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Private Equity Investing in Education Companies Conference

June 17, 2011 By 2 Comments

ForProfitEDU would like to extend an exclusive invitation to you to attend The Capital Roundtable’s conference on Private Equity Investing in Education Companies, being held on Thursday, July 21 in New York City.

As a partner, we have the privilege to put your name on our VIP list, allowing you to register for a special rate of $995 — $400 off the standard registration price.

 

This day-long conference is being chaired by Daniel Black, Managing Partner at Wicks Group of Companies, and features 20 experts.

For registration or inquiries, just call Shaina Mardinly at 212-832-7333 ext. 0, or email her at smardinly@capitalroundtable.com.  Please be sure to mention our name.

For more details, click here:

 

http://www.capitalroundtablemail.com/masterclass/Capital-Roundtable-Private-Equity-Education-Conference-2011.html?&tag=forprofitedu
I hope to see you on July 21 for what promises to be a great day.

P.S. Since we expect this conference to attract a strong attendance, please register as soon as possible to reserve your seat.

 

 

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New Republican challenge GAO Report on For-Profit Colleges

January 3, 2011 By Leave a Comment

With the start of the new year, Republicans are taking aim at the GAO reports accuracy.  It’s clear that the report provided a jaded view fueled by partisan politics.  We all agree that the bad apples need to be either removed or reformed, but by no means should we throw the baby out with the bath water. 

Here is a link to the Chronicles article: http://chronicle.com/blogs/ticker/new-republican-leaders-take-aim-at-gao-report-on-for-profit-colleges/29330?sid=at&utm_source=at&utm_medium=en

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Debate on Gainful employment from the linkedin group on forprofit education

October 7, 2010 By 1 Comment

 The following are some snipets from the linkedin group on forprofit education:

 Here is one company that in my opinion has put their money where their mouth is. Congrats to Corinthian Colleges, Inc. (CCi) for putting on the armor and marching onto the battlefield!

We can only impact this with hard work. Thank you for the letter (I heard it was 80k, 68k of which argued against).

  I admire Corinthian for taking a stand on this discriminatory DOE Gainful Employment ruling. The rhetorical question is why is this not being applied to non-profit colleges and universities also?

The full page ad and quarter page ads that Corinthian placed in last Sunday’s New York Times (September 19, 2010) should have been paid for by a coalition of for-profit schools. But, my hat is off to Corinthian to have the courage to do what others have not done. Recommend the web-site www.mycareercounts.org to everyone, please.

 • I agree — the Corinthian ad appeared in the Seattle Times as well. The fact that seems to get lost in the wash are the tens of thousands of grads who have started successful careers outside the ‘traditional’ public and ‘not for profit’ systems. Many who could not have been or would not have been successful anywhere else.
 • Next will be the campaign from CCA…
 I certainly think that these policies would have more legs if also applied to the traditionals or “not-for-profit”. The reality is that “not-for-profit” still profits in many ways that are overlooked. Take a look at the compensation of College Presidents and coaches. Take a look at the money they get both privately and publicly and how it is spent. In times when public universities are cutting classes at the expense of their students, they still continue to raise tuition and give the Regents and presidents large pension packages.
 • I had also heard that Kaplan University had placed a similar ad. I have not found a good source to view the text of the Corinthian ad or the Kaplan ad. I would appreciate it if one of you would be able to provide a link pointing me to site providing this.
• Good point,  They also do not contribute tax dollars, something America is quite short on…

 • You need to look at trends on a global basis -and over a long term.
After 40 years in industry, I’ve noticed that a lot of people worry about where thengs are heading; but inevitably, they end up going somewhere unpredicted….and as the decades roll past, this all happens faster & faster.
I decided 10 years ago to cut loose from “government accredited education” and make our business of education much simpler…. provide the best learning experience, charge a reasonable price, take on board students and staff who are like minded, and don’t worry about the things that keep complicating the rest of the industry. This formula works. Politicians are never light on their feet….but small businesses are. Politicians are never going to kill “for profit education” ….they can try, but it is not in their nature to have any capacity to do so.


