Published: May 2017

The Dept. of Education needs to step in to prevent another for-profit scandal

Consumer Action joined over thirty student, consumer and veterans' groups in calling on Education Secretary Betsy DeVos to seek public comment and impose conditions on the sale of several Education Management Corporation colleges (including Argosy University, South University and the Art Institutes) to a Los Angeles “nonprofit,” Dream Center Education Holdings LLC. The Dream Center is a Christian missionary organization that says it will convert the for-profit colleges into nonprofit enterprises. This proposed transaction presents an opportunity for the Department to prevent another repeat of scandalous mistreatment of students and taxpayers, but only if the Department of Education takes the steps necessary to do so.

In 2015 EDMC agreed to pay a $95.5 million settlement with the federal government over unscrupulous recruiting practices for-profit colleges. Student advocates expressed skepticism about the upcoming sale of Education Management Corporation’s (EDMC) for-profit colleges to Christian organization Dream Center Education Holdings, fearing the schools' new status as non-profit institutions would allow the operators to skirt federal rules imposed on for-profit institutions in recent years.

A sale requires approval from accreditors as well as the Department of Education. The coalition wrote to DeVos saying her approval should be contingent on several conditions:

  • Whether the operations of the EDMC institutions are likely to avoid the predatory practices previously identified by federal prosecutors
  • Whether the structure of the colleges going forward will actually meet claims of nonprofit status
  • Whether taxpayers are protected against insolvency

The Department of Education must ensure that institutions seeking the benefits of the nonprofit label actually have the accountability of a valid nonprofit control structure.

 

Lead Organization

The Century Foundation (TCF)

Other Organizations

Americans for Financial Reform | AMVETS | Association of the United States Navy | Blue Star Families | Center for Responsible Lending | Children's Advocacy Institute | Consumer Action | Consumer Federation of America | Consumer Federation of California | Consumers Union | David Halperin, Attorney | East Bay Community Law Center | Generation Progress | Higher Ed Not Debt | Ivy League Veterans Council | League of United Latin American Citizens | Maryland Consumer Rights Coalition | National Consumer Law Center (on behalf of its low-income clients) | Project on Predatory Student Lending of the Legal Services Center of Harvard Law School | Public Counsel | Public Law Center | Robert Shireman, The Century Foundation Senior Fellow | The Institute for College Access and Success | U.S. Coast Guard Chief Petty Officers Association & Enlisted Association | U.S. Public Interest Research Group | Veterans Education Success | Veterans for Common Sense | Veterans Student Loan Relief Fund | Vietnam Veterans of America | Young Invincibles

More Information

For more information, visit TCF's website.

Download PDF

The Dept. of Education needs to step in to prevent another for-profit scandal   (EDMCLetter.compressed.pdf)

 
 

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