For-Profit College Issues

We’re closing in on year three since the U.S. Department of Education (DOE) was tasked with canceling federal student loans for thousands of consumers. These students were victimized by predatory for-profit colleges like Corinthian Colleges, which, at its peak, operated more than 100 campuses in the U.S. and Canada. 

When someone asks why the debt cancellation is getting nowhere, the answer usually includes a mention of Education Secretary Betsy DeVos.

Whether DeVos doesn’t like taking orders from Congress or is made of Teflon, no one knows. But what we do know is nothing seems to stick when she’s asked to make something happen for the benefit of those exploited students.

You want me to do what?

A coalition of states tried to get DeVos to take action on 27,000 applications for loan forgiveness filed by students whose for-profit schools collapsed and left them stranded without a degree or guaranteed admission to another school. That went nowhere, and neither did another alliance of 18 states. Then, 23 senators asked the Consumer Financial Protection Bureau (CFPB) to look into the mismanagement of the forgiveness program because they also couldn’t get DeVos to move forward.

Fast forward to Thursday, when the House Education and Labor Committee called DeVos on the carpet to try to find out two things: 

1. Why her department has been dragging its feet on bringing some resolution to the affected students.

2. What the logic was behind the math in her loan relief plan -- specifically how it deals with debt relief claims made under the “borrower defense to repayment” statute, a law which gives students a defense against loan repayment if they were subject to adversarial debt collection. The Washington Post’s education economics writer Danielle Douglas-Gabriel reported that higher education experts went as far as saying DeVos’s new sliding scale will result in substantially less loan cancellation than before.

Why the stonewalling?

Committee Chairperson Bobby Scott (D-VA) didn’t waste any time in laying out his case in Thursday’s hearing. 

“The department's initial partial relief formula would have provided about 93 percent of defrauded students full relief,” Scott said. “In 2018 the federal court blocked the initial partial relief formula because it misused students personal data. But even after the court's ruling which specifically asserted the department could provide timely and full relief to eligible borrowers under the Obama era framework, the department refused to do so.”

Scott then moved to some facts which showed how defrauded students were completely left out in the cold:

• In the 18 months between the court's 2018 ruling and the department’s announcement of a new revised formula, the department failed to process a single borrower defense claim. 

• In that same timeframe, the number of borrowers awaiting relief soared from 54,000 to approximately 240,000.

• The department illegally collected on 45,000 borrowers during that period of inaction, putting some borrowers in a situation where wages and tax returns were garnished by the government when those borrowers should have been receiving some type of monetary relief.

The gloves came off as Scott made it clear that the department has done nothing on behalf of the students who were hoodwinked. 

“So, Madame Secretary, your refusal to process those claims is inflicting serious harm on students that you have the duty to serve while the department has been searching for a legal method to shortchange these defrauded borrowers,” he argued. 

“These defrauded borrowers have been left with mountains of debt, worthless degrees and none of the job opportunities they were promised. In many cases, they were unable to go back to school, start a family, or move on with their lives.”

DeVos defends herself

To her credit, DeVos appeared prepared for Scott’s barrage and defended both her department and the administration vigorously. She put some of the blame back on the Obama administration, saying it not only left behind 64,000 borrower defense claims to be processed, but it also “weaponized the regulation against schools it simply didn't like.” 

“They applied the law in a discriminatory fashion...since 2015, there has been a 5,000 percent increase in borrower defense claims. This administration is committed to pulling back the previous administration's overreach and will enforce a borrower defense rule that is consistent with Congress' intent, that protects all borrowers and that treats taxpayers and schools fairly.” 

In defense of the DOE’s new formula, DeVos wanted it known that the DOE’s rule first and foremost “puts into place a process that is clear, understandable and easily accessible for borrowers. It also ensures that claims are processed efficiently, carefully, transparently and fairly.”

However, DeVos’ definition of “clear, understandable, and easily accessible” might be interpreted as an exhausting number of hoops a student would have to jump through to get a loan absolved. Students have to file claims “which will be judged using a preponderance of the evidence standard”; the new process allows for “both borrowers and institutions to present evidence, obtain relevant evidence we are considering in the case and respond to any evidence in the record.” 

One caveat that might make matters worse for students using the borrower defense rule is that DeVos’ version does not apply retroactively. When it goes into effect on July 1, 2020, it will apply to loans only dispersed after that date. 

“This means that the Department will continue to enforce, in good faith, the previous administration's 2016 rule for all loans dispersed between July 1st, 2017 and July 1, 2020,” DeVos said, leaving her interpretation of “in good faith” up for conjecture.