 • If you want to review nearly everything that’s appeared on this topic, go to:

http://www.intered.com/for-profit-regulation 

  •  • – some really smart people said the same thing about the student loan industry as well. Politicians are professional manipulators (starting with the campaign/election process) and socializing sectors like education IS in their nature…and companies like Sallie Mae would certainly disagree with your assessment of their “capacity”. 

    I appreciate your point of the publics and not-for-profits not being tax paying entities. So true that the for-profits “re-invest” into the country’s tax pool.

• I think the politicians are influenced heavily by the kings of the non-profit world. For-profits are starting to eat their lunch and they are afraid. They might have to tap their endowments (profits).

 •  CCA should have expresed outrage over this months ago. I have no confidence in their ability to speak forcefully for the for-profit industry.
 • I am new to this thread but I find the discussion fascinating.  to your point: how is it feasible that the non-profits are not to be held to similar standards? The criteria for inclusion, as far as I can see, is not whether you are a for-profit educational institution, but whether your students are recipients of financial aid from the Federal Government. Obviously, if I am correct in this, then the “non-profits” are clearly to be held accountable to a similar standard. So, if my kid wants to study Latin at the University of Wisconsin, is the DOE going to force the college to explain the potential gainful employment my kid is likely (NOT) to receive as a result of such an education? Are there any public educators out there reviewing this discussion? I would love to see your comments to this along with the group’s active participants.
 •  – Public educators are not overly concerned. This is a one-sided attack…always has been. The attack is designed to help the public educators by eliminating the private sector competition. Public educators know they could never survive were they held to the standards for-profit schools are held to. So they stay out of the battle as they are secure being out of the line of fire. I have YET TO HERE the DOE make a cogent argument as to why these standards only apply to the for-profit sector. Please…ask them. Maybe they will provide you with an answer.

 • I have posted the question to the Linked In White House group as well as sending an email directly to: AskArne@ed.gov. I will keep this group posted when a response is received.

• Hi, this attack is geared specifically to the for-profit sector. As far as not being held to the same standards…For-Profits have a minimum standard for their completion rates, placement rates, and student default rates to maintain our accreditation and ability for Title IV funding. They are also starting to ding us if the student waives placement because they are GAINFULLY EMPLOYED in a field other than what they studied at your institution. How is that fair? The students waives placement and the institution gets dinged on their placement rates. When was the last time you heard publics being held to these standards. BTW, how much placement assistance did your son with his Latin degree receive upon graduation??? And thank you for posting the question to Arne.
 • Have governments got so much money to spare that they have to focus on damaging for profit education; -which in turn will increase their own cost of providing education.

• They think they can redirect the Title IV money to build a community college system.

 • He is right; the administration figures it will take two years to take out the for-profits, so they’ll be “stimulating” the community colleges in the meantime to expand to accomodate the influx of students. Ahhh, more students fot THEM to abuse.

 • I will withhold further comment on the government’s capacity to do what we do…
 • Many politicians operate with the notion that the best defense is an offense – any offense, regardless of how offensive. In my opinion, this attack on for-profit education is not so much an attack on “for-profit” as it is a defense to prevent an informed constituency from asking deeper, more meaningful questions about political leadership and education. Those deeper questions might be:
1. Where is our national education agenda?
2. Why is education still considered a local issue when it is so clearly a national issue?
3. Why are we still burning billions of education dollars on local level administration in the non-profit (public) education system when that model is so clearly broken?

And on and on and on.

 • Diversity is very important.
I always found as an employer, that the best work team is one made up of people who each have a very different education.
It is wrong to assume that there is one, single, best way of educating people.
Different people learn in different ways.
Everyone has differentr priorities in their lives at different times
Diversity in education breeds innovation in graduates.
All too often though, we try to find a “single framework” and exclude everything on the fringes -that is a big mistake if you want your country to continue to develop.

Isn’t it interesting that big, diverse countries, with less “national strategies” like India and China, are growing faster than America and Europe.

 
• I have received a prompt response from the Department of Education (POSTED BELOW). It raises some of the same questions:

1. Are non-profit (besides community colleges) educational institutions held to the same standards as for-profit institutions?

2. It appears that community colleges will be evaluated on the same playing field according to the response below? Correct?

