretary Arne Duncan said in a written statement. “We look forward to partnering with institutions to help students prepare to succeed in college.”