“Frankly, it’s criminal”

When Rep. Lori Trahan (MA-03) had her turn at the grill, she went straight at Secretary DeVos’ revised formula, which, in Trahan’s estimation, provided only partial loan relief to the defrauded students. 

Rep. Trahan demonstrated why DeVos’ plan won’t work by weaving a tale about an imaginary student (named “Betsy,” interestingly enough) who was defrauded by their school. Because “Betsy” makes less than the federal minimum wage, she would not receive full debt relief, Trahan argued.

As the video shows, Trahan took no prisoners, playing pin-the-tale-on-DeVos with the Education Secretary and her new formula.

“Look, the new partial relief formula that you came out with two days ago, it doesn't benefit students who have been fleeced,” argued Trahan. “It doesn't take into account individualized earnings, debt load, whether Betsy is back in a full-time or part-time accredited college program, which is why my friend from Pennsylvania, Representative Wild, and economists alike call it nonsensical.”

“These are students who wanted nothing more than to get ahead, who took out loans in good faith, and they were taken advantage of instead. And your response to them is to cheat them again.” 

Speaking to Scott’s tirade about the DOE’s snail’s pace, Trahan pointed out to DeVos that she has the ability to make things better, but she said the Education Secretary simply isn’t doing enough.

“So, I know right now, you have the authority to provide full, fair, and immediate debt relief to student borrowers who were defrauded by these predatory colleges. And every day that goes by is a violation of students' rights. And frankly, it's criminal,” Trahan said. 

“I know fraud when I see it”

When Suzanne Bonamici (D-OR) had her turn at DeVos, she didn’t spare her concerns either. 

In lawmaker’s scrutiny of the Education Department’s revised formula for processing Borrower Defense claims, she argued that only a fraction of borrowers will get that relief and that DeVos’ continuing efforts to demand loan repayment from defrauded students was an insult. 

“I’m a former consumer protection lawyer for the Federal Trade Commission, and I know fraud when I see it,” Bonamici said during the hearing. “These students were misled and cheated. And the fact that some of them may be making money doesn’t mean they weren’t defrauded. If someone went into one of these programs hoping to become a nurse, for example, and now they’re selling clothes at a department store, it doesn’t mean that they weren’t defrauded.”

“That’s not the way it works”

Not unlike anything else we’ve seen from congressional hearings lately, the Republicans on the committee went to bat for DeVos. Rep. Virginia Foxx (R-NC), the ranking member on the committee, offered this analogy in defense of DeVos’ right to provide partial relief for successful borrower defense claims: 

“I bet you there is not a member of this committee who has not had a car accident or a problem in homeowner's insurance, and I'll guarantee you that the insurance companies don't write you a check for what you think is your damage. They assess that damage. They look at your car. They come to your home. What these members are saying is, you just write a check from the taxpayers and say, ‘It's okay if you tell us you've been defrauded or you've been damaged.’ That's not the way it works.”

Dealing with the DOE?

The Department of Education barely gets one star from ConsumerAffairs reviewers, and now you may be able to understand why.

But one thing that raises an eyebrow is something that Trisha of Thousand Oaks CA brought up in her review of the DOE. She says that when someone calls the DOE, they’re actually getting a call center run by Maximus Federal Services Inc. which, Trisha claims, “runs every aspect of FSA (Federal Student Aid).” 

“They can't answer questions. Being on the outside, we can't possibly know this...They work off of a script. If you ask a question not on the script, they will dance around an answer and actually make something up. They don't offer anything because they don't know how.”

The rate at which students are able to pay off their student loans could be altered under the Trump administration’s 2020 budget plan, which includes a proposal to eliminate the Public Service Loan Forgiveness (PSLF) program.

The proposal, titled “A Budget for a Better America: Promises Kept. Taxpayers First,” includes $64 billion in funding for the U.S. Department of Education, which represents a $7.1 billion decrease compared to the 2019 funding.

Under the plan, the PSLF program -- which forgives student loans for borrowers who are employed full-time in government and some nonprofit positions who make 120 eligible on-time payments over ten years -- would be cut.

The elimination of the program would affect borrowers who take out a new student loan starting July 1, 2020. It would exclude borrowers who are currently completing their education.

‘Draconian cuts’

The proposed plan aims to balance taxpayer interests with students’ needs. The White House said it would save an estimated $53 billion over nine years by cutting the PSLF program.

The budget plan might also make colleges share some of the responsibility for student loans. It  includes a “request to create an educational finance system that requires postsecondary institutions that accept taxpayer funds to have skin in the game through a student loan risk-sharing program.”

