Private College Revenues and the US College Meltdown

dahneshaulis@gmail.com

According to National Center for Education Statistics charts, public higher education institutions overall experienced increased revenues in recent years, but private colleges saw a $46 Billion loss in revenues from 2013 to 2015.

To make matters worse, in 2016, the revenue line for non-profit private colleges and universities actually dipped below expense lines. Revenues were $183B and expenses were $189B, for a net loss of $6B.

Bear in mind that the numbers are not up-to-date, so this pattern may have improved, stabilized, or worsened since 2016. But with student enrollment continuing to decrease, declining private college revenue numbers may be a harbinger of a larger meltdown.

In 2016, EY suggested that as many as 805 colleges faced significant challenges due to low enrollment numbers and unsustainable finances.

Some of private college revenue losses may due to a tuition discounting. In any case, drops in institutional revenues for a significant period require cost cutting, which frequently means cuts in teachers, staff, and financial aid. Conditions at individual private colleges may be vastly different, from thriving and growing to downsizing and closing.

College Enrollments Continue Decline in Several States

dahneshaulis@gmail.com

[Updated 10-20-2018]

Although the National Student Clearinghouse numbers won't be out until December, a cursory look at news articles over the last month suggests that US higher education enrollment will be down again in 2018-19.

This is not surprising news, given that only a minority of colleges surveyed by Inside Higher Education/Gallup had met their enrollment goals by June.

Thousands of learning sites and campuses have closed over the last seven years, and the trend looks like it will continue. You can track the school closings here.

For-profit colleges continue to downsize, although they aren't reporting numbers. However, many University of Phoenix and Virginia College campuses will be closing. Harrison College campuses closed abruptly leaving thousands of students shunted to other questionable subprime schools, like National American University.

University of Phoenix campuses will be closing in Albuquerque, Atlanta, Chicago, Colorado Springs, Columbia SC, Detroit, El Paso, Honolulu, Philadelphia, Virginia Beach, and several locations in California and Florida.

Community colleges are also expected to lose students for the foreseeable future.
In Illinois, freshman enrollment was down 20% at Western Illinois University and Southern Illinois University at Carbondale. 

In New Mexico, enrollment is down 7% at University of New Mexico and 5% at Santa Fe Community College. New Mexico State's enrollment dropped by 1% but the school is facing a $3.3 million shortfall. 

In Montana, enrollment at the University of Montana declined 7.6%.

In Hawaii, enrollment as University of Hawaii campuses saw drops at University of Hawaii-Hilo (3.8%), Hawaii Community College (6.6%) and UH-Maui (6.4%).

In Pennsylvania, enrollment was down for the eight consecutive year, a drop of 4%.  Indiana University of Pennsylvania experienced a 9% enrollment drop this semester. Cheney University's numbers were down 37%.

In New Jersey, Cumberland County College is merging with Rowan College at Glouchester County after years of enrollment declines.

In Michigan, enrollment is down 1.5% at Western Michigan and Grand Valley State.

In Mississippi, enrollment at universities and community colleges decreased by 1%. The greatest decline was at Jackson State, which saw a 10% decline.

In Missouri, enrollment is down at Crowder College (8%), Missouri Southern State University (2.7%) and Pittsburg State University (4%). University of Missouri increased enrollment significantly after rebranding itself.

In Nebraska, enrollment increased at Creighton, but decreased at all University of Nebraska campuses.

In Arkansas, enrollment is down 1.3%. University of Arkansas at Little Rock had an enrollment drop of about 10%.

In Wisconsin, UW system-wide enrollment was down 2,598 students or 1.5%.

In Kansas, University of Kansas, Kansas State and Pittsburg State all recorded declining enrollment.

Community college numbers in Oregon continue to drop, particularly at Lane Community College, where enrollment is down 11%.

In West Virginia, WVU-Parkersburg reported a 3% drop.

In Ohio, University of Akron's enrollment fell 7%. Enrollment dropped about 3% at Kent State, also with a decline in foreign students.

In North Dakota, the University of North Dakota experienced a 4% loss in enrollment. North Dakota State also had a 4% loss, resulting in an estimated $5M less in revenues.

