Developers working with West Virginia University allegedly failed to pay nearly $7.2 million dollars to the construction company that built University Place, according to a civil suit filed Wednesday in Monongalia County Circuit Court. Among other things, Turner Construction Company alleges that West Virginia Campus Housing, the company responsible for the public private partnership of the development, breached its contract. … WVU entered into a public-private partnership in 2012 with Paradigm Development Group to construct UPlace after the University’s Board of Governors approved a 5-acre land acquisition, according to a previous report by The Daily Athenaeum. Paradigm is WVCH’s parent company, according to the suit. … Once construction was underway, WVCH allegedly failed to make full payments to Turner Construction. Still, WVCH subleased the premises to WVU. … In July 2014, UPlace faced harsh criticism after it notified future residents that the complex would not be ready in time for its mid-August move-in date as originally promised. UPlace cited delays in construction after poor winter weather. Residents were forced into alternative living arrangements for most of the fall 2014 semester until UPlace opened in late November that year.
A Monday report from the Office of the State Auditor lists several findings related to overbilling and invoices lacking proper documentation in regard to a food service provider’s contract with San Juan College. … Litke said the review found that invoices provided by Sodexo were listed by category but did not provide details or supporting documentation. He said Sodexo now provides additional documentation with each monthly invoice. Litke said he found the more than $16,000 in charges that lacked documentation a little disconcerting. But Sodexo has provided the missing documentation to the college since the report was issued, he said. One of the items listed in the finding was $19,826 Sodexo billed the college in February 2014 for relocation costs for the company’s general manager to move from Wyoming to New Mexico. According to the report, Sodexo did not seek the required approval of the college before approving the request.
The University of Akron is hiring Aramark to take over its dining services. The school, which has run its own food service since it was founded, announced the move this week. … The contract with Aramark is still being finalized, a UA spokesman said Tuesday, and wasn’t available for review. It also wasn’t immediately clear how many companies bid for the work or what would happen to the university employees. The school employed about 80 full- and part-time food, catering and retail workers, not including students. … Aramark runs dining services at 2,200 colleges, universities and school districts — in addition to overseeing food operations at stadiums, arenas, prisons and businesses.
Chartwells will be just one of many private contract firms operating on campus this coming year. The university uses at least 45 private contract firms to employ custodians, security officers, parking attendants and food service workers, according to a report published Aug. 7 by American Federation of State, County and Municipal Employees Local 3299, a union that represents campus workers employed directly by the University of California and advocates on behalf of campus contract workers. The report alleged that university contract workers are paid as much as 53 percent less than workers employed directly by the UC system in similar positions. … UC President Janet Napolitano recently announced a plan to raise the minimum wage to $15 in 2017 for UC workers, including contract workers. But some workers and students have pointed out that the change does not go so far as to guarantee contract workers’ benefits and pay are on par with those of union workers performing equivalent jobs. Issues with contract workers on campus were brought up to the ASUC Student Union board during its July 22 meeting, when the Student Labor Committee organized campus contract workers employed by ABM to speak against the Chartwells contract. At the meeting, one worker alleged she made $8 an hour less than a UC worker in the same job with the same amount of experience, while another worker said he didn’t think he would be able to send his children to college on his current salary.
The University of New Orleans plans to outsource its building services work this fall, a cost-cutting measure that the cash-strapped Lakefront school expects will save more than $1 million in five years at the expense of nearly 80 workers whose jobs are thrown into question. … UNO spokesman Adam Norris said Wednesday that affected employees were notified about the possible change two weeks ago. The Building Services Department includes janitorial and grounds employees. Norris said 66 classified employees, those covered by Civil Service, and 10 unclassified employees will be affected. … UNO President Peter Fos eventually recommended eliminating six academic programs, one department and 22 faculty and staff positions in a push to save $1 million this academic year and $2.8 million next year. Since taking the helm in 2012, Fos has eliminated at least 140 positions.
