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Friday, July 12, 2024

Pending HEI Investigations

The Higher Education Inquirer (HEI) is working on a number of investigative projects. They include:

(1) Maximus is the sole contractor for the US Department of Education's Default Resolution Group (DRG) and its "Fresh Start" program. The DRG contract is set to expire, and information about their contract appears to have been removed from public view. DRG is likely to face more problems as defaults are expected to rise dramatically in late 2024.

(2) Subprime scholarship at America's largest online robocolleges, including Liberty University's online doctoral degrees in history and philosophy. We are communicating with subject matter experts to determine the extent of the problem.

(3) Our 6 1/2 year battle to obtain information about bad actors receiving Department of Defense Tuition Assistance (TA).

Approximately $600 million in tuition assistance each year is managed by DOD VOL ED and its contractors. About 100,000 servicemembers each year use TA benefits to pay for continuing education, and a disproportionate amount goes to robocolleges.

In 2017, as a continuation of Obama-era policies, contractors PwC and Gatehouse compiled a list of the 50 worst offenders, schools that were violating DOD MOU and President Obama's Principles of Excellence (Executive Order 13607).

Under President Trump, DOD refused to name the bad actors and did not punish anyone for their violations. In 2018, DOD education program analyst Anthony Clarke said that DOD did not want to create a "witch hunt." After 2019, the oversight program fell under the radar.

The University of Phoenix was implicated in a number of violations, but there is no record that DOD did anything to correct the situation, other than to reprimand at least one base commander. DOD has had a long-term relationship with predatory subprime colleges for years through the Council of College and Military Educators (CCME).

DOD has a current contract with Purdue University Global offering degrees of questionable academic value.

HEI has spent a great effort communicating with DOD officials, whistleblowers, and political aides, and following up with information that first appeared in in the Military Times in 2018 and 2019, then reappeared in 2024. We are also awaiting a substantive response from DOD FOIA 22-1203-F submitted in July 2022 that has received multiple delays and is not expected to be answered until October 4, 2024, about 1 month before the US federal elections.

Articles About Robocolleges

Articles About DOD Tuition Assistance

Wednesday, July 10, 2024

New Data Show Nearly a Million University of Phoenix Debtors Owe $21.6 Billion Dollars

The Higher Education Inquirer has just received a Freedom of Information Act (FOIA) response from the US Department of Education, stating that about 971,000 current student loan debtors who have attended the University of Phoenix have accumulated an estimated $21.6B in debt. The FOIA is Department of Education FOIA 23-02912-F. These debt numbers are consistent with a previous HEI analysis.

We have been unable to learn whether this accumulated debt includes the hundreds of millions in debt that has already been forgiven--and that its present and future owners may be liable for. In 2023, we reported that approximately 73,000 debtors from the University of Phoenix had filed borrower defense fraud claims, and that more than 19,000 cases were granted immediate relief in the Sweet v Cardona settlement.

Through another FOIA request, we also discovered 6,265 consumer complaints in the Federal Trade Commission database made after its current owners took over. In 2019, the FTC and the University of Phoenix settled a claim for $191M for deceptive employment claims. It would appear that Phoenix has not done enough to clean up its act.

The Higher Education Inquirer has been working for more than six years to get data about the school's noncompliance with the Department of Defense Tuition Assistance (TA) program, where servicemembers have been systematically preyed upon--and where Trump officials and their surrogates worked to cover up malfeasance by subprime schools--including the University of Phoenix. We hope to report on this topic later.

The University of Phoenix is presently owned by Apollo Global Management and Vistria Group, who have been unsuccessfully trying to sell the school for at least three years. Previous potential suitors, held to secrecy, have included Tuskegee University, UMass Global, and the University of Arkansas System.

Apollo Global Management is currently negotiating with the State of Idaho, which would incur $685M in debt to acquire the school. State officials are wary of the deal, and those with strong principles are unlikely to approve. But it's possible that other politicians may change their minds: if they or their families are properly compensated, directly or indirectly, for taking the risks to their reputations and careers.

How University of Phoenix Failed. It's a Long Story. But It's Important for the Future of Higher Education.

Fraud Claims Against University of Phoenix Continue to Mount

University of Phoenix articles

Borrower Defense articles

Wednesday, July 12, 2023

University of Phoenix and the Ash Heap of Higher Ed History (Updated September 14, 2023)

[Editor's Note: The Higher Education Inquirer will continue to update this story as more information comes in.]

