In almost every way, the chain of universities run by the non-profit Center for Excellence in Higher Education is facing major problems.
The colleges that were formerly part of the college nonprofit empire of Carl Barneywere all dressed Probationary period by their accreditation body since 2018 due to low graduation and placement rates and due to questions about the accuracy of the information provided to the accreditation body. All but two of the chain's 15 locations are currently being closed.
The center and its colleges are examined from the Federal Office for Financial Consumer Protection, which also has filed a lawsuit on the matter. A dish in Colorado last year found the center and guilty of his leadership of consumer fraud and fined it $ 3 million.
Despite this, the colleges are still eligible to receive tens of millions of dollars in tuition grants under a temporary agreement with the US Department of Education. But the agreement could come to an end, according to experts under a presidential administration that is eager to scrutinize proprietary universities more closely. And without the flow of federal dollars, colleges could be forced to close.
The centre's colleges are part of more than 130 institutions, almost all for-profit institutions, operating under a tentative or monthly agreement with the department due to questionable operations or a proposed change of ownership a recent report from the Century Foundation. The agreements give the department extensive powers to exclude colleges from the federal student aid program, said Yan Cao, a senior fellow of the foundation and one of the authors of the report.
President Biden has said His government will seek to "prevent for-profit education programs from benefiting students," and his agents stand ready to renew several regulations that hold these institutions accountable for their graduates' income and access to federal dollars for colleges that oppose them Violating regulations would restrict these rules.
While these regulatory efforts will take years, Education Department officials could terminate tentative agreements much faster.
They're "low hanging fruit," said Amy Laitinen, director of higher education at New America, a left-wing think tank. "I would be surprised if you didn't consider things like that."
Eric S. Juhlin, Managing Director of the Center for Excellence in Higher Education, downplays his challenges. He said the colleges are "on solid financial footing" with a total of around 10,000 students enrolled, and he called probation "an instrument of the accreditation body," not a negative measure. The center is also appealing for fraud conviction, which it called a "totally wrong decision".
But Juhlin said he was concerned about the department's regulatory agenda. "It is already clear that this department is trying to reverse or repeal some of the actions taken by the previous administration," he said.
Many new members of the education department served under President Barack Obama when the agency introduced several new regulations to hold proprietary colleges accountable. These measures included what is known as the acquisition rule, which compared college graduates' earnings with their student loan debt to see if they were encumbered with unpaid debts and provided a way for borrowers to get their student loans back if their college suddenly closed or was cheated.
Former Education Minister Betsy DeVos, who served under Biden's predecessor, repealed these ruleswhich a judge had already partially crushed and was working to shield corporate colleges as part of a comprehensive higher education deregulation agenda.
Under DeVos, the department also gave Barney, the for-profit mogul, permission to convert his colleges into charitable organizations. This would enable them to earn more than 90 percent of their income from Pell Grants for low-income students on federal student loans.
Under the new education minister Miguel A. Cardona, the department has announced that it will renew the regulations of the Obama era. However, the process involved is long and will almost certainly face political setbacks and legal challenges. Even if the regulations come into force, it will be a few more years before institutions face consequences.
For this reason, the universities operating under tentative agreements are likely to be targets.
Once the colleges are granted tentative status to receive government grants, the department can revoke their access immediately, said Dan Zibel, vice president and chief counsel of the National Student Legal Defense Fund. Such a revocation will remain in place even if a college appeals the decision to the department and the courts, said Zibel, a former attorney for the agency.
For the department, revocation is a much more efficient way to enforce accountability to colleges with poor academic results, staggering finances, or violations of federal regulations. And it's a tactic that is often used under Obama.
Over the past three years of the Obama administration, the department reported that it had suspended federal aid to around 30 colleges operating under temporary arrangements – essentially a death penalty for dozens of locations that could not stay in business without the power of Federal dollar.
The list of colleges currently undergoing temporary agreements with the department includes some of the largest institutions in the for-profit sector. Walden University is currently among them examined from the Justice Department on whether it has misled nursing students about the availability of clinical internships and other issues. The owner, Laureate Education, wants to sell Walden to Adtalem Global Education Corporations, whose investors want to stop the sale. A Laureate spokesman said the company was "optimistic" that the sale would close in the second half of the year.
Another prominent nonprofit, American Intercontinental University, owned by Perdoceo Corporation, had a tentative agreement that expired in late March. In 2019 the company, formerly called Career Education Corporation, was an investigation is enclosed of all 50 attorneys general paying more than half a billion dollars for it with excessive placement rates Recruiting students.
Perdoceo has closed or consolidated multiple locations and even postponed federal dollar income to comply with federal regulations that limit the percentage of federal aid that proprietary colleges can receive an analysis from BMO Capital Markets.
The company did not respond to a request for comment.
Proponents of the proprietary college industry say the Department of Education has responsibility for overseeing government aid programs for students, but shouldn't target the for-profit sector only.
"It would be inappropriate for the department to politicize the admissions and certification process simply on the basis of an institution's tax status," said Nicholas Kent, senior vice president of political and regulatory affairs at Career Education Colleges and Universities, an association that is primarily proprietary Represents colleges.
For Cao of the Century Foundation, the bottom line is that colleges are not automatically eligible for government grants and the department has a duty to protect the people who actually receive the money.
"The idea of Title IV," she said, "was that the funds would only be available to schools to help students."