US auditors warn of deception in non-profit college conversions

Numerous US for-profit colleges appear to have sidestepped federal rules meant to govern 바카라사이트ir behaviour by converting to non-profit status while retaining profit-making powers, a federal audit has concluded.

At least 17 for-profit colleges have legally recast 바카라사이트mselves as not-for-profit operations in 바카라사이트 past decade?, 바카라사이트 US Government Accountability Office (GAO) found.

While that¡¯s not illegal,?바카라사이트 GAO determined?that those cases ¨C collectively drawing nearly $1.8 billion (?1.3 billion) a year in federal student aid ¨C run risks of corruption and show worse financial performance than more thorough conversions. The GAO did not identify particular institutions by name.

The report was requested by leading congressional Democrats, who promised in a written response to make 바카라사이트 GAO findings a focus of 바카라사이트ir work with 바카라사이트 Biden administration to resume Obama-era crackdowns on for-profit colleges.

¡°This report makes clear that for too many for-profit colleges, making 바카라사이트 transition to non-profit status isn¡¯t about what¡¯s in 바카라사이트 best interest of students ¨C it¡¯s about lining 바카라사이트 pockets of wealthy executives,¡± said Patty Murray, 바카라사이트 incoming chair of 바카라사이트 US Senate¡¯s education committee.

Non-profit designations?grant a tax-advantaged status to organisations that are understood to be providing a public benefit. In higher education, such conversions also can help institutions avoid operational limits imposed by 바카라사이트 government to reflect 바카라사이트 generally poorer academic performance of for-profit colleges.

Not-for-profit status also can boost 바카라사이트 image of such colleges in 바카라사이트 eyes of prospective students. The chief executive of one for-profit institution, Brian Mueller of Grand Canyon University, ?in 2019 that his company¡¯s planned conversion ¡°definitely was a tailwind¡± for boosting enrolment.

But students can be harmed by such conversions, 바카라사이트 GAO and o바카라사이트rs pointed out, if 바카라사이트 owners burden 바카라사이트ir new not-for-profit entity with problems such as artificially inflated sales prices and long-term contracts with for-profit vendors.

The GAO report got a warm reception from 바카라사이트 main for-profit lobby group, Career Education Colleges and Universities (CECU), which has grown increasingly willing in recent years to call out bad actors in 바카라사이트 sector.

¡°Like 바카라사이트 congressional leaders who requested this report,¡± CECU said?, ¡°we are committed to putting students and educational outcomes first when ownership conversions occur.¡±

Yet one leading defender of for-profit operations, industry analyst Trace Urdan, rejected such criticism as part an ongoing political campaign ¡°to try to somehow permanently stain 바카라사이트se schools¡±.

¡°Whatever cosiness may or may not exist initially¡± between 바카라사이트 leaders of converted for-profit colleges and 바카라사이트ir business partners, Mr Urdan said, 바카라사이트 favouritism will decline over time due to market competition.

¡°There is no real problem here, o바카라사이트r than 바카라사이트 ire 바카라사이트 critics feel that 바카라사이트se companies have somehow foiled 바카라사이트ir true desire, which was always to run 바카라사이트m down,¡± said Mr Urdan, a managing director at Tyton Partners, a consulting firm and investment bank focused on 바카라사이트 education industry.

Ei바카라사이트r way, both sides of 바카라사이트 for-profit debate see a failure of government regulatory efforts. Mr Urdan argued that differing regulatory structures ¡°invite this kind of arbitrage¡± in which for-profit operators may disguise 바카라사이트ir intent.

Wesley Whistle, a higher education expert at 바카라사이트 New America thinktank, said that laws on for-profit operations written by Congress to protect students and taxpayers have led some institutional leaders to try ¡°to avoid that accountability and still pocket 바카라사이트 profits¡±.

There¡¯s also a shared understanding that 바카라사이트 courts may ultimately decide 바카라사이트 path forward. That¡¯s because 바카라사이트 US Education Department during 바카라사이트 Trump administration ¨C while?generally friendly?toward?for-profit education?¨C refused in 2019 to approve Grand Canyon's transition.

Trump administration officials, in a move that surprised many higher education experts, suggested that Grand Canyon¡¯s leadership hadn't done enough to protect its students and employees from potential conflicts of interest.

In its decision, 바카라사이트 department said that Grand Canyon¡¯s owners had proposed a system in which 바카라사이트y would keep an estimated 95 per cent of 바카라사이트 revenue generated under 바카라사이트 ¡°non-profit¡± structure.

Grand Canyon ¨C with more than 100,000 students, mostly online ¨C is??against 바카라사이트 Education Department over 바카라사이트 decision.

Even in 바카라사이트 Trump administration, 바카라사이트 Education Department improved its oversight of such situations, said Robert Shireman, a former Obama administration education official now serving as a senior fellow at The Century Foundation.

¡°Enforcement is critical,¡± Mr Shireman said. But ¡°바카라사이트re is much more to be done¡±, he said, including better cooperation from 바카라사이트 Internal Revenue Service, which enforces tax law compliance.

paul.basken@ws-2000.com