The University of Phoenix (or at least its name) may soon enter the ash heap of US higher education history--and rise again as a state-run robocollege. But it shouldn't--at least not yet. Once hailed as the leader in affordable adult education for workers entering middle management, it is a shell of its former self--in an economy less certain for workers and consumers.

With the school's wreckage are approximately one million people buried alive in an estimated $14B-$35B in student loan debt.

Pattern of Fraud

As of January 2023, more than 69,000 of these student loan debtors have filed Borrower Defense to Repayment fraud claims with the US Department of Education against the University of Phoenix (UoPX). Many more could file claims when they become aware of their rights to debt relief. In the partial FOIA response below, the US Department of Education reported that 69,180 Borrower Defense claims had been made against the school.

In a recent federal case, Sweet v Cardona, most if not all of the 19,860 "denied" cases were overturned in favor of the student loan debtors. We estimate the smaller number of fraud claims alone to amount to hundreds of millions of dollars.

Through a FOIA request, we also discovered 6,265 consumer complaints in the FTC database. In 2019, the FTC and the University of Phoenix settled a claim for $191M for deceptive employment claims. Based on the consumer complaints, we have no reason to believe that Phoenix has changed its behavior as a bad actor.

On May 3, 2023, six US Senators (Warren, Brown, Blumenthal, Durbin, Merkley, Hassan) called for the US Department of Education, Department of Veterans Affairs, and Department of Defense to investigate the University of Phoenix for launching a new program suggesting that it was a public university. The letter stated that the school "has long preyed on veterans, low-income students, and students of color."

Wolves in Sheep's Clothing

University of Phoenix's owners could potentially be liable for refunding the US government for the fraud. But as a state-related organization, it may be more politically difficult to claw back funds, no matter how predatory the school is.

Purdue University Global and University of Arizona Global set a precedence in state-related organizations acquiring subprime schools (Kaplan University and Ashford University) and rebranding them as something better. Whether they are better for consumers is questionable. Phoenix will have to cut costs, largely by reducing labor. Using Indian labor (like Purdue Global) and AI could be profitable strategies. It's likely that this deal, even if profitable, will add fuel to the growing skepticism of higher education in the US.

University of Phoenix's Finances

Apollo Global Management and Vistria Group currently own University of Phoenix but have been trying (unsuccessfully) to unload the subprime college for more than two years. Little is publicly known about the school's finances. What is known is that UoPX gets about $800M every year from the federal government, through federal student loans, Pell Grants, GI Bill funds, and DOD Tuition Assistance.

Despite this government funding, US Department of Education data show the school's equity value for the Arizona segment declined significantly, from $361M in FY 2018 to $187M in FY 2021.

$347M of the University of Phoenix's $518M in assets are intangible assets. Intangible assets typically include intellectual property and brand reputation. The school has $348M in liabilities.

The University of Phoenix has been reducing expenses by cutting instructional costs, from $70M in FY 2020 to $60M in FY 2021. UoPX spends about 8 percent of its revenues on instruction.

Marketing and advertising expenses are not available, but Phoenix has been visible on the Discovery Channel's Shark Week, CBS' Big Brother, and other television events. ISpot.tv reports that University of Phoenix spends millions of dollars each year on television ads. On one ad alone, the ad spend from February 2023 to July 2023 was an estimated $3.5M.

Attempts to Sell UoPX

There have been two known potential buyers for the University of Phoenix: the University of Arkansas System and the University of Idaho. In both cases, the owners required the potential buyers to keep the deal secret until the sale was imminent.

Fear of the impending higher education enrollment cliff appears to be an important pitch to potential buyers.

Arkansas, the first target, was in the process of making the deal, and it might have gone through if nit for the voice of one whistleblower and one outstanding investigative reporter, Debra Hale Shelton of the Arkansas Times.

In the case of Idaho, news of the potential deal was publicly noted just one day before the preliminary agreement was made with the Idaho Board of Education. Two other secret meetings were held before that.

A number of journalists including Kevin Richert (Idaho EdNews), Laura Guido (The Idaho Press), Troy Oppie (Boise State Public Radio), and Noble Brigham (Idaho Statesman) have exposed some of the problems and potential problems with the deal. In June, Idaho legislators began questioning the acquisition.

More recently, the opinion editor at the Idaho Statesman argued that the deal may actually be worthwhile.