American Council on Education President Ted Mitchell called the cuts "draconian.”

​“This is the third year in a row that the Trump administration has proposed to walk away from adequately investing in student financial aid and incredibly important, life-saving biomedical research,” Mitchell said in a statement.

“If enacted, the president’s proposal would cut over $200 billion in federal student aid and also cut billions more in funding for the National Institutes of Health and the National Science Foundation, threatening the well-being of our nation’s students and citizenry.”

James Kvaal, president of The Institute for College Access and Success (TICAS), also criticized the proposed budget cuts.

"These deep cuts overshadow otherwise worthwhile changes, such as automatically enrolling distressed borrowers in income-driven repayment, automating the annual income recertification process, and modernizing student loan servicing," Kvall said in a statement.

The proposal hasn’t been finalized yet, and it will likely be altered before taking effect. On Monday, Presidential adviser Ivanka Trump is expected to appear at an event that will discuss college affordability and reauthorization of the Higher Education Act.

Students eligible for federal college grants left $2.3 billion on the table this year, according to an analysis by personal finance site NerdWallet.

The analysis reveals that the money was available through Pell Grants, federal aid that is distributed based on financial need and does not have to be repaid. These were left unclaimed because students didn't fill out the reuqired Federal Application for Financial Student Aid (FAFSA) form.

In fact, NerdWallet found a staggering 1,234,249 high school graduates didn’t fill out their FAFSA for the 2017-2018 academic year, and an estimated 648,191 of them would have qualified for Pell Grants.

Qualifying students could have received an average of $3,583 to help pay tuition and fees, reducing the need for student loans.

Grant money might have made the difference

As we reported last week, a new survey by COUNTRY Financial asked recent high school graduates who had never attended college why they weren't applying. Nearly half -- 48 percent -- said the high cost of college was a factor in their decision. Nearly as many -- 47 percent -- said they were unwilling to go into student loan debt to pursue a college degree.

"Student loans have had an impact on the ability of Americans to complete their education," the authors wrote. "Of those who started but did not complete a post-secondary program, 59 percent said the cost of education factored into their inability to finish their education, and 53 percent said that taking on student debt was also a factor in their incomplete education."

The Nerdwallet researchers say this underscores the need for all college students to fill out the FAFSA, the key to unlocking federal and state aid dollars. You can get started on the process here.

Pell Grants

While there are different grant programs available, the Pell Grant is among the most widely used by those who are eligible. The amount of money applicants can receive changes on a yearly basis. Currently, the amount is capped at $5,920.

The amount applicants can qualify for will depend on financial need and the cost of attending a particular school. Recipients can receive Pell Grants for up to 12 semesters, meaning the money could be available throughout the process of receiving a bachelor's degree.

Nearly half of all 2017 high school graduates were eligible to receive a Pell Grant for college this fall. However, the Nerdwallet analysis shows 36 percent of last spring's high school graduates failed to submit the FAFSA.

The lesson for current high school seniors and their family is to file the FAFSA by the deadline, which is midnight Central Time, June 30, 2018. However, since aid is awarded on a first-come, first-served basis, it is best to file as early as possible.

More state universities are beginning to respond to rising tuition burdens on families by offering more financial aid -- and in some cases, free -- tuition.

The University of Michigan (U-M) is the latest state university to roll out a free tuition plan, called the "Go Blue Guarantee." Launching next January, it will guarantee students from a family with income below $65,000 a year free tuition for up to four years.

"Today, our long-standing commitment to ensuring that qualified students from Michigan can afford a U-M education becomes a guarantee," said U-M President Mark Schlissel.

Eliminates some of the complexities

Schlissel says the guarantee eliminates a lot of the complexities found in financial aid. If a family of an accepted student qualifies, the student pays no tuition

"I have always believed that talent is ubiquitous in our society, but opportunity most certainly is not," Schlissel said. "The 'Go Blue Guarantee' helps us ensure wider opportunity."

U-M says the new aid package is a way it can help meet the financial needs of in-state students who have the grades to attend the university but not the money. The school says the program is not taking any money away from existing financial aid packages.

The "Go Blue Guarantee" will be available to students whose families fall within the income limits, and also are below a certain net worth threshold. Qualifying students also may be eligible for additional aid to cover non-tuition costs.

New York's free tuition program

In April, New York announced its own free tuition plan. The state legislature approved funding to provide free tuition to students attending CUNY and SUNY, as long as their families earn less than $100,000 a year.

Qualifying students must attend school full-time and average 30 credits each year, including summer and winter classes. They will also be required to maintain a passing grade point average to be eligible for free tuition.

