Tide turns for for-profit schools

De­spite as­sis­tance from DeVos, sec­tor seen as in de­cline

Baltimore Sun Sunday - - NEWS - By Maria Danilova and Richard Lard­ner

WASH­ING­TON — The for-profit col­lege in­dus­try is strug­gling un­der the weight of de­clin­ing en­roll­ment, stiff com­pe­ti­tion from tra­di­tional uni­ver­si­ties and an im­age bat­tered by past mis­deeds, even as the Trump ad­min­is­tra­tion tries to of­fer a help­ing hand.

Ed­u­ca­tion Sec­re­tary Betsy DeVos has hired sev­eral in­dus­try in­sid­ers and frozen Obama-era reg­u­la­tions that would have in­creased pro­tec­tions for stu­dents. She has re­duced loan for­give­ness relief for some former stu­dents de­frauded by their schools, mean­ing that the for-profit in­dus­try could be on the hook for less. And she is con­sid­er­ing re­in­stat­ing an ousted over­sight agency for many for-profit col­leges.

“There is a se­ri­ous at­tempt by this depart­ment to find that ap­pro­pri­ate fair bal­ance for both stu­dents and schools,” Steve Gun­der­son, pres­i­dent of Ca­reer Ed­u­ca­tion Col­leges and Uni­ver­si­ties, the in­dus­try lob­by­ing group, said in an in­ter­view.

But Ti­mothy Lutts, pres­i­dent of the Cabot Wealth Net­work in Salem, Mass., sees an in­dus­try in de­cline.

An im­prov­ing econ­omy has led to lag­ging en­roll­ment as adult stu­dents re­turn to the work­place in­stead of seek­ing a de­gree to bur­nish their re­sumes, he said. For-profit col­leges now also com­pete with non­profit schools that of­fer on­line de­gree pro­grams with­out the stigma that still haunts mon­ey­mak­ing schools.

“It was a great sec­tor a decade ago,” Lutts said. “For for-profit schools, the tide is still go­ing out.”

Stu­dent en­roll­ment at most four-year for-profit col­leges fell in 2017 to just over 901,000, down nearly 69,000 from the year be­fore, ac­cord­ing to data com­piled by the Na­tional Stu­dent Clear­ing­house Re­search Cen­ter. It’s a down­ward trend that be­gan in the fall of 2010. The fall­ing num­bers have led to up­heaval. Ad­talem Global Ed­u­ca­tion in De­cem­ber un­loaded DeVry Uni­ver­sity by trans­fer­ring own­er­ship of the strug­gling school at no cost to a small for-profit ed­u­ca­tion com­pany in Cal­i­for­nia. The move came a year af­ter DeVry agreed to a $100 mil­lion set­tle­ment to re­solve a Fed­eral Trade Com­mis­sion law­suit al­leg­ing the school mis­led stu­dents through de­cep­tive ads.

Corinthian Col­leges col­lapsed in 2015 and ITT Tech­ni­cal In­sti­tute a year later.

Don­ald Trump’s elec­tion as pres­i­dent had held the prom­ise of heady times for the in­dus­try. Af­ter all, he was the founder of Trump Uni­ver­sity.

Among the DeVos hires are se­nior coun­selor Robert Ei­tel, who served as an at­tor­ney for Bridge­point Ed­u­ca­tion; Ju­lian Schmoke, the top fi­nan­cial en­force­ment of­fi­cial, who once worked as an aca­demic dean at DeVry; and Diane Auer Jones, who was hired re­cently as a se­nior pol­icy ad­viser, used to lobby for Ca­reer Ed­u­ca­tion Cor­po­ra­tion, a ma­jor for-profit op­er­a­tor.

“What we have here is essen­tially an em­brace of that in­dus­try by the Trump ad­min­is­tra­tion,” said Kath­leen Clark, a law pro­fes­sor at Wash­ing­ton Uni­ver­sity in St. Louis. “If the con­cern is that a whole in­dus­try has been ex­ploit­ing the sit­u­a­tion, you wouldn’t want any one from that in­dus­try be­ing in­volved in any reg­u­la­tion, you would be skep­ti­cal.”

