Cloud over for-profits persists as DeVos moves to ease rules
WASHINGTON — For-profit colleges are facing complaints, lawsuits and ongoing government scrutiny as Education Secretary Betsy DeVos engineers a seismic shift in the regulatory landscape that stands to benefit the multibillion-dollar industry. DeVos’ actions amount to an about-face from the Obama administration’s push to clamp down on the industry and forgive student debt for those who were charged top dollar but left with worthless degrees.
In an ongoing lawsuit against Ashford University, California’s attorney general accuses the online school of peddling “false promises and faulty information” to lure students who were eligible for federal financial aid, the school’s primary source of revenue. Ashford denies the accusations. The lawsuit’s allegations are strikingly familiar to those that plagued now-defunct for-profit chains including Corinthian Colleges and ITT Technical Institute, spurring the Obama administration to craft sweeping rules to police the industry. And they’re being echoed in other ongoing complaints against several of the biggest for-profit colleges.
Education Department documents obtained by The Associated Press through an openrecords request show students filed nearly 24,000 federal fraud complaints between President Donald Trump’s Jan. 20, 2017, inauguration and April 30 this year, almost entirely against for-profit colleges. More than 3,600 were lodged against DeVry University, while the University of Phoenix drew 1,100.
Separately, the Federal Trade Commission is investigating the University of Phoenix chain for possible deceptive or unfair business practices, a probe that began under the Obama administration.
And the Department of Veterans Affairs is in an extraordinary dispute with Ashford over the school’s eligibility to receive federal GI Bill funding, which many military veterans use to pay tuition. The outcome could have major implications for Ashford if it’s cut off from that funding.
The regulatory transformation that DeVos is pushing could be a lifeline for many for-profit schools already wrestling with image problems, sliding enrollments and growing competition, even in online education.
Schools such as the nonprofit Western Governors University, for example, have seen enrollment soar as they offer online programs with tuition as low as $6,500 a year. Meanwhile, at DeVry, which charges more than twice as much, enrollment has fallen by nearly 20 percent in the last year, according to its federal Securities and Exchange Commission filings.
Among most four-year, for-profit colleges, enrollment fell this spring by nearly 7 percent from the year before, to about 925,500 , according to the National Student Clearinghouse Research Center. It continued a downward slide that began in 2010 as the U.S. economy began to improve, steering adult students back to the workplace.
Most for-profit colleges opposed the Obama administration’s industry crackdown but have eased up on lobbying since Trump brought his business-friendly approach to the White House. Steve Gunderson, president and CEO of Career Education Colleges and Universities, the industry’s largest trade group, said for-profits have generally received a warm reception from Trump officials.
“That’s been a very different attitude toward us,” he said. “During the Obama administration, they declared war on our sector. We were fighting for survival.”