Category Archives: Higher.Education

In a bid to ease student debt, California considers a role in helping refinance private loans

Source: Melanie Mason, Los Angeles Times, April 18, 2017
 
State treasurer and gubernatorial hopeful John Chiang is wading into the increasingly high-profile debate over college affordability with a new push for California to play a role in alleviating the burden of high-interest private student loans.  Chiang is sponsoring legislation that would create a $25-million fund that would offer a degree of protection to student loan providers. With the state assuming some of the risk, the measure’s proponents say financial institutions will be more likely to offer lower interest rates to those carrying student debt. … The proposal, which is being carried in the Legislature by Sen. Ben Allen (D-Santa Monica), is among a swell of measures introduced in the Legislature this year aimed at tackling the high cost of college. Allen and Chiang will unveil the legislation at a Capitol news conference Tuesday. …

City Colleges moving Lakeview Learning Center after $7 million sale

Source: Gregory Pratt, Chicago Tribune, April 6, 2017

City Colleges of Chicago board members Thursday unanimously authorized selling the property housing the Lakeview Learning Center for $7 million. …
City Colleges is selling the Lakeview property to BlitzLake Partners, a private real estate acquisition and development firm, a move that school officials said was fiscally responsible at a time of state budget cuts. The college system has not received $70 million it had expected from the state during the past two years during the historic budget impasse in Springfield that has left higher education with only sporadic funding. … But the move has generated controversy as the Lakeview Learning Center has a long history in the area. … Four people urged trustees at Thursday’s board meeting not to sell the property, including Carlos Aulet, who teaches English as a second language at Truman College and also is vice president of a local chapter of the American Federation of State, County and Municipal Employees.  In an interview, Aulet said the Lakeview center “came from the community (and) it belongs to the community.”  “There’s no reason for the sale other than that property values, ever since the Cubs won, have soared there, and somebody smells money,” Aulet said.  George Roumbanis, the union chapter’s president, told the Tribune he’s concerned that students won’t transfer to Truman from the Lakeview campus. …

To Ease The Student Debt Crisis, Hold Colleges Responsible

Source: Doug Webber, FiveThirtyEight, April 6, 2017
 
… In recent years, the public debate over student debt has often focused on the roles of the students who are borrowing the money and the government policies that encourage that borrowing. But there is also another key element of the equation: the colleges themselves. Colleges and universities benefit from the federal student debt system, which lets far more students afford tuition than otherwise could. But they shoulder none of the financial risk that comes with that debt; they get paid just as much regardless of whether students pay off their loans on time.  In the most extreme examples, these misaligned incentives have led to outright fraud and other bad behavior by some schools. Corinthian Colleges, one of the biggest players in for-profit higher education, shut down in 2015 amid allegations it had misled students and the government about its students’ graduation rates and employment prospects. Another big, for-profit college, ITT Technical Institute, closed its doors last year after similar allegations. The real issue, though, isn’t outright fraud — it’s that colleges are partially insulated from basic market forces, and they behave accordingly. They have financial incentives to enroll as many students as possible, and little incentive — or at least, little direct financial incentive — to ensure that those students will graduate on time and find jobs that pay well enough to repay their loans. The issue is particularly acute at less selective institutions including, but not limited to, for-profit colleges. …

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For-Profit Schools: Trump Delays Enforcing New Rules, Lifting Shares
Source: Josh Mitchell and Gunjan Banerji, Wall Street Journal, March 12, 2017
 
It isn’t exactly 2006 again, but for-profit colleges are riding high on Wall Street.  Stocks in the industry, some left for dead five months ago, have climbed rapidly since November as investors cheer President Donald Trump’s talk of easing regulations. Last week, for-profit schools got an inkling he might deliver on the promise when the Education Department announced it would delay enforcing rules drafted under the Obama administration.  Those rules, known as “gainful employment,” threatened to shut down hundreds of for-profit campuses in the next two years due to high debt levels among former students. …

For-profit colleges may lose access to federal student aid
Source: Kimberlee Payton-Jones, American School and University, March 18, 2014

In response to what appears to be a growing national concern, the Obama Administration announced new steps to force career and for-profit colleges to better prepare students for the work force or risk access to federal student aid, according to a press release from the Department of Education.

“The proposed regulations address growing concerns about unaffordable levels of loan debt for students enrolled in these programs by targeting the lowest-performing programs, while shining a light on best practices and giving all programs an opportunity to improve,” Department of Education Secretary Arne Duncan said in the press release.

The regulations seem to be directed at for-profit colleges, which have a higher rate of student loan default than do public institutions. “Students at for-profit colleges represent only about 13 percent of the total higher education population, but about 31 percent of all student loans and nearly half of all loan defaults,” the release said. “In the most recent data, about 22 percent of student borrowers at for-profit colleges defaulted on their loans within three years, compared to 13 percent of borrowers at public colleges.”