Paul Peter­son, a pro­fes­sor of ed­u­ca­tion at Har­vard Uni­ver­sity, said DeVos’ hir­ing de­ci­sions were not un­usual. His­tor­i­cally, U.S. ad­min­is­tra­tions have tended to fill many po­si­tions with peo­ple out­side the gov­ern­ment sec­tor in or­der to bring new en­ergy and per­spec­tive, with Democrats tra­di­tion­ally re­ly­ing most on lawyers and aca­demics, while Repub­li­cans pick­ing in­dus­try prac­ti­tion­ers.

“You don’t want peo­ple run­ning the gov­ern­ment who don’t know any­thing about the sec­tor,” Peter­son said.

Ed­u­ca­tion Depart­ment press sec­re­tary Liz Hill said in­di­vid­u­als hired had long ca­reers be­fore and af­ter their work in the for-profit sec­tor. “In ad­di­tion to be­ing highly qual­i­fied, they are care­fully com­ply­ing with all eth­i­cal re­quire­ments and have re­cused them­selves when ap­pro­pri­ate,” Hill said in a state­ment.

She said DeVos was fo­cused on ex­pand­ing ed­u­ca­tion op­tions for stu­dents and that the schools’ tax sta­tus was ir­rel­e­vant to the qual­ity of their ed­u­ca­tion.

“The one ques­tion we should be ask­ing is whether or not an ed­u­ca­tion in­sti­tu­tion is serv­ing stu­dents well, not how it filed pa­per­work with the IRS,” Hill said.

But Erika Colon, a 35-year old mother of three in Bos­ton, said the fed­eral gov­ern­ment should in­crease over­sight and tighten con­trols of for-profit schools. Colon, 35, took out about $15,000 in loans to get a cer­tifi­cate as a med­i­cal ad­min­is­tra­tive as­sis­tant at one of the Corinthian Col­leges schools.

She said she re­ceived a low-qual­ity ed­u­ca­tion, could not get a job and ended up re­train­ing in a re­lated field at a dif­fer­ent school — only then get­ting hired by a hos­pi­tal.

“They are just giv­ing stu­dents high hopes for noth­ing and just tak­ing peo­ple’s money,” Colon said.

For-profits had ex­pe­ri­enced a boom over the past two decades, buoyed by fed­eral stu­dent fund­ing and the global fi­nan­cial cri­sis that left many Amer­i­cans with­out jobs and ea­ger to go back to school to gain new skills and cre­den­tials. En­roll­ment rose from around 230,000 in the early 1990s to a record 2 mil­lion in 2010.

The schools re­cruited ag­gres­sively, of­ten tar­get­ing non­tra­di­tional stu­dents — usu­ally older peo­ple who had jobs and could only study part time. Schools fo­cused heav­ily on women and peo­ple of color. They also pur­sued vet­er­ans with their mil­lions in GI Bill tu­ition as­sis­tance.

But af­ter grad­u­at­ing, many stu­dents strug­gled to find promised jobs or to trans­fer cred­its to other schools, lead­ing to mas­sive stu­dent loan de­faults. An Ed­u­ca­tion Depart­ment watch­dog said in a re­port last month that the “sec­tor con­tin­ues to present it­self as a high-risk area for the depart­ment.”

With the fu­ture un­cer­tain, a grow­ing num­ber of schools are seek­ing to aban­don the for-profit world by con­vert­ing to non­profit sta­tus. These trans­for­ma­tions, which re­quire ap­provals from state and fed­eral reg­u­la­tors, mean less over­sight and relief from a law that bars for-profits from re­ceiv­ing more than 90 per­cent of their rev­enue through fed­eral stu­dent aid pro­grams.

Af­ter five straight years of los­ing rev­enue and stu­dents, Bridge­point Ed­u­ca­tion, the San Diego-based owner of two for-profit uni­ver­si­ties, an­nounced last month that it in­tends to merge its schools into a sin­gle non­profit called Ash­ford Uni­ver­sity.

Bridge­point will be­come what’s known as an on­line pro­gram man­age­ment com­pany. These are the busi­nesses that de­sign, mar­ket and run the vir­tual pro­grams that col­leges of­fer to stu­dents.

Pend­ing the nec­es­sary ap­provals, Bridge­point’s first client would be Ash­ford Uni­ver­sity.

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