Department of Education
to me

show details Oct 1 (3 days ago)

Recently you requested personal assistance from our on-line support
center. Below is a summary of your request and our response.

If this issue is not resolved to your satisfaction, you may reopen it
within the next 14 days.

Thank you for allowing us to be of service to you.

Subject
—————————————————————
“Department on Track to Implement Gainful Employment Regulations”

Discussion Thread
—————————————————————
Response (Monica Bates) – 10/01/2010 03:44 PM
Dear Mr. XXX,

Thank you for contacting the United States Department of Education through AskArne@ed.gov.

The Department’s proposed regulations will hold programs accountable for preparing students for gainful employment and ensure program integrity in higher education.

As proposed, the graduation rate and job placement disclosure rule would require proprietary institutions of higher education and postsecondary vocational institutions to provide prospective students with each eligible program’s graduation and job placement rates, and that colleges provide the Department with information that will allow determination of student debt levels and incomes after program completion.

As proposed, the approval of additional programs rule would require institutions to provide: 5 year enrollment projections; documentation from employers not affiliated with the institution that the program’s curriculum aligns with recognized occupations at those employers’ businesses; and that there are projected job vacancies or expected demand for those occupations at those businesses before new programs can become eligible to participate in federal student aid.

Additional information on the Department’s planned public sessions will be released in the coming weeks.

Once again, thank you for contacting the United States Department of Education.

Sincerely,

Information Resource Center
Office of Communications and Outreach
United States Department of Education
400 Maryland Ave, SW, LBJ
Washington, DC 20202-0498

Customer – 09/29/2010 11:56 PM
——————————————-
From:]
Sent: Wednesday, September 29, 2010 10:45:48 PM
To: Ask Arne
Auto forwarded by a Rule

“Department on Track to Implement Gainful Employment Regulations” (attached): I posted the following question today on the Linked-In For-Profit Education Industry Group:

I am new to this thread but I find the discussion fascinating. Sally, to your point: how is it feasible that the non-profits are not to be held to similar standards? The criteria for inclusion, as far as I can see, is not whether you are a for-profit educational institution, but whether your students are recipients of financial aid from the Federal Government. Obviously, if I am correct in this, then the “non-profits” are clearly to be held accountable to a similar standard. So, if my kid wants to study Latin at the University of Wisconsin, is the DOE going to force the college to explain the potential gainful employment my kid is likely (NOT) to receive as a result of such an education? Are there any public educators out there reviewing this discussion? I would love to see your comments
to this along with the group’s active participants.

I was challenged by a member of the group to directly ask our government how such an inequity is possible. I look forward to a response which I will forward to the group. Thank you.

 • Well, I finally took the time to find an article on the latest default rates. If you want to know the source, you can find it at

http://money.cnn.com/2010/09/13/pf/college/student_loan_default_rate/index.htm

“Student loan default rate creeps higher”

The most important revelation in this article for me is found in this paragraph:

Graduates of public colleges defaulted at a rate of 6%, up from 5.9% a year earlier. Students coming from private schools had a 4% default rate, up from 3.7%. The default rate for borrowers at for-profit schools, however, rose to 11.6% from 11% a year earlier.

OK, people, what gives? Why is the rate of default so much higher for for-profit schools? A demographic group with fewer moms and dads able to help out in tough times?

 • – at the risk of sounding condescending, if you aren’t familiar with the different demographics served, you should do some homework. Working adults, unemployed adults, under-employed adults and a high percentage from economically-challenged families vs. 18-22 year old students predominately from middle to upper-middle class homes, and you ask what gives?
  •  –
When you preface a comment in such a way, then you can assume the reader understands your intent. I would recommend leaving your emotions and condescensions for the government and just try be a real and honest guy here. Just a thought.

Nonetheless, that is exactly what I assumed the rebuttal to be. As I sent you in an email, is there any rate of default that would shock anyone from this group (people in the for-profit space)? In other words, if the default rate were 50%, would that concern you? At what rate (or rate discrepancy) would we expect/want the DOE to step in?

When do we have another mortgage crisis developing versus when do we have an over-zealous government agency?