Particulars about the finances are sketchy at best and misleading at worst. The University of Phoenix is said to include $200M in cash in the deal, but they have not said how much of that sum is required by law as "restricted cash"--money the school needs if the Department of Education needs to claw back funds. Phoenix also claims to be highly profitable, but without showing any evidence.

What is known about the deal is that the University of Idaho will have to borrow $685M and put its (bond) credit rating at risk. The school has not identified important information how the bonds would be sold (underwriters, bond raters, date to maturity, interest rate).

The University of Idaho has created an FAQ to answer questions about the sale, but HEI has identified a number of misleading statements about University of Phoenix's present finances (failure to report the school's equity), potential liability (cost of tens of thousands of Borrower Defense claims), and leadership (lack of background information about Chris Lynne, the President of the University of Phoenix). These deficiencies have been reported to the University of Idaho and to the Representative Horman.

On June 20, Idaho Attorney General Raul Labrador filed a lawsuit to halt, or at least slow down the deal.

The University of Idaho submitted a Pre-Acquisition Review from the US Department of Education, and it may take up to three months before the application is completed.

As of September 2023, the deal is far from done. Since this article was first published there have been a number of developments:

On September 11, US Senators Elizabeth Warren, Dick Durbin, and Richard Blumenthal called on University of Idaho President Green to abandon the sale. The Senators also asked Green if he had a plan to pay for the Borrower Defense claims, noting that University of Arizona may be on the hook for thousands of claims against Ashford University (aka University of Arizona Global campus).

In November, the Joint Finance-Appropriations Committee of the Idaho Legislature is expected to discuss the issue again.

*The Higher Education Inquirer has made a FOIA request for more up-to-date numbers from the US Department of Education. We have also filed FOIA requests with the FTC.

Sunday, September 11, 2022

State Universities and the College Meltdown

State Universities are using Google Ads to boost enrollment numbers.

(Updated November 28, 2022)

While for-profit colleges, community colleges, and small private schools received the most attention in the first iteration of the College Meltdown, regional public universities (and a few flagship schools) have also experienced financial challenges, reorganizations, and mergers, enrollment losses, layoffs and resignations, off-campus learning site closings and campus dorm closings, lower graduation rates, and the necessity to lower admissions standards. They are not facing these downturns, though, without a fight.

State universities, for example, are attempting to maintain or boost their enrollment through marketing and advertising--sometimes with the assistance of helpful, yet sometimes questionable online program managers (OPMs) like 2U and Academic Partnerships and lead generators such as EducationDynamics.

Academic Partnerships claims to serve 50 university clients. HEI has identified 25 of them.

Google ads also follow consumers across the Web, with links to enrollment pages. And enrollment pages include cookies to learn about those who click onto the enrollment pages. Schools share the information that consumers provide with Google Analytics and Chartbeat.

A pop-up Google Ad for Penn State World Campus

Advanced marketing will not improve institutional quality directly but it may raise awareness of these state schools to targeted audiences. Whether this becomes predatory may be an issue worth examining.

In order to stay competitive, state universities have to have a strong online presence and spend an inordinate amount of money on marketing and advertising. Ohio University and other schools now offer programs that are 100 percent online.

State universities have joined for-profit colleges in the television advertising space.

Despite marketing and enrollment appeals like this, we believe the financial situation could worsen at non-flagship state universities when austerity is reemployed--something likely to happen during the next economic downturn.

While state flagship universities have multiple revenue streams, they are often unaffordable for working families. Elite state universities, also known as the Public Ivies, have increasingly shut out state residents--in favor of people from out of state and outside the US--who are willing to pay more in tuition.

Aaron Klein at the Brookings Institution calls this significant (and dysfunctional) out-of-state enrollment pattern as The Great Student Swap.

State Universities with more than 4000 foreign students include UC San Diego, University of Illinois, UC Irvine, University of Washington, Arizona State University, Purdue University, Ohio State University, Michigan State University, and UC Berkeley.

People fortunate enough to attend large state universities as undergrads may feel alienated by large and impersonal classrooms led by graduate assistants and other adjuncts. There are also significant and often under-addressed social problems related to larger universities, including hunger, substance abuse, sexually transmitted diseases, hazing and sexual assault.

Online only versions of flagship schools may not be of the same quality as their brick and mortar counterparts. Purdue University Global and University of Arizona Global Campus, for example, are open enrollment schools for working adults which produce questionable student outcomes. These "robocollege" schools hire few full-time instructors and often spend a great deal of their resources on marketing and advertising.