In Iowa, enrollments dropped at Northern Iowa (5.8%), Iowa (1.6%), and Iowa State (2.8%. Hawkeye Community College had a 6% loss.

In Arizona, enrollments at Maricopa Community Colleges have declined after it was ruled that Dreamers were not eligible for in-state tuition. 

Nationwide, enrollment may also be influenced by recent declines in the number of foreign students.

There are some notable rises in enrollment. North Carolina is seeing increases after making tuition affordable with its NC Promise program. Texas and Utah are also likely to see continued gains in college numbers as more people move to their states.

Related articles:
College Meltdown: State By State Changes
Subprime College Crash Continues Under the Radar
Private College Revenues and the US College Meltdown
US Department of Education Fails to Recognize College Meltdown
College Meltdown: NY, IL, MI, PA, VA hardest hit
Community Colleges at the Heart of College Meltdown
Charting the College Meltdown

Visa Mill Promoters Drop $760K on Key Republicans and NY Governor Andrew Cuomo

According to Federal Election Commission (FEC) records, individual members of Thompson Education Center have spent at least $710,000 for the 2017-2018 election cycle, all on Republican efforts. 

[Image below from Open Secrets.]

Backers of Thompson Education Center, Lianbo Wang and Sherry Li, have already donated at least $600,00 to the Trump Victory fund. They also donated $55,000 to New York Governor Andrew Cuomo in 2014. 

Thompson Education Center (TEC) is a project, backed by Chinese-American investors, to create a private college in Sullivan County, New York. The school would house up to 2500 students, presumably Chinese nationals seeking US visas.

Information about the school is sketchy. Press releases from 2016 and 2017 stated that TEC would build a nursing school, a culinary center, and a conservatory for film and tv.

[Image from NTD, suggesting that the Thompson Education Center could become a high-end visa mill for Chinese nationals.]

In 2013, the original $6 billion China City project was supposed to include a Chinese theme park, two hotels, a Chinese cultural museum, and a casino. But public opposition has resulted in a more modest plan that remains mostly on the drawing board.

Is the China City/Thompson Education Center project a threat to US security or a business scam? Possibly both.

Buying Political Influence

[FEC documents show that Sherry Li and Lianbo Wang have made major contributions to Donald Trump, the Republican National Committee, and key Republicans.]

[Image below shows political contributions that Sherry Li has made to state and local politicians, including Andrew Cuomo, as well as politicians in Sullivan County, where the China City/Thompson Education Center is planned.]

[Image below from Yahoo Finance shows that Sherry Li spent time in DC in 2017 to influence key Republicans, including Steve Stivers, head of the National Republican Congressional Committee.]

Trying to Follow the Money

Not much is known about Li or Wang, but a brief article revealing their political donations and activities appeared in the Daily Best last year. Apparently, their Oyster Bay Long Island residence has also been the headquarters for the United Nations Mao Zedong Foundation and several other businesses.

[Image below from Opencorpdata.com downloaded 10-2-2018 shows several business at the Li and Wang residence.]

 

[Image below: The New York State Department business entity database lists 15 companies under China City of America.]

Securities and Exchange Commission documents show transfer of ownership from Chinese corporations to the US and other business dealings, but the origins of Sherry Li's wealth are cloudy.

[Image below from Defeat China City of America on Facebook indicates relationships between Sherry Li and Chinese businesses.]

Press releases by the Thompson Education Center are located here.
[Image below: The Thompson Education Center twitter account has not shown any entries since June 2018.]

[Image below from Blacktiemagazine.com shows Sherry Li and her assistant at a black tie event in 2018. It appears that Thompson Education Center has few if any other employees.]

Preliminary research results in many more questions: about the citizenship status of Lianbo "Mike" Wang, capital flow from China through the 15 China City businesses and other enterprises, the tax status and detailed plans of the Thompson Education Center, and their possible ties to the Chinese Communist Party.

Higher Learning Commission: Accreditation Is No Sign Of Quality

"Yet in practice, accreditors—who are paid by the institutions themselves—appear to be ineffectual at best, much like the role of credit rating agencies during the recent financial crisis." David Deming and David Figlio in Accountability in US Education: Applying Lessons from K–12 Experience to Higher Education (2016)

As a watchdog of America's subprime colleges and a monitor of the College Meltdown, I can tell you that institutional accreditation is no sign of quality. Worse yet, accreditation by organizations such as the Middle States Association, Western Association of Schools and Colleges, and the Higher Learning Commission is used by subprime colleges to lend legitimacy to their predatory, low standard operations. 