 • It has been required for many years that for-profit schools manage their default rates to maintain their eligibility to offer Title IV programs and understand that. I think the bigger issue is that often the demographic we serve is high risk. We provide accessibility to education which may not otherwise be available. We teach in a way that allows for our students to learn a practical skill in a short period of time to get an entry-level position in their chosen fields. Hopefully, this will in-turn decrease the dependency on some other public assistance programs while creating a stepping stone to continuing to further their education.

90/10 and gap, I won’t go any further on this topic but it is worthy of a mention in driving tuition rates. Again, not a standard that the traditionals are held to.

We have so many people who take advantage of social services offered by this country because it is easier and makes more sense for them to stay home and on these services then take the step to get off of them. We have generations of welfare families out there. For-profits are the ones that serve them. We get them in school, hold their hands, and strive very hard to get them not only to graduation but getting them employed.

Another trend that is not sitting well with me is that if a student is employed out of the field and waives placement, we are getting dinged for it; it doesn’t make any sense. Again, ask many who graduated from a traditional college with a liberal arts degree what they ended up doing with it…

•  – apologies for the comment if you feel I WAS being condescending, but I will not leave my “emotions” for the government. For people like myself (and various other) who have given upwards of 20 years of my life to this sector of higher education, this is an emotionally charged issue. MY government is unfairly and unduly attacking me and my friends, and threatening rules that would be devastating to this country, especially those financially less fortunate than most. Sorry, but you’d have to be a droid to not feel emotion on this one.
 • Having attended the APSCU Student Rally and immediately going to Senators Boxer’s and Feinstein’s office to discuss this rule, I can tell you it is extremely one-sided. Our initial talking point with staffers, most of which had already decided their recommendations, was to talk about equal treatment. Their response was that it indeed is equal since non-profits and publics have to have the same income-to-debt ratio for their certificate and diploma programs. When I countered with, equal would be for publics and non-profits to be held to the same standard for Associate, Bachelor, Masters and higher; the same as the for-profits are, I was met with silence. The party line was that Congress is held responsible to safeguard the taxpayer’s investment. I countered with the $220 billion in 2008 that was subsidizing publics and non-profits at both the state and federal levels that not a dime is returned or paid back to the government. Since non-profits make up 10% of higher education, let’s take 10% of the subsidies and split the $22 billion according to enrollment to bring down the tuition at the for-profits and I’m sure the debt-to-income ratios would be far greater than our counterparts. I also asked one staffer, why couldn’t subsidies be based on student need instead of flat across the board. They didn’t have the answers.
 • You are right
 • That’s the problem. Lack of knowledge results in reliance on “party line”. This is why I actually laughed out loud when Senators Harkin and Franken suggested that this was not a political issue.

Like so many issues in DC, this is partisan politics at its worst. Hardcore democrats are out to destroy for-profit schools and hardcore republicans are supportive of the for-profit schools. Our need is to influence the others, those who care enough to look at the facts…those that will consider what is at risk and who is at risk.

  • Having worked in career colleges, both FP and NP, and as a graduate of a public university, I continue to find these discussions interesting. I have opined in the past that the NP and FP operated basically the same – tuition driven, no direct assistance from government, student centric, outcomes of paramount importance to survival. One’s tax status doesn’t really matter.

The FPs will be able to meet these requirements and still survive, if only barely. They will eventually be forced to enroll fewer low socio-economic students, primarily minorities and single mothers. Yes, the repayment rates will rise, the default rates will drop, and we will create a permenant underclass that has very little chance to gain any semblence of the so called Amercian Dream. The DOE, media, President Obama, and Arne Duncan need to heed the old adage, “be careful for what you ask, you just might get it.”

 • Thank you,  – WELL SAID!!!!!

For more information and to see the complete debates join our linkedin group, link on top right of this site
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Many for profit schools are taking the recent shot across the bow as a catalyst to intiate self policing of practices

August 12, 2010 By Leave a Comment

Clearly the Senate hearings and public outcry relating to the for profits have resulted in many schools taking notice of the potential exposure and negative attention that could arise if their schools are targeted.  Management teams are weary and Board members are nervous.  Investors as usual are still fearful.  The result is an increased push toward aggressive self policing and investigation.  The thought is that we need do a better job of internal checks and balances to be able to identify and remove any & all bad apples before someone else does it publicly.   The good news is that third parties can help  schools do this on a consistent basis.  Feel free to reach out to us if you would like some assistance in this area, we would be happy to give free advice and introductions.

