Gainful Employment: The Saga Continues

Gainful Employment Rule

The Gainful Employment Rule is back in the headlines, at least within the higher education sphere. According to a fact sheet provided by the Institute for College Access & Success (ICAS), the current Higher Education Act requires that all career education programs receiving federal student aid — many of which are for-profit institutions —  “prepare students for gainful employment in a recognized occupation.” 

Watching all the changes connected to this Rule has been akin to watching a tennis match over the past six years, and it looks like there’s more to come. 

Obama Enacts Gainful Employment Rule

In 2015, the Obama Administration enacted the Gainful Employment Rule to protect unsuspecting students from unscrupulous for-profit predatory institutions. 

Needless to say, for-profit institutions hated the Gainful Employment Rule. Why? Because they could no longer rake in huge sums of tuition money, much of which came directly from the federal government, without accountability. 

In other words, they could no longer enroll unsuspecting students, issue a diploma that often wasn’t worth the paper it was written on, and leave bewildered graduates out in the cold and unable to find work. To make matters worse, these graduates were then saddled with tens of thousands of dollars in student loan debt. 

Data generated from the Education Department and crunched by the ICAS confirm that more than 350,000 students who graduated between 2010 and 2012 fell prey to predatory, low-quality for-profit institutions. These institutions could be categorized as the “bottom of the barrel” in terms of academic quality. They were dangerously close to losing their accreditation, meaning they could no longer qualify to receive federal financial aid money.  

Just how much taxpayer money did those for-profits rake in from those unsuspecting graduates who had worked so hard to make a better life for themselves and their families? Nearly $7.5 billion. The result was 350,000 men and women who found themselves strapped down in student loan debt and unable to find work. These individuals were often first-generation college students and people of color. 

Keep in mind that these figures are only for program completers (graduates). The data would be far higher if we included those who began programs and then for whatever reason had to drop out. 

New Administration, New Policy on Gainful Employment

The for-profit world was ecstatic when Donald Trump appointed Betsy DeVos as Education Secretary. Because of her background in the for-profit education business, they already viewed her as a friend. It took very little lobbying to convince her that higher education institutions shouldn’t be held accountable for their graduates’ success. 

As a result, in 2019 the Trump Administration rescinded the Gainful Employment Rule and immediately allowed schools to stop complying. It’s now as if the rule had never existed. In fact, when running a search for Gainful Employment here’s a screenshot of what you will currently find on the Education Department website: 

 

Gainful E

 

As a result, predatory for-profits have been allowed to play in the sandbox unfettered for two years without any gainful employment accountability. 

To sweeten the deal even more, the Trump Administration’s Education Department also rolled back another Obama-era decision to shut down the Accrediting Council for Independent Colleges and Schools (ACICS). This particular accrediting body caters to for-profit predators who can’t earn accreditation from other bodies. Their efforts are mostly rubber-stamped and institutions aren’t held accountable for outcomes. I’ve written previously about ACICS and the institutions it has granted accreditation in ACICS: It’s Time to Pull the Plug and The Dominoes That Didn’t Have to Fall: Vatterott College, the ECA, and Others Like Them

Rescinding the Gainful Employment Rule and ACICS went hand-in-glove. 

 

Another New Administration, Another New Policy 

According to reporting in the Chronicle of Higher Education, the Biden Administration will likely take steps to reverse the damage caused by the rescission of the Gainful Employment Rule, but it won’t happen overnight. 

The process will require a lengthy rule-making process and if approved, won’t take effect until at least mid-2022. 

That gives the predatory for-profit world enough time to mount a defense through highly-paid lobbyists. Their efforts can sway public opinion and lawmakers’ minds.

If reinstating the Gainful Employment Rule was as easy as it was to rescind it, we could protect the lives of hundreds of thousands of victimized students.  We could also save billions of taxpayer dollars that continue to fatten the bank accounts of for-profit presidents. 

###

 

About the Author: Dr. Roberta Ross-Fisher has expertise in higher education quality assurance, educator preparation, and competency-based education. A former public school teacher and college administrator, Roberta is now an educational consultant specializing in the Council for the Accreditation of Educator Preparation (CAEP). 

Twitter: @RRossFisher

Email: globaleducationalconsulting@gmail.com 

 

Top Graphic Credit: princess on Unsplash

 

Unforced Errors Could Derail For-Profit Deal

For-Profit

Updated May 5, 2021: The Higher Learning Commission removed Walden’s governmental investigation designation from their website. The University and Laureate are likely breathing a big sigh of relief because of this decision, but they still have a long way to go before this is put behind them.

 

A series of alleged unscrupulous practices at one institution could end up derailing three for-profit companies within the higher education sector. 

Students, faculty, and investors in Walden University, its parent company Laureate Education, and potential buyer Adtalem Global Education could all be negatively impacted as a result of ongoing governmental regulatory investigations brought about by allegations that Walden was less than honest about one of its programs. 