EducationDynamics is a lead generator for "robocolleges" such as Purdue University Global and University of Arizona, Global Campus.

Purdue University Global has used questionable marketing and advertising.

The Higher Education Inquirer has already noticed the following schools in the Summer and Fall 2022 that received media scrutiny for lower enrollment, financial problems, or labor issues:

Westfield State University

Connecticut State Colleges and Universities

Western Connecticut State University

State University of New York

Montclair State University (Merger with Bloomfield College)

William Paterson University

Montclair State University

Rutgers University, Camden

New Jersey City University

Penn State University

Indiana University of Pennsylvania

Slippery Rock University of Pennsylvania

Penn West University (Merging Cal University of PA, Clarion, and Edinboro)

Virginia Commonwealth University

University of North Carolina, Ashville

East Carolina University

Columbus State University

University of Tennessee, Chattanooga

Northwestern State University of Louisiana

Henderson State University

Missouri State University

Missouri Western University

Youngstown State University

University of Akron

Cleveland State University

University of Toledo

Indiana State University

University of Southern Indiana

Eastern Michigan University

University of Michigan, Flint

Central Michigan University

University of Wisconsin System

University of Wisconsin, Milwaukee

Northern Illinois University

Southern Illinois University

Minnesota State System of Colleges and Universities

Southwest Minnesota University

Iowa State University

University of Northern Iowa

University of Nebraska, Kearney

University of Nebraska, Lincoln

University of Nebraska, Omaha

Kansas State University

Emporia State University

Fort Hays State University

Pittsburg State University

South Dakota State University

Black Hills State University

University of Colorado, Boulder

University of Montana

Montana State University

University of Wyoming

Stephen M. Austin University

Northern Arizona University

Eastern Washington University

Washington State University

Portland State University

San Francisco State University

Cal State University System

Cal State University, Chico

Fresno State University

University of Hawaii

More schools will be added as information comes in.

Wednesday, August 10, 2022

Rebuilding the Purpose of the GI Bill (Garrett Fitzgerald*)

[This article is part of the Transparency-Accountability-Value series.]

The landscape of military-connected students in higher education has been filled with turmoil for the last two decades. The G.I. Bill, a well-earned and financially substantial benefit for student veterans since 1944, has been a lightning rod for this turmoil. With the more recent release of the Post-9/11 G.I. Bill, the benefits have become even more lucrative for the student and therefore, the universities receiving those dollars.

From 2009 to 2020, approximately $60 billion in Post-9/11 G.I. Bill tuition has been paid out to colleges and universities. In light of this cash windfall predatory companies and institutions took advantage. It has caused irreparable harm to hundreds of thousands of military-connected students.

One of the original concepts behind the Montgomery G.I. Bill was to supercharge the country’s economic rebuild after World War II. With college paid for, the country could spread the introduction of millions of veterans into the workforce over a period of time rather than all at once. It also provided, in an unprecedented fashion, a pipeline of trained, skilled and educated candidates for the workforce. It worked. The country saw strong economic growth during this period and one of the primary reasons for this was that student veterans - and their financial benefits - were being put to good use at quality institutions of higher learning.

Fast forward to today, we see veteran graduation rates declining and employment statistics headed in the wrong direction. Coincidentally, a trend we’re also seeing, in parallel, is the immense amount of money paid each year to subprime predatory colleges and universities. These institutions have lost sight of their purpose (education) and are investing millions of dollars into military recruitment for a cut of the financial benefits.

To better showcase this imbalance, in 2017 seven of the top 10 colleges receiving the most G.I. Bill benefits, spent less than one-third of tuition and fees on “academic instruction” (Veterans Education Success). These colleges, coincidentally, are producing far below average graduation and employment statistics - wonder why? They are more focused on military recruitment than what to do with these students once they enroll.

One might ask themself, “how do these bad colleges manage to enroll so many military-connected students?” The answer is that they advertise their programs with substantially more investment than others. Colleges with limited budgets or those looking to enter the military market for the first time, are unable to compete on most lead gen sites and some are even outpriced on sites like Google and Facebook.

The question is what do we do about this crippling issue? Predatory colleges won’t change their ways with the lack of government-backed punishment handed down over the years so the solution has to come from elsewhere. CollegeRecon sees the solution in the way military-connected students research and discover university options.