…In a recent paper, Latika Chaudhary and I assess the earnings gains to associate’s degree programs in for-profit colleges. After carefully controlling for student background characteristics (including unobservable characteristics like ability and motivation), we find that for-profit students who work both before and after attending experience a bump in earnings around four percent per year of education—or 10 percent total (since a typical associate’s degree take 2.6 years to complete)—relative to high school graduates who do not attend college. The annual earnings gain increases to seven percent when we add in the slightly higher probability of being employed post-education. We find suggestive evidence that students who drop out of for-profit programs see virtually no return and those who complete their associate’s degrees have higher returns—around eight percent per year. Still, these numbers are quite a bit smaller than the returns found in other sectors (upwards of 12 percent per year for community college associate’s degree students) and suggest that many for-profit students would fare better in public community colleges, where earnings gains may be higher and tuition is less than a quarter of the price.
The labor market returns to a for-profit college education
Source: Stephanie Riegg Cellini and Latika Chaudhary, Economics of Education Review, Volume 43, December 2014, Pages 125–140
Abstract: A lengthy literature estimating the returns to education has largely ignored the for-profit sector. In this paper, we estimate the earnings gains to for-profit college attendance using restricted-access data from the 1997 National Longitudinal Survey of Youth (NLSY97). Using an individual fixed effects estimation strategy that allows us to control for time-invariant unobservable characteristics of students, we find that students who enroll in associate’s degree programs in for-profit colleges experience earnings gains of about 10% relative to high school graduates with no college degree, conditional on employment. Since associate’s degree students attend for an average of 2.6 years, this translates to a 4% return per year of education in a for-profit college, slightly lower than estimates of returns for other sectors found in the literature.
Betrayers of the Dream
Source: Mark Huelsman, The American Prospect, July 12, 2015
On April 26, an institution of higher education that as recently as 2010 employed more than 6,000 faculty members and another 4,000 in support staff announced that it would close its doors. Corinthian Colleges had enrolled more students than the Ohio State University and the University of Texas at Austin combined. For the giant for-profit chain founded just 20 years ago, the fall from grace was aided by lawsuits from several state attorneys general and the federal government, and investigations by the SEC. These found a broad pattern of deception in recruiting students, bogus reporting of job placement data, and a strategy of combining high tuitions and debt levels with a substandard educational product. … In the publicity about the government’s belated crackdown on the for-profit education industry, one key fact has not gotten sufficient attention: The students targeted and affected most by fraudulent operators are disproportionately black. The story of predatory for-profit colleges is not unlike that of subprime lending or the proliferation of payday loans. Wider economic unease was used by the cynical to bring further distress to people of color. … The differences for those seeking two-year degrees are even more stark. Tuition at community colleges nationally is $3,347. At a for-profit, it’s $15,230. Average cumulative debt for black graduates at two-year for-profit programs is nearly $26,000, and 93 percent of students must borrow. At community colleges, which are often competing for the same low-income, adult, or first-generation students, far fewer students borrow and debt levels are nearly $10,000 lower. On average, a black student takes on more debt for a two-year degree at a for-profit college than a white student does for a bachelor’s degree at a public college. … A full 53 percent of student loan borrowers at four-year for-profit programs drop out, including 65 percent and 67 percent of black and Latino borrowers. Compare this to about one in five borrowers at public four-year colleges and one in three borrowers at community colleges, and you quickly begin to realize that even if for-profits could claim to offer a similar product, it’s one that comes with far greater risk.
