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Last week National Hispanic University announced the shuttering of its online and campus-based degree programs. The university’s phasing-out as a degree-granting institution raises the question of whether there is a market for an institution with a special focus on America’s fastest-growing demographic.

The small nonprofit university was struggling when Laureate Education, a private for-profit chain, bought it in 2010. The U.S. Department of Education then placed growth restrictions on National Hispanic for two years. And officials from the university said subsequent snags over federal and state aid access contributed to its woes.

Laureate lost an argument with the feds over an obscure exemption in the Higher Education Act, which is the law that governs financial aid. As a result, students could not receive Pell Grants or other forms of aid for the university’s liberal studies program, which had been one-quarter of National Hispanic’s total enrollment.

About 500 undergraduates attend the university, which is located in San Jose.

The department made its final ruling on federal aid eligibility at National Hispanic last March. After scrambling to assess the damage, the university in December halted new student enrollments.

Around the same time Laureate and National Hispanic’s leaders learned that students would not qualify for state-based aid under the Cal Grant program. The university failed to meet the state’s minimum eligibility threshold of a 30 percent graduation rate.

University officials argued that they would have passed with the most recent data. But California relied on outdated rates, according to the university. And the rates reflected a relatively small number of National Hispanic's students because of limitations to federal data sets.

The university appealed the Cal Grant ruling but lost that appeal last month. The decision to phase out degree programs followed last week. National Hispanic will continue to offer teacher-education certificates in San Jose through a partnership with an unnamed local university and the National Hispanic University Foundation.  

“National Hispanic University has faced real and significant financial difficulties for many years,” university officials said in a written statement. “Our existing financial challenges have been compounded by the unfortunate and disappointing regulatory barriers impacting NHU, resulting in reduced enrollment and making it challenging for a small institution like ours to thrive.”

'Challenging Market'

The demand also might not be there. Several experts said they were skeptical about the potential for a university specializing primarily in Hispanic students. With the demise of National Hispanic’s degree programs, no major Hispanic-focused institution currently exists, although there are many that are overwhelmingly Latino.

That seems surprising, given the large number of young Hispanics in California, Texas, Florida and other states. Yet Hispanic students are probably less likely to be attracted to a new, less-established institution than to their local public and private four-year institutions or community colleges, experts said.

“In California there are a lot of alternatives,” many of which are low-cost, said Gary Brahm, chancellor of Brandman University. “It’s a challenging market.”

The private, nonprofit Brandman in 2012 teamed up with an investment fund to create the Hispanic-serving Ameritas College. The new college initially experimented with offering degrees in a hybrid format, with both campus-based and online coursework. It also features English immersion and dual-language student support services.

But Brahm realized quickly that Hispanic students were more interested in degrees from Brandman than from Ameritas. So the university converted Ameritas into a one-year “pathways” program.

“The students didn’t really need four years at Ameritas,” Brahm said, adding that they “prefer to be in the general student population.”

There are 370 institutions that the feds classify as Hispanic-serving institutions and 127 in California alone, according to Excelencia in Education, a nonprofit group. To receive that classification, Hispanic students must account for 25 percent or more of total undergraduate enrollment at a college. A recent report from Excelencia found that the 370 Hispanic-serving institutions enroll almost 60 percent of the nation’s Hispanic undergraduates.

As a result, Deborah Santiago, Excelencia’s co-founder, COO and vice president for policy and research, focuses most of her energy pushing those and other traditional colleges to do a better job of serving Hispanic students.

Santiago recently joined National Hispanic’s governing board. She said the university was a good idea. “They saw a student body that needed serving.”

National Hispanic tried to be “more intentional” about helping Hispanic students, said Santiago. For example, the university offered students on-campus jobs to help them avoid debt. (Research has shown that Latino families tend to be more debt-averse than are other groups.)

But while Santiago also applauded National Hispanic’s attempts to be innovative with online offerings, she said those programs can be difficult for Hispanic students. The reasons are the same as with other nontraditional students, who are typically lower-income and first-generation college students.

Echoing Santiago was John Moder, senior vice president and COO of the Hispanic Association of Colleges and Universities. He said many Hispanic students also face the “digital divide” of not having Internet access at home.

While Moder said the development of online, Spanish-language degree programs online “would make a lot of sense,” he was doubtful that demand would be strong outside of Puerto Rico.

Ken Hartman agreed. Hartman, a senior fellow for Eduventures and the former president of Drexel University Online, said the overall market for online offerings seems to support colleges with a religious identity, such as Liberty University and Grand Canyon University.

However, a push by radio personality Tom Joyner to help historically black colleges develop online programs “didn’t go anywhere,” according to Hartman.

“There are certain things that don’t translate so well online,” he said. “That includes a cultural and racial focus.”

Hartman said student demand online follows a relatively simple formula.

“A good-quality educational experience at a fair price” is the draw, he said. The rest is “icing on the cake.”

Worthy Experiment?

National Hispanic University found itself on the wrong side of language in the Higher Education Act that some experts call the “University of Phoenix exemption.”

That section of the law explains how liberal arts offerings from for-profits can be eligible for federal financial aid. Those programs must meet certain “gainful employment” regulations that prove adequate workforce payoffs for graduates. However, programs can also be “grandfathered in” by not having to meet those requirements if they were in place prior to 2009, when the law went into effect.

The University of Phoenix had certain programs that fell into the latter category, hence the clause’s nickname.

National Hispanic offered liberal studies degrees for 30 years prior to 2009, university officials said. But it apparently did not qualify for the exemption because the university became a for-profit later, when Laureate purchased it.

Kevin Kinser, chair of the educational administration and policy studies department at the State University of New York at Albany and an expert on for-profits, said via email that if the university couldn’t get the exemption, then the liberal studies programs could only be eligible if they prepared students for gainful employment and complied with the federal regulations.

The university’s regional accreditor had given a green light to its new approach with Laureate, Kinser said. He and several other experts said National Hispanic had plenty of promise.

“It’s a shame that it didn’t work out,” said Kinser.

One reason people were pulling for the university is California’s episodic capacity crises in its public higher education systems. While the state’s budget is on an upswing, community colleges in California turned away more than 500,000 students during the recession because of budget problems.

Audrey Dow, community affairs director for the Campaign for College Opportunity, a California-based nonprofit group, said there is no doubt that the state’s colleges need to enroll more Hispanic students – and serve them better.

Several institutions in California are doing a good job of creating extra student supports for Hispanics, she said, among other innovative approaches. But too often those efforts remain limited or experimental.

“Boutique programs aren’t going to get us there,” said Dow.

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