There has been a need for change in the way military-connected students learn about their education benefits, research degree program pathways and select institutions to enroll in for decades. The VA doesn’t do nearly enough, transition programs are often not effective and selecting colleges based on location or misleading marketing messages is what got us here in the first place.

Over the last 6+ years, CollegeRecon has been building a new standard for the way military-connected students discover and engage with colleges and universities, and vice-versa.

The platform is free for the military and veteran community. It provides impartial and easily digestible information on all the benefits programs available to each individual based on their own military experience and status. It also dives into degree program opportunities, earning credit for service, recommended questions to ask admissions reps, discounts available to military-connected students, etc.

What sets CollegeRecon apart from other online resources is the set of free tools we’ve created to assist men and women with refining school searches, connecting with campus administrators and gaining access to military-affiliated scholarships to offset any out-of-pocket expenses. CollegeRecon has nearly 3,000 active college profiles with information on degrees offered, tuition costs, military support programs, campus facts, etc. If a match is made and the individual is interested in learning more about the institution, he or she can “request info” from a designated point of contact on campus who can help answer questions. An important key to our platform’s success is that members can connect with any college in our network, not just partners.

CollegeRecon is NOT a traditional lead generator where users register an account and have their information sold to 10 semi-matched schools. CollegeRecon members are in complete control of who they request information from and they can even choose to communicate with a school outside of the CollegeRecon environment; we provide links and contact information for all school websites listed in the tool.

For universities, CollegeRecon offers a safe and effective environment to promote their brand and create opportunities for engagement with a targeted audience of college-seeking, military-connected students. With this platform, colleges can get their brand in front of the largest online community of military-connected men and women actively seeking opportunities in higher education.

CollegeRecon aligns with schools to be a transparent, targeted and trusted partner and to provide an even playing field for different types of colleges. CollegeRecon currently works with colleges and universities across the country; including four-year private and public, 2-year colleges, as well as online and campus learning institutions.

Our goal has never been to create high volume, low quality leads. The purpose of the platform is to create awareness for colleges in a brand-safe way while offering a non-predatory environment for prospective students looking to utilize the G.I. Bill or Tuition Assistance.

As we continue to build out the platform’s capabilities and reach within the military and higher ed community, our focus remains set on rebuilding the purpose of the G.I. Bil. That purpose, in our view, is to ensure those who served in uniform are rewarded with a genuine education that leads to career fulfillment and economic prosperity.

*Garrett Fitzgerald is the CEO and Founder of Homefront Alliance, the parent company of College Recon. "GI Bill" is a registered trademark.

Monday, May 9, 2022

College Meltdown 2.2: Who’s Minding the Store?

The latest report by the Government Accountability Office (GAO) about wrongdoing by higher education online program managers (OPMs) felt disappointing to social justice advocates who watch the space and know the bad actors who were unnamed in the GAO document.

US higher education has always been a racket, but its latest pursuits have gone untouched and even unmentioned. GAO’s behavior, though, is no worse than the many other corporate enablers who are supposed to be minding government funds wasted –or worse yet—used to prey upon US working families.

The US Department of Education has done little lately to safeguard consumers from predatory student loan servicers like Maximus and Navient, or subprime universities like Purdue University Global and University of Arizona Global, and hundreds of small players who offer marginal education leading to less than gainful employment.

The Department of Veterans Affairs has done little lately to protect veterans and their families from being ripped off by subprime schools. At one time, VA was a leader in tracking GI Bill complaints and making them public, but transparency and accountability are far from what they were.

The US Department of Defense (DOD) has been asleep at the wheel with its distribution of DOD Tuition Assistance funds to subprime colleges. Its complaint system is close to nonexistent.

The US Department of Justice (DOJ) and US Securities and Exchange Commission (SEC) have done little to rein in bad actors in higher education, leaving the work to states attorneys general. Hate crimes on campus have also been ignored. In other cases, elite university endowments have received little notice despite eyebrow raising profits. Student loan asset-backed securities are also below their radar.

During the pandemic, The Department of Treasury has failed to adequately oversee funds issued to the Federal Reserve and the Small Business Administration funneled to subprime schools.

The Federal Trade Commission (FTC), which had done an adequate job investigating predatory lead generators and marketing and advertising false claims has been hamstrung by a recent court decision and can no longer fine higher ed wrongdoers. Predatory companies know this and will act accordingly—as criminals do when cops are not on the beat.

What lack of oversight have you seen with federal agencies tasked to protect higher education consumers?