[Image below: DeVry University uses its accreditation to lend credibility to its brand.]

According to the US Department of Education, the Higher Learning Commission (HLC) accredits 946 Title IV schools, including some of the nation’s most well-respected public and private colleges. As the America’s largest accreditor, it is a gatekeeper to its member schools collecting close to $40B annually in Title IV funds and many billions more from the Department of Defense (Tuition Assistance) and Department of Veterans Affairs (VA) GI Bill.

The Higher Learning Commission monitors excellent schools like University of Chicago, University of Colorado, University of Michigan, Notre Dame, and University of Wisconsin. But it also accredits a number of subprime schools, including Colorado Technical University, DeVry University, University of Phoenix, Walden University, National American University, and Purdue University Global.

On the three pillars of regional accreditation: compliance, quality assurance and quality improvement, the Higher Learning Commission gets a failing grade by supporting subprime colleges.

Insiders in higher education have been well aware of the corruption inherent in accreditation, but few speak of it publicly. The way the system works, accreditors like the Higher Learning Commission receive most of their their money from member schools, which gives them a vested interest in keeping their customers viable, even among their worst or most predatory performers.

Despite protests from the American Association of University Professors, The Higher Learning Commission has been accrediting for-profit colleges since 1977 and ethically questionable schools for nearly 20 years. In 2000, Executive Director Steven Crow defended the HLC's accrediting of Jones University, an online for-profit college that is no longer in operation.

Rather than acting as auditors, higher education accreditors for decades have acted as shills for whomever they accredit, and that can include some of the most predatory and substandard schools in America.

"I really worry about the intrusion of the profit motive in the accreditation system. Some of them, as I have said, will accredit a ham sandwich, and I think it's very important for us to make sure that they're independent and not being bought off by the Internet." -Mary A. Burgan, General Secretary of the American Association of University Professors (2000)

Many accreditors are part of a larger organization called the Council for Higher Education Accreditation (CHEA), which acts more as a barrier than a supporter of educational quality.

So who's watching the accreditors? In reality, it's no one.

[Image below from CHEA shows Higher Learning Commission dues for member colleges. Over the last 30 years, the Higher Learning Commission has received millions of dollars from subprime schools like University of Phoenix.]

The US Department of Education does very little or nothing in terms of overseeing higher education quality, and the Trump-DeVos administration has done a great deal to roll back the modest regulations enacted by President Obama.

In July, an internal investigation showed that the US Department of Education was not properly watching the accreditors, and it's very likely the situation will worsen. The agency is in the process of reviewing accreditation and accreditors, but the foxes are submitting more comments then the hens.

National American University and the Subprime College Crash

Summary

• As a subprime higher education company, National American University Holdings (NAUH) has avoided media and agency scrutiny for years.
• NAUH has been losing money since 2015, with only severe cost cutting in sight.
• A former NAUH executive has filed a False Claims lawsuit alleging that the school defrauded the US government.
• Share price has been at or near $1 delisting price since March 2018.
• NAUH has mortgaged their real estate assets to stay afloat, to the tune of $8M, a big number for a small cap company.
• NAUH is underwater, with debt surpassing equity in May 2018.
• NAUH has delayed submitting its annual report to the SEC.
• NAUH has only one major investor, T. Rowe Price.

NAUH and the Subprime College Crash
While subprime college college companies like Corinthian Colleges (COCO), Apollo Group (NASDAQ:APOL), DeVry University (DV), ITT Educational Services (ESI), and Education Management Corporation (EDMC) made the greatest profits and the greatest losses over the last two to three decades, National American University Holdings (NAUH) has been flying under the radar.

The reason for so little attention: NAUH is a small cap company with about 35 small ground campuses. Their campuses are spread out across the US West and Midwest, including Ellsworth Air Force Base near Rapid City, South Dakota. The company also has a few real estate holdings in South Dakota.

NAUH's shares have never risen to the heights of other subprime colleges that have already crashed. Its peak was $12--more than eight years ago.