  If you are a third party and would like to be listed as a service provider in this area please email us: info (at) forprofitedu.com with your URL, contact info and references.  Sorry companies without validated references WILL NOT be listed!

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dont miss todays Senate hearing at 10:00 on recruitment practices in forprofit education

August 4, 2010 By Leave a Comment

Full Committee Hearing – For-Profit Schools: The Student Recruitment Experience

Committee:

Senate Committee on Health Education Labor and Pensions

Date:

Wednesday, August 04 2010, 10:00 AM

Place:

106 Dirksen Senate Office Building

Witnessesreturn to top

Panel I

  • Gregory Kutz , Managing Director, Office of Forensic Audits and Special Investigations, U.S. Government Accountability Office, Arlington, VA

Panel II

  • David Hawkins , Director of Public Policy and Research, National Association for College Admission Counseling, Arlington, VA
  • Michale McComis , Executive Director, Accrediting Commission of Career Schools and Colleges, Arlington, VA
  • Joshua Pruyn , former Admissions Representative, Alta College, Inc., Denver, CO
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CPC vs. CPL? Does that even make sense?

June 17, 2010 By Leave a Comment

On page 83 of the recent proposed rulemaking from the department of Education you will find:

Several negotiators were concerned about the impact of the proposed language on an institution’s Internet-based activities.  Negotiators asserted that the HEA permits advertising and marketing activities by a third party, as long as payment to the third party is based on those who “click” and is not based on the number of individuals who enroll.  The Department agrees and does not believe that the proposed regulatory language would prohibit such click-through payments.

Please explain to me how CPC makes more sense than cpl, other than with non-internet (call center) leads.  Anyone who can manage an efficient CPL program can just as easily manage a successful CPC program.  Still don’t see why internet driven CPL is being called into question especially for the lead provider who have zero interaction with the prospect who sought out, then filled out the lead form for the school.

 

To access the complete 500+ page doc Click: 

http://www.ed.gov/news/student-aid-rules-protect-borrowers-and-taxpayers

then click on the link in box on right: notice of proposed rulemaking.

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Notice of proposed rulemaking

June 17, 2010 By Leave a Comment

 

With the 505+ page document the government put out many are still scratching their heads.  Many comments are whirling as people speed read the proposed rules. 

Click: http://www.ed.gov/news/student-aid-rules-protect-borrowers-and-taxpayers

to visit the page then look for the box on the right with the link to the document notice of proposed rulemaking.

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PBS frontline piece on for profit colleges not as bad as most expected!

May 5, 2010 By 3 Comments

Last nights front line piece was not as one sided as expectst expected.  To view the segment visit: http://www.pbs.org/wgbh/pages/frontline/collegeinc/#

Clearly there were some negative comments made from former employees of a few schools, but overall the segment appeared not completely biased.  What is clear is the necessity and role the for-profit play in helping America again reach the goal of being the nation with the highest college graduation rate.  For-profits spend much more on marketing and utilize more aggressive admissions tactics, but clearly it is what’s needed to gain the attention and help drive the decision to go to college for a growing sector of the population which are not well suited to traditional institutions. 

Other than a few bad employees, some questionable tuition cost benefit equations at a few institutions and some programs of questionable value,  the industry as a whole is providing a beneficial service to the under-served segment of our population. 

