Wolves and sheep: For-profits in non-profit clothing

For-profit online “universities” have repeatedly demonstrated that students who enroll in these predatory “colleges” get ripped off financially and educationally. Almost universally, students who enroll in for-profits end up deeply in debt with no hopes of ever earning enough to dig their way out.

Moreover, the student debt crisis disproportionately harms students of color, especially African American and Latina/o/x students.   

While many hoped that announcements of some of these scams’ bankruptcies signaled the death of these rip-offs, sadly this is not the case, according to Robert Shireman, Senior Fellow of the Century Foundation and former Deputy Secretary of Education during the Obama administration. Rather than die out, these “educational” bottom feeders are finding new ways to once again get their tentacles around public dollars allocated to higher education. Because of a loophole in California law, if we are not careful, these for-profit 2.0’s will once again be bamboozling Californians.  

Here’s how the scam works, according to Shireman. Because oversight is so lax, for-profit online corporations like Kaplan “University” have been able to call themselves non-profits without implementing the usual accountability, oversight, and regulation required of true non-profits and public institutions. Instead, they continue to operate just as secretly as they did when known by their for-profit name, e.g. Kaplan University. Kaplan has pulled this off through a relationship with Purdue University in Indiana. Kaplan University will now be known as Purdue University Global (PUG).

According to Shireman, “the Department of Education has already approved PUG as a ‘public’ institution that will be eligible for unlimited federal student loans to enroll students from California and other states.” The problem is, PUG is in no way public. The venture will not be governed or financially backed by the state of Indiana, instead operating in secret, like a private company, Shireman states.

“The only difference,” confessed Kaplan officials, “will be the school’s name on the diploma.” This venture is pure Kaplan but now will be able to market itself across the globe using the credibility of a public research university. Purdue should be ashamed.

Why should faux non-profits matter to us?

California protects its citizens against predatory for-profits through oversight by the California Bureau of Private Postsecondary Education (CBPPE). Kaplan and the other faux non-profits slip through the net because as (pseudo-)public’s CBPPE has no authority over out-of-state “public” institutions.  If we don’t do something quickly, these for-profit fakers will drain the precious public dollars that we need for genuine public institutions or non-profits–who are accountable to the citizens of our states or their Trustees, respectively. Bolstered by Betsy DeVos, there are more coming our way; Stevens-Henager College and Grand Canyon Education are pseudo-publics looming, Shireman states.

There is a fix. We can close the loophole in CBPPE by requiring all out-of-state online institutions to come under CBPPE jurisdiction unless they really are public—that is, the home state affirms through an agreement with California that the program is backed by the full faith and credit of the state,” Shireman writes.

We also could require that they actually behave like non-profits in the way they use their money, in not having conflicts of interest in their governance, and by being “accredited by an agency without investor/owner conflicts in its governance.”

Language to this effect is being proposed; we hope that the Legislature and the Governor understands how critical this will be for all Californians.