For-Profit Colleges Encourage Huge Student Debt
Source: Steven Salzberg, Forbes, 7/12/2015
Would you pay the same tuition for a Harvard degree as for a second-rate school that you’ve never heard of? Probably not. But thanks to the federal government’s help, that’s exactly what we are all doing. It turns out that many of the biggest beneficiaries of federal loan programs for graduate schools are low quality, for-profit universities that have figured out how to turn federal largesse into nice fat profits. A new study from the Center for American Progress finds that just 20 universities account for nearly one-fifth of all grad student debt, a total $6.6 billion. What’s perhaps most surprising is who those universities are: 10 of the 20 are for-profit schools, including two foreign schools….The degrees themselves are barely worth the paper they are printed on, because the reputations of most of these schools are–well, let’s just say they aren’t good. Graduate degrees do improve your career choices, if you get them from a well-regarded institution. But when the school isn’t even ranked in the top 200, a degree isn’t going to open any doors, and it’s certainly not worth borrowing tens of thousands of dollars to get one.
Forgiving Student Debt at Corinthian Colleges and Other For-Profits
Source: New York Times, Room for Debate, May 7, 2015
The for-profit Corinthian Colleges filed for bankruptcy after investigations into possible recruiting fraud led the Department of Education to suspend its access to federal student aid. Thousands of former students are asking the government to forgive their loans, arguing that the school used predatory practices to persuade them to borrow money. Other for-profit colleges have been accused of similar practices.
Loan relief for students could cost taxpayers millions of dollars, and establish a precedent for other students unhappy with their college degree. Who deserves debt forgiveness when for-profit colleges close or are accused of fraud?
Insufficient Protections at the Department of Education
Ben Miller, New America Foundation
Students who borrow loans from the federal government have a reasonable expectation of protection.
Forgiving Loans Would Be a Mistake
Richard Vedder, Center for College Affordability and Productivity
Loan forgiveness would set a precedent and encourage excessive borrowing.
For-Profit College Student Debt Should Be Forgiven
Osamudia R. James, law professor
We cannot expect these students — who are mostly veterans, minority and low-income — to carry their debt burden back to already economically destabilized communities.
Align the Incentives of Students and Schools
Andrew Kelly, American Enterprise Institute
If an institution’s students cannot pay back their loans, the school should be on the hook to pay back a portion of the loan balance.
The Government Should Actively Notify Borrowers
Robyn Smith, National Consumer Law Center
Thousands of low-income borrowers whose debts should be forgiven instead struggle financially because of the government’s draconian powers to collect student loan debts.
Kilgore College trustees voted unanimously Monday to move forward with outsourcing of the maintenance department, bringing the custodial, maintenance and groundskeeping services under one company’s umbrella. The move could cost the college as much as 20 percent more than it has been spending on those services. … One of the “driving factors” of the decision was the state had “offloaded 100 percent of the benefits costs for that classification of employee on to the college. There was no subsidy,” KC President Bill Holda explained to the packed second floor of the Stewart McLaurin Administration Building. About the time the cost of benefits began to go up, he said, the state’s share of those costs for other employees went down. … Holda “guesstimated” the college put in roughly $2.1 million per year for grounds, custodial and maintenance services. During interviews with the different companies college officials found the school will have to spend between $300,000 and $400,000 more per year to make the place “appropriate.” …
The University of Kentucky Board of Trustees has approved the next phase of the university’s on-campus housing revitalization that will bring the total number of beds delivered or currently under development to 6,504…The largest on-campus housing development in American public higher education to date, the University of Kentucky’s revitalization began in late 2011 when the UK Board of Trustees saw an opportunity for investment in student success by enhancing the undergraduate experience with new living-learning communities.
University of Kentucky set to approve $74 million dorm project for upperclassmen
Source: Linda Blackford, Lexington Herald-Leader, June 9, 2015
University of Kentucky trustees are set to approve the fifth phase of new, privately funded student housing on campus, this time for upperclassmen and graduate students…The project will be funded and built by EdR, a Memphis-based campus housing company that is responsible for $422.3 million in construction aimed at replacing and updating UK’s aging housing stock…The terms between EdR and UK for University Flats are the same as those for the other 12 residence halls that have been built or are under construction by EdR. The company will have a 75-year lease and collect rent, paying back some of it to UK after meeting profit thresholds. For example, EdR receives a 2 percent management fee for operating the buildings. After EdR receives a 9 percent rate of return from rents, UK receives 25 percent of the net income…But because UK owns the building, EdR does not have to pay property taxes under a special agreement set up by the state revenue department.