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Ohio State plans to privatize energy with largest investment in university history

Source: Owen Daugherty and Summer Cartwright, The Lantern, March 30, 2017
 
Ohio State has proposed a plan to receive its largest investment in the university’s history by selling its energy to the highest bidder. In accepting the unprecedented proposal, OSU will move forward in a public-private partnership with ENGIE, a French global energy producer and operator, who would control the energy used on campus for the next 50 years. The agreement, which is the first of its stature, includes the largest upfront payment — to the tune of $1.015 billion — between an American university and a global energy partner, OSU officials said. University officials said they ultimately chose the proposal from ENGIE-Axium because it offered the largest upfront payment of the three competitors, in turn committing the most money to the University’s endowment. This continues the trend of OSU privatizing its resources, which began with its CampusParc deal in 2012. The 50-year, $483 million deal was also the largest of its kind. …

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Ohio State CFO will recuse himself from decision in energy privatization plan
Source: Tom Knox, Columbus Business First, March 9, 2017

The chief financial officer at Ohio State University will recuse himself from deciding who will privatize the university’s energy operations. Geoff Chatas will help analyze the financial aspects of the deal but won’t know who the final candidates are – they’ll be masked to avoid the appearance of conflict of interest, said Ohio State President Michael Drake. … The CFO won’t have a say in who will run the university’s energy operations for 50 years because of a choice he made in 2015 when he accepted a job at the parent company of CampusParc, which in 2012 had negotiated a deal with university officials, including Chatas, to privatize OSU’s parking operations. The move raised questions of quid pro quo, which Chatas vehemently denied, but he soon reversed course and stayed at the university. … Ohio State expects to make a choice on energy privatization before the end of the school year. It’s a unique arrangement for a public university: a group of companies would for 50 years operate utility assets that make Ohio State run, including natural gas and chilled and heated water facilities. The winning bidder would have to meet sustainability goals sought by Ohio State. …

OSU moving toward privatizing its power system
Source: Laura A. Bischoff, Dayton Daily News, February 11, 2017

Ohio State University says it is taking the next step toward becoming the largest institution nationwide to hire private companies to manage its energy systems for decades to come. OSU Provost Bruce McPheron gave notice to staff and students on Thursday that the university will formally ask finalists to submit proposals for the massive project. The finalists in the running have not been disclosed. Ohio State administrators will determine by the end of the current semester whether to ask trustees to pull the trigger on it. The university is weighing whether to hire private contractors to take control of critical assets: the utility system that heats, cools and powers more than 400 buildings on main campus. OSU would receive an undetermined amoung of upfront cash and then agree to buy its energy from the vendor. The contractor would be responsible for making energy efficiency upgrades to cut OSU consumption by 25 percent within a decade. …

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SRC hires teacher-prep program over protests

Source: Kristen A. Graham, Philly.Com, March 16, 2017

Over protests from the public and concerns from one of its members, the School Reform Commission awarded a contract Thursday to prepare 20 new teachers to work in the Philadelphia School District. The contract amount is relatively small for a district with a multibillion-dollar budget: $150,000 for one year of work. But the approval was controversial because of the vendor: Relay Graduate School of Education, a relatively new teacher-preparation program founded by three charter-school networks. … It submitted an application to the Pennsylvania Department of Education, but failed to gain approval to offer degrees in Pennsylvania. Aspiring teachers will essentially be in a two-year Relay “residency” program, working with a veteran Philadelphia educator their first year and in their own classroom the second year. If they complete the program, they would get a master’s degree from a Relay program in another state. …

Custodians, maintenance workers believe CMU admins could privatize workforce in the name of budget adjustments

Source: Ben Solis, Central Michigan Life, March 26, 2017

Some custodians and maintenance staff employees have concerns about layoffs and outsourcing, according to the president and other members of the union that represents them.  As Central Michigan University administrators grapple with a two-year $20 million budget deficit, service, maintenance and custodial employees on campus believe both situations are likely, said Karen Witer, president of AFSCME Local #1568 and a custodian at CMU. … AFSCME’s fear of staff cuts is compounded by its upcoming negotiation of a new service contract. The union also believes CMU’s history with privatization is a sign that its workforce could be outsourced as well.  AFSCME and the university are expected to begin negotiations sometime after spring courses end in May.  When AFSCME members seek higher wages for employees making $10.08 an hour, Witer said her group is commonly confronted with talk of privatization. … CMU outsources some of its custodial work to Romanow Building Services, a Saginaw-based company, said Barrie Wilkes, vice president of Finance and Administrative Services. The university also privatized its dining services by contracting with Aramark in the mid 1990s. … Witer believes Romanow could potentially take over all custodial services at the university if administrators think the company is more affordable and more efficient. …

Higher Ed ‘Do Not Resuscitate’ Orders

Source: Matthew A. Bruckner, Howard Law Research Paper No. 17-1, February 22, 2017

Abstract:
Concerned about exploitative profiteers opening fly-by-night colleges to defraud students and then seeking respite in bankruptcy court, Congress chose to effectively preclude all institutions of higher education from reorganizing in bankruptcy court. This Article contributes to the literature on higher education bankruptcies by explaining why Congress’ solution could never achieve its fraud-prevention goal. It also compares the bankruptcy treatment of healthcare enterprises to that of higher education enterprises to support this claim.