According to the National Center for Education Statistics, NAUH's 3-year student loan default rate is 24% and their student loan repayment rate is 27%. Their graduation rate is 13-35%, depending on the campus. 

Worse yet, NAUH is targeting service members and veterans even more as the company lies at the brink of delisting. That's something that could get negative media attention.


Downward Trajectory
NAUH has made some money by scavenging from other failed schools, including Everest College (once part of the infamous Corinthian Colleges), ITT Tech, Brown Mackie College, Wright Career College, Career Point College, and Westwood College. But overall it has been on a three-year streak of earnings losses. NAUH's last reported gains were in February 2015.

Revenues are also down, way down. According to NAUH's last quarterly report, "FY 2018 annual revenues were $77.2 million, compared to $86.6 million in the prior year."

National American University's campuses are small, but most are too expensive to maintain. It appears that more than a dozen schools have closed or are in the process of closing.

Revenue + Earnings
(2015) 117.9M (-6.7M)
(2016) 96.1M (-8.2M)
(2017) 86.6M (-7.8M)
(2018) 77.2M (-12.3M)

Nearly all students are now learning online or through hybrid education. NAU has 4,6817 students in its online programs, 617 students at its campuses, and 747 students attend hybrid learning locations.

Enrollment
(2015) 9,519
(2016) 8,185
(2017) 6,703
(2018) 5,648

In 2016, National American University began closing campuses.  In 2018, they continue to consolidate and downsize.  


National American University Campus Populations 
(Source: National Center for Education Statistics)

Salem, VA  980

It Gets Worse
National American may gain some attention--in a bad way--because it shows few signs that it can survive.

The 2018 year started out rough, with the unsealing of a False Claims lawsuit by a former NAUH official. The lawsuit alleged that the school defrauded the US government out of millions of dollars in a student aid program, unlawfully paid bonuses to university employees for recruiting students and rigged the accreditation for its medical assisting program.

As part of its cost cutting, almost all of NAU's students are now online, which usually results in lower graduation rates--and more students who cannot repay their student loans.

NAUH has now been been forced to mortgage its properties for $8M in order to maintain liquidity. The loan is with Black Hills Community Bank. While the conditions may be favorable, maybe too favorable, business deals like this sound reminiscent of other subprime colleges before they failed.

NAUH Cash (in thousands)

(2015) 23,300

(2016) 21,713

(2017) 11,974

(2018) 5,324

NAUH's debt surpassed its equity value in May 2018. 

At this point, only one investor stands between NAUH and delisting--T. Rowe Price, a huge company that can afford to lose a little money in spots. But with all other institutional investors out, how long will T. Rowe Price keep their shares?

The Slow-Motion Collapse of America’s Largest University

[While most of my higher education analysis has been statistical in nature, it’s important to look at qualitative and historical aspects of higher education. The collapse of University of Phoenix is one of those important stories.]

From 1976 to the early 2000s, the University of Phoenix established itself as a leader in educational innovation for working adults.

Hundreds of the school’s campuses and learning sites dotted the American landscape, conveniently located near interstate off ramps. Phoenix turned hotel meeting rooms and retail spaces into learning centers for busy strivers. For those who could not attend those schools, University of Phoenix created an online presence that was unsurpassed, with small class sizes and working professionals with real world experience as instructors. 

Phoenix’s founder John Sperling was considered a genius for bringing education to adult professionals and other nontraditional students. A former university professor and self-described enemy of the academic elite, Sperling became friends with the political and business elite. Higher education’s billionaire was a notable friend of California Congresswoman Nancy Pelosi--and he appeared on Oprah.

Like the prosperity preachers who filled American television, Sperling offered the keys to success to anyone who would listen. Instead of Jesus, though, he was selling higher education.

In 2007, the limitations of online education, the adjunctification of labor, and the University of Phoenix became more evident in a New York Times article that revealed the school’s subprime graduation rate.

Rather than improving educational quality, Phoenix and its parent company, Apollo Group, became all about the numbers. At the highest level, Apollo was shooting for a half million students, which sounded laudable. Apollo Group branched out into associate degrees, and it reached out to students outside North America.

But the truth is that the company had to cut corners to meet these numbers.