I would hope that what comes out of the Govt. sessions addresses only the problems specifically and helps pave way to increased growth opportunity for the majority of the quality institutions.  Using a machete instead of a pair of pruning sheers would be a huge mistake, which would backfire on the educational goals we all share…

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Anonymous letter

March 5, 2010 By 1 Comment

From time to time we receive anonymous letters from people who have something to say, but don’t want to be outed/exposed, here is a recent one:

I have heard most if not all of the arguments & viewpoints against the way for-profit schools market.  I have heard all of the name calling, the comparison to the subprime lenders, the predatory marketing tactics, the hundreds of millions being spent by schools and the deceptive/ misleading advertising practices.  For an uneducated or ill-informed individual,  it’s easy to see how some jump on the bandwagon.  However, let us not forget that whenever one listens to only one side of a story or argument it’s easy to fall into alignment.  What bothers me, in addition to the one-sided arguments being made, is the complete lack of thinking things thru.  The fact that some elected officials are too quick to make changes, many simply for change sake, is just news-bite governing.    When did we all of a sudden decide to switch to a fast break style government?  When did ready fire aim become the best practices promoted by some leaders within the department of education.  Is it really reform if the changes that result backfire on the ultimate goal?    Why don’t people think things thru anymore?  What about the ripple effects caused by these aggressive proposed changes?  I thought one of our top goals as a country was to increase the percentage of Americans with a college degree?  Shouldn’t government work to improve the advancement opportunities for those who need it most.  I am all for closing any firm or firms who are systematically practicing & promoting non-compliance, fraud or deception, I am not however in favor or thoughtless knee jerk decision making that effects an entire industry.

 I was a Political Science Major and a logic minor in college.  Talk about an internal conflict within one’s own education…  It’s sad that in today’s screwed up political climate it seems like an either/ or equation, do I want to be in politics or do I want to be a logical person!

How is it that schools spending large sums of money on advertising are determined to be doing something bad?  What about the reinforcement value of the “go to college”  messaging, the education awareness they generate, and the outreach into areas not targeted by tradition schools?

 Why is it bad for lead providers to provide prospective education seekers with non-incentivized compliance approved forms for individuals to request information directly from schools who want to talk to them about potentially becoming a student.  Isn’t that a value?  

 It’s Interesting that you never hear about the positive aspects resulting from the unprecedented awareness created from the influx of educational advertising over the last decade. 

Here is one:

Recent Pew research center study:

 The most detailed study to date of the 18- to 29-year-old Millennial generation finds this group probably will be the most educated in American history. But the 50 million Millennials also have the highest share who are unemployed or out of the workforce in almost four decades, according to the study, released today by the Pew Research Center.

Pew’s analysis includes its own data, such as a new survey of 2,020 adults, including 830 Millennials, conducted by landline and cell phone last month. It also analyzes data from other sources, such as the Census, which shows 40% of those 18-24 were in college in 2008, a higher percentage than any previous generation at those ages.

**

So if you are a misguided politician you read the above excerpt and say: 

See those for profit schools are suckering more people to go to college than ever before, and if those people weren’t suckered into getting a degree they would not have any student loans…  Also, what good is a degree, look at their graduates, they are unemployed…

I would argue that obtaining a college degree is not ever a bad idea!  I would also argue that they are unemployed because of the current economic debacle we are currently facing. 

A logical person however may read the same excerpt and say:  

Wow, I am glad to see the increase in college educated people within the most recent generation, hey maybe it’s because of all the increased awareness resulting from the influx of advertising to those people over the last decade or maybe from the outreach from the proactive colleges.  It’s unfortunate to see so many of them unemployed, but then again over 10% of our country is unemployed, the economy sucks.    

Anonymous

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Gainful employment, what it can mean to forprofit schools

March 4, 2010 By 3 Comments

During long winded negotiated rulemaking for Higher Education, the US DOE proposed defining gainful employment by establishing a 8% debt to income threshold (debt to income is also commonly used for mortgage limits) based on median student debt for recent college graduates with income based either on Bureau of Labor Statistics 25th percentile wage data or actual college graduate earnings. Loan payments would be based on the standard repayment plan (10 years) for the unsubsidized Stafford loan program. For programs that failed to satisfy this standard, the US Department of Education proposed an alternative that requires a loan repayment rate for recent college graduates of 90%. The loan repayment rate measures the percentage of borrowers actively repaying their loans/ and not defaulting. It is a dual to the default rate, but also includes borrowers who are delinquent, in an economic hardship deferment or in forbearance along with borrowers who are in default.

Mark Kantrowitz has written a piece that’s worthwhile reading.  Click the link below to view Marks piece:

http://www.finaid.org/educators/20100301gainfulemployment.pdf

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