Un-Ivy League goes to head of the class in Trump’s Washington

THE INVITATION went out to top universities including Ohio State and Notre Dame: Let’s talk about the future of American higher education under President Donald Trump.

It also went to a less-august institution: DeVry Education.

That DeVry was invited to a January “listening session” on education by Trump’s team hints at where his administration soon may nudge more college students: Into the arms of forprofit companies.

That, anyway, is the word on Wall Street. Only months after Trump agreed to pay US$25 million (RM112.5 million) to settle a series of lawsuits stemming from his for-profit education venture, Trump University, the likes of DeVry are on the march. Since the November election, DeVry’s stock price has jumped almost 40 per cent.

It’s quite a turnabout for a company that, not long ago, seemed to exemplify the problems in for-profit classrooms: Students tend to graduate with more debt and fewer job prospects than those who attend traditional schools. In recent years, scandals and bankruptcies have jolted the industry and sent students – and investors – running.

On the heels of the Trump U. settlement, DeVry agreed in December to a US$100 million settlement of a federal lawsuit alleging it mislead people about its students’ job success.

As usual in such cases, neither Trump nor DeVry admitted to any wrongdoing.

Now, the shift is palpable. Trump’s new education secretary, the wealthy Republican fundraiser Betsy DeVos, has long supported directing taxpayer dollars to schools run by for-profit companies, including those operating fully online – an approach pioneered by publicly traded higher-education businesses.

That’s good news for them because they rely on federal student loans and grants for as much as 90 per cent of their revenue.

“We are encouraged,” said Lisa Wardell, Devry’s chief executive officer. “We’re looking for a voice and a seat at the table.”

Investors clearly are encouraged, too. DeVry’s stock closed at US$32.45 in New York on Feb 13, up 38 per cent since the Nov 8 US presidential election. Shares of Grand Canyon Education, a for-profit Christian university, have gained 21 per cent. And Laureate Education, which once employed former President Bill Clinton as honorary chancellor, recently went public.

DeVos, confirmed only after Vice President Mike Pence broke a 50-50 tie in the Senate, has largely focused on K12 education. Now she will step into the national debate over the value – and soaring costs – of traditional colleges and universities.

Despite hard questions about their own value and cost, for-profit education companies are positioned to prosper in the Trump years, analysts say.

Trace Urdan, a research analyst in San Francisco at Credit Suisse, upgraded DeVry to “outperform” the day after the November election. He expects Trump will take a friendlier approach than Obama, whose administration curbed funding to schools that failed to meet certain criteria, such as how much debt students shoulder relative to earnings.

DeVos, 59, is married to the scion of Amway Corp., one of the world’s bestknown multilevel marketing companies.

She will control federal purse strings on higher education, overseeing the issue of US$30 billion in Pell grants and more than US$100 billion of student loans annually, as well as the collection of those loans.

Trump, meantime, plans to tap Jerry Falwell Jr., a campaign ally and president of conservative Christian Liberty University, to help examine how to get the government out of higher education altogether. Falwell, son of the fundamentalist preacher who founded the Moral Majority, said he would look at ways of reducing “overreaching regulation” in a Jan 31 Chronicle of Higher Education story. He declined to be interviewed for this article.

For-profit colleges generally don’t focus on traditional college students: Recent high school grads on campus quads. Most DeVry students are over the age of 25 and many are veterans or working parents. Roughly a third are African Americans and Hispanics; two thirds are women. “We’re serving the new normal students,” Wardell said. “These are students that don’t have the economic means to privately pay for school.”

DeVry’s most popular programmes include medical billing, business administration and network-systems administration.

The company also operates a nursing school, a veterinary school and Caribbean-based medical schools that train students who often failed to get into US universities.

Wardell hopes the Trump administration will look at the “unintended consequences” of regulations such as Obama’s debt-toearnings measure. The Department of Education classifies DeVry’s veterinary school as “in the zone” requiring improvement.

DeVry thinks this is unfair because its default rate is low, and besides, “we need vets,” Wardell said. “It’s not that we don’t want to be regulated.”

The default rate “provides only a limited snapshot of one type of studentloan struggle,” said Ben Miller, senior director for postsecondary education at the Center for American Progress policy institute in Washington. For example, it tracks results only within three years of leaving school.

Wardell, who served on DeVry’s board before being named CEO last May, said for-profit schools have gotten a bad reputation because of a few bad practices.

“If we had policed ourselves seven or 10 years ago as an industry, much like the financial-services industry has done,” she said, “we would not have found ourselves in the quagmire in which we found ourselves in the last few years.” — WP-Bloomberg