Campus seeks to fund new dorms through public-private partnerships
Source: Jacob Blair, Eastern Progress, April 29, 2015
Eastern is taking campus housing projects in a new direction by seeking a private developer to construct new space for 1,100 residents and renovate existing residence halls. Barry Poynter, vice president for finance and administration, said the university was authorized $75 million during the state’s budget session in 2014 to pursue public-private partnership (P3) lease agreements. As state lawmakers increasingly cut funding to state universities, schools like Eastern have begun looking for creative ways to fund much-needed construction projects, such as new residence halls. One option growing in popularity is public-private partnerships–meaning a private developer takes on the risk to build and manage a facility and the university pays to use it. The Grand Campus apartments are an example of this arrangement. ….The University of Kentucky is spending almost $345 million to fund the construction of 12 residence halls by 2016, according to leasing summaries between the university and Education Realty Trust (EdR), a private housing developer for colleges and universities. The project will result in room to accommodate 9,000 undergraduate students in Lexington. The lease summaries list the cost of the new buildings at approximately $345 million, though EdR’s website said the agreement is a $500 million deal. The lease agreements call for EdR to construct the buildings, finance the building to develop and manage the buildings. The University of Kentucky pays EdR a management fee each year, but the university receives a percentage of the gross revenue. The university could receive a quarter of the net income if EdR performs well financially that year….
….When it comes to inflicting debt on low-income students, among the worst offenders are the for-profit “universities,” to which Mettler devotes an excoriating chapter. In the last several decades these institutions have seen explosive growth. With the contraction of state budgets and the changing demographics of college students—many today are adult part-time students, often with families, seeking skills and credentials with which they hope to get or hold a job—the for-profit institutions, which specialize in online and night classes, proliferated and expanded. In 1990 there were 343 for-profit colleges. By 2009 there were 1,199, accounting for nearly 10 percent of all college students, many of them vulnerable and needy—military veterans, single parents, dropouts from traditional institutions who are un- or underemployed.
Mettler tells hair-raising stories about telemarketers who prey on prospective students with misleading promises, and are then rewarded with bonuses or free vacations if they reach enrollment quotas. She describes “an auto repair school in Ohio that was actually run out of a fruit stand” and a beautician school that tells students to expect annual earnings up to $250,000. These are small operations, but the largest for-profits such as the University of Phoenix, whose enrollment peaked at nearly 600,000 in 2010, are several times the size of the largest public universities such as Arizona State or Ohio State.
Large or small, fair or fraudulent, the for-profits have a smart business plan: keep costs down by forgoing a campus and offering courses taught by part-time employees, while pulling in maximum revenue in the form of government grants to students and government-guaranteed student loans. In 1991 Congress passed a rule requiring that in order to qualify for accreditation, a for-profit must show that at least 15 percent of its income comes from nongovernment sources, but in 1998 the rule was watered down to 10 percent. “Despite being regarded as part of the private sector,” as Mettler puts it, “the for-profits are financed almost entirely by American taxpayers.” For investors in these enterprises, it’s been a great plan. For many if not most of their students, whose debt and default rates are proportionally higher than their counterparts in traditional colleges, it’s been a less happy story…..
Union representatives called on the UC Board of Regents to support a bill that would ensure that workers employed by private university contractors are compensated comparably with university employees doing similar work. At the regents’ meeting Thursday, advocates of Senate Bill 376 — including union AFSCME 3299 President Kathryn Lybarger and California Labor Federation Executive Secretary-Treasurer Art Pulaski — publicly asked UC President Janet Napolitano to support the measure.