 

Cash-Strapped For-Profit Laureate Education

Apparently, Laureate has been bleeding cash for quite some time and has been strategically trying to quietly sell off low-hanging fruit that weren’t money makers. According to its 2020 3rd Quarter SEC report, they ceased operations in Europe, Central America, Asia, and Saudia Arabia back in 2017-2018. 

Those divestitures didn’t make a big enough impact on their debt load so they started looking around to see what else they could sell. In 2020, they found buyers for their operations in Chile, Brazil, Australia, and New Zealand. The company briefly considered operating in Chile as a non-profit but that idea was nixed due to a changing political and regulatory climate. 

As a result of these sell-offs, only Mexico and Peru currently serve as Laureate’s principal foreign markets. 

 

COVID-19’s Not the Cause for Laureate’s Financial Woes

In its SEC report, Laureate wrote about the global impact COVID-19 has had on higher education operations, both domestically and around the world. While that’s certainly true, Laureate’s financial woes can’t be blamed on COVID because they started long before the virus reared its ugly head. The company admitted as much, but tried to make the argument that the pandemic could potentially further impair its future financial health if its ability to enroll students, raise tuition, and collect student debt was hampered. 

Every higher education institution in the world could make that statement. 

Selling off operations in foreign countries helped Laureate’s debt load, but not significantly. The sales from Brazil, New Zealand, Australia, and others only brought in a few hundred thousand dollars apiece. Laureate’s in need of some serious cash. 

 

Walden University: A Potential Game Changer for Laureate’s Bank Account

In a purchase finalized back in 2004, Laureate Education owns Walden University, based in Minneapolis. Walden has operated within the higher education space for quite some time. The institution has about 50,000 students and has generally held a good reputation. 

A significant part of Walden’s success can be attributed to the fact that it has been regionally accredited by the Higher Learning Commission since 1990. Many of their programs also hold highly coveted specialized accreditation: 

According to its SEC report, Laureate has a buyer for Walden. It plans to seal the deal by the end of 2021. 

 

Adtalem Global Education

The potential buyer is Adtalem Global Education, which used to be known as the DeVry Education Group until 2017. It turns out that the company’s name change came about after DeVry University agreed to pay $100 million to settle a Federal Trade Commission lawsuit alleging it misled tens of thousands of students about their post-graduation job and income prospects, according to the Chicago Tribune.

According to its website, Adtalem currently owns and operates eight institutions and companies and has a presence in 209 territories and countries. 

Adtalem’s primary focus seems to be strictly on the nursing programs. According to a press release, the company’s goal after acquiring Walden is to become number one for total undergraduate and graduate nursing enrollment in the U.S. with 90,000 students. 

In order to achieve this lofty goal, Adtalem plans to lay down a hefty $1.5 billion for the University. In cash. What will happen to the rest of Walden University’s academic programs that lie outside the healthcare professions remains unknown. 

 

Giant Flies in the For-Profit Ointment

The deal between Laureate and Adtalem isn’t sealed just yet. On September 11, 2020, the two companies entered into a sale agreement. However, just three days later on September 14, 2020 the Civil Division of the US Department of Justice notified Walden the University of its investigation.

One month after that, the Higher Learning Commission (HLC) notified Walden they were planning to publish a public “Governmental Investigation” designation to the University on its website due to the DOJ inquiry.  In a desperate move, Laureate filed a lawsuit against the HLC to force them to remove the public designation. The DOJ decided not to act and sent it back, according to a US District Court document released on April 23. 

In addition, Higher Ed Dive reports that there are allegations Walden made misrepresentations about its Master of Science in Nursing program to the Commission on Collegiate Nursing Education (CCNE), and that it falsely advertised aspects of the degree to students, including the availability of clinical site placements required to complete the program. 

In other words, Walden University and Laureate Education are in hot water. 

Even if all these allegations are disproved this sale may still not go through. It would then have to pass through a series of regulatory hoops. Any one of them could significantly delay or derail the transaction.

One major hurdle is getting the deal approved by the HLC. That accreditor must approve the university’s substantive change application for Adtalem to take ownership. This won’t be easy given the circumstances. 

It turns out that these alleged unforced errors could potentially derail this for-profit deal within the higher education sector. Laureate Education could see its financial position weaken even further if it’s not able to make the $1.5 billion sale. Adtalem’s strategic goal of becoming the biggest dog in the park for healthcare enrollments could go up in smoke. And perhaps worst of all, Walden University could lose something that money cannot buy: Its good name and reputation. 

###

 

About the Author: Dr. Roberta Ross-Fisher has expertise in higher education quality assurance, educator preparation, and competency-based education. A former public school teacher and college administrator, Roberta is now an educational consultant specializing in the Council for the Accreditation of Educator Preparation (CAEP). 

Twitter: @RRossFisher

Email: globaleducationalconsulting@gmail.com 

 

Top Graphic Credit:  Vladimir Solomyani on Unsplash