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Foundation to Buy Education Management Corp., Convert Campuses Into Nonprofits

Source: Andy Thomason, The Chronicle of Higher Education, March 3, 2017

The Dream Center Foundation, a charitable organization, will acquire the Education Management Corporation and convert its remaining campuses from for-profit status to nonprofit, according to a news release from the foundation. The Obama administration’s heightened regulation of for-profit colleges was not kind to the once-sprawling for-profit educator known as EDMC. In 2015 the corporation reached a $95.5-million settlement with the federal government over claims that it had pressured and misled prospective students. The corporation has closed many of its campuses in recent years. According to the foundation’s news release, EDMC’s Art Institutes, Argosy University, and South University will become nonprofit entities. …

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For-Profit College Operator EDMC Will Forgive Student Loan
Source: Stephanie Saul, New York Times, November 16, 2015

The for-profit college operator Education Management Corporation will forgive loans to about 80,000 former students nationwide as part of an agreement with state attorneys general resulting from a multiyear investigation of the company’s aggressive recruitment practices. FROM OUR ADVERTISERS The $102.8 million loan forgiveness program was announced on Monday in Washington along with a separate $95.5 million civil settlement with the Department of Justice, the result of a whistle-blower lawsuit accusing the company of using boiler-room tactics to enroll students who had little chance of succeeding in college. … Under the settlement with the states, students nationwide who were enrolled for 45 days or fewer and who had transferred fewer than 24 credit hours from another university will see their private loans automatically forgiven by the company, said Nathan Blake, an assistant attorney general in Iowa, one of the lead states involved in negotiations with the company. The average student eligible for the program will receive about $1,370 in loan forgiveness. … The company has 110 online and brick-and-mortar locations in 32 states and about 100,000 students. Its schools operate under the names the Art Institute, Argosy University, Brown Mackie College and South University.

EDMC to close 15 Art Institute locations
Source: Justine Coyne, Pittsburgh Business Times, May 6, 2015

Education Management Corp. is closing 15 of its Art Institute campuses, a spokesman for the company confirmed Wednesday. The decision will impact about 200 employees immediately, but will not have an impact on employment at EDMC’s Pittsburgh headquarters, according to EDMC spokesman Chris Hardman…. A total of 5,432 students are enrolled among the campuses that are slated to close, according to a list provided by EDMC. The company will undergo a teach out process at each location, meaning each campus will continue to offer courses, student services and placement assistance until the last student has graduated, according to Hardman. Campuses were notified of the closures Wednesday. …. Concerns have been raised that some of the Art Institute’s programs will not meet pending federal gainful employment regulations, which are expected to go into effect July 1. To meet these gainful employment standards, a program will have to show that the estimated annual loan payment of a typical graduate does not exceed 20 percent of his or her discretionary income, or 8 percent of total earnings. ….

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177 Private Colleges Fail Education Dept.’s Financial-Responsibility Test

Source: Chris Quintana and Joshua Hatch, The Chronicle of Higher Education, March 8, 2017

According to a Chronicle analysis of data released on Tuesday, 177 private colleges that grant degrees failed a U.S. Education Department test for financial responsibility in the 2014-15 academic year. That’s 18 more than the previous year. Of the institutions that failed, 112 are nonprofit, and the remaining 65 are for-profit. In the previous year, 93 of the 159 failing institutions were nonprofit. …

Murray State Board of Regents Discuss Budget, Legislation, More in February Meeting

Source: Matt Markgraf, WKMS, February 25, 2017

… The Board considered options to reform or outsource healthcare and mental health services for students, faculty and staff, based on recommendations from consulting group Hodgkins Beckley on Friday. Options include increasing the budget for services provided, outsourcing services to a contracted health provider as Western Kentucky University has done, shifting costs out of the budget by adding a mandatory fee of around $150 dollars per student or implementing insurance and Medicaid. … MSU health services currently cost around $925,000 a year: $529,000 for health care and $396,000 for counseling. The board weighed pros and cons of six options as presented. … The third option outsources health services but keeps counseling services on campus. Urgent care clinics would be contracted to come on campus to operate services. Students would pay for the visit or use insurance or Medicaid. Employees could use insurance. While this option would significantly reduce costs, there would still be some cost the university attached. Western Kentucky University has a model like this one. The fourth option outsources services, provides funding for short term counseling, health services would be based on insurance. This is different than the third as it’s more insurance-based. … Regent Chair Steve Williams said the presentation was “food for thought” and offered a starting point for further discussion. …