In a scheme called “The Matrix”, enrollment representatives were rewarded for meeting enrollment numbers. And with that, enrollment representatives would do almost anything to get asses in classes.  Apollo Group’s CEO Todd Nelson took the school to its highest numbers. But these numbers would come at a cost. The school faced enormous pressure from federal and state agencies.

The 2010 Harkin Commission and Aaron Glantz’s investigations with the Center for Investigative Reporting a few years later showed Phoenix to be a school that would use any means necessary to make a profit. Phoenix became a joke in popular culture, skewered by comedians John Stewart and John Oliver.

[In recent years, University of Phoenix's Wikipedia page looked more like a criminal rap sheet than an institution of higher education.]

With the doubling of class sizes, that motivation has been stripped away. I can barely keep up with the minimal requirements of my job, to say nothing of the additional effort I used to put in. There is no time for extras; the students are a blur. I find myself hoping they drop out and doing little to nothing to keep them in class, because each drop equals a bit of relief for me.--University of Phoenix instructor, 2018

In 2016, Apollo Education Group was taken over by Apollo Global Management, a corporate behemoth  known to buy failing companies and stripping them of assets, and then selling them at a profit. Along with the sale, friends of President Obama--Tony Miller and Marty Nesbitt--were brought in to make the deal seem to be an act of educational reform. 

[Image below: Apollo Education still has more than two dozen lobbyists in DC, but the money to Washington may be dwindling. Source: Open Secrets]



In 2018, the school’s marketing strategy has been to look backward, at the deceased founder John Sperling, and the adult night classrooms that are all but gone.  

In a Trumpian world where history doesn't matter, the University of Phoenix is an unexamined relic of the 20th century.  Enrollment is down an estimated 80 percent from its peak and more than 450 campuses and learning sites have closed.  At least half of the campuses that have remained open are no longer taking new students, suggesting that they will close in the next 18 months. 

Purdue University and Its Subprime College Cousin Committing Fraud

Purdue University Global is not Purdue University. It's far from it. In fact, Purdue University Global is actually the former Kaplan University, a once declining for-profit college with a subprime history.
Purdue Global, the real Purdue's subprime cousin, is an open enrollment institution with more than 30,000 working class students. In 2016, then known Kaplan University included more than 6,000 military service members and 5,800 military veterans. The school today still heavily targets them.

[Purdue University Global is targeting service members and veterans through Army Times, Navy Times, and Marine Times, using practices that may violate DOD rules.]

The faculty, comprised mostly of poorly paid adjuncts, may be good, but not great. There are a handful of small campuses, from South Portland, Maine to Omaha, Nebraska. But most of Global's students are working exclusively online, which enables the school to keep costs down.

Purdue University Global's graduation rate and student loan debt numbers are all subprime. The newly rebranded enterprise has a 23-39% graduation rate, a 25% student loan repayment rate, and a 5-year student loan default rate of 53%. But you won't find the information if you type in "Purdue University Global."

As of August 8th, the College Navigator and College Scorecard have no consumer information for Purdue University Global. Instead, you have to search for Kaplan University, its former name.

According to the College Scorecard, the median income for those who have attended Kaplan University/Purdue Global is $33,500 a year --far from the $55,000 that Purdue University students make after attending, and not enough to pay off student loans.

Purdue Global's Concord Law School has a California Bar pass rate of 16-27%.

The school's subprime status hasn't stopped Purdue University Global from using its Big 10 cousin's history and prestige and fraudulently offering a "world-class education" to unwitting customers.

This bait and switch ploy is not happening without the consent of the older, wealthier cousin, Purdue University. Purdue University now owns the school once known as Kaplan University.

[Image below: The lush Purdue University campus in West Lafayette, Indiana is used to sell Purdue University Global. But credits from Global may not transfer from the subprime college to the Big 10 school.]

[Below: Purdue University President Mitch Daniels is also a Senior Administrator at Purdue University Global.]

[Image below: Purdue University Global uses a predatory lead generator, QuinStreet, to find unwitting consumers.]

[Image below: Purdue University Global online enrollment representatives use the prestige of Purdue University to peddle the school.]

False and misleading information like this will not put Purdue University Global on the map. Consumers will eventually see through the deception. But it will make Purdue University, the real Purdue University, the target for government fraud investigations.