There is an additional condition as well. Upon ending their education, they will be required to live and work in the state for the same number of years they received the financial aid.

The financial aid program called the “Excelsior Scholarship” will be available to students starting school this fall, as long as their families make under $100,000 per year. The income threshold will increase to $110,000 in 2018 and $125,000 in 2019.

According to the College Board, the average cost of tuition and fees for the 2016–2017 school year was $9,650 for in-state students across the U.S.

Not too long ago, the Washington Post Company owned a very profitable newspaper and an even more profitable for-profit college. The newspaper, of course, was The Washington Post and the college was Kaplan University.

We all know what happened to the Post. The Graham family sold it to Amazon impresario Jeff Bezos. Now the Grahams are selling Kaplan to Purdue University, an unusual and somewhat controversial transaction in a world where for-profit schools are still regarded as inferior to "real" universities (like Purdue, Indiana's land-grant college).

But Purdue says it needs the expertise that Kaplan has developed.

“None of us knows how fast or in what direction online higher education will evolve, but we know its role will grow, and we intend that Purdue be positioned to be a leader as that happens,” Purdue President Mitch Daniels said in a statement. “A careful analysis made it clear that we are very ill-equipped to build the necessary capabilities ourselves, and that the smart course would be to acquire them if we could.”

Sold for $1

Businesses do this all the time -- buy a company that has the technical or marketing skills they need to enter new markets or protect existing ones. But it's a little unusual for a public university to buy a private, for-profit school.

What's perhaps even more unusual is that Purdue won't be folding Kaplan into its existing academic operations. It plans to continue to operate all 15 Kaplan campuses and "learning centers," currently with about 32,000 students and 3,000 employees.

The price, by the way, is a whopping $1. Graham Holdings Company, as the former Washington Post Company is now known, will get 12.5 percent of Kapaln revenues going forward.

All of this, of course, still depends on approval by various boards and regulators. During the Obama Administration, for-profit schools were held in low regard and attempts to merge for-profit schools into nonprofit institutions didn't get very far.

That may change now that the president is himself the ex-CEO of a for-profit school that enjoyed more than its share of controversy.

The Purdue trustees have already given their blessing to the deal. The U.S. Education Department and the Higher Learning Commission has yet to weigh in.

One of the most complained about subjects on consumers’ minds lately has been student loans. Reports show that complaints made to the Consumer Financial Protection Bureau (CFPB) increased by 429% year-over-year from December 2016 to February 2017, the most of any product or service.

However, prospective students in New York may have less to complain about in the future. With the passing of its 2018 State Budget by the Senate, the state will soon become the first to offer free tuition at both two- and four-year public colleges and universities to lower and middle income families.

The program, which was proposed by Governor Andrew Cuomo earlier this year, will affect approximately 940,000 middle-class families and individuals, who will have the option of attending any of the 64 CUNY or SUNY colleges free of charge.

“With this Budget, New York is once again leading the nation and showing what responsible government can achieve. The result is a Budget that advances the core progressive principles that built New York: investing in the middle class, strengthening the economy and creating opportunity for all,” Cuomo said in a statement.

Who can apply?

The free tuition program, called the “Excelsior Scholarship” program, will initially cover students starting school this fall whose families make under $100,000 per year. However, that threshold will increase in subsequent years to $110,000 in 2018 and $125,000 in 2019.

Applicable students must also be enrolled full-time at their public college or university of choice and average 30 credits each year, including summer and winter classes. An impetus has also been put on grades under the program, as students must maintain a passing grade point average to be eligible for free tuition.

Additionally, students are required to live and work in New York for the same number of years after graduating school that they received the scholarship. So, those who attend a four-year college will have to live and work in the state for four years after they’ve received their diploma.

Covering costs

So, how exactly will the plan work? Basically, the state has calculated that tuition at CUNY and SUNY schools comes out to approximately $6,470 per year. When combined with room and board and other associated fees, that number comes out to just under $25,000 annually.

The budget language indicates that around $5,500 of this total cost will be covered by current tuition assistance programs, and that the remaining amount will be covered by the state and reimbursed to the public colleges and universities. Officials peg the cost of the program at $163 million per year once it is fully implemented.

Facing opposition

However, opponents of the plan have stated that the real cost will be much more than Cuomo and his supporters predict, especially for students who don’t meet the program requirements. Assemblyman James Skoufis points to parameters within the state budget that allow SUNY Board of Trustees the option of increasing tuition by $200 per year over the next three years for some students.

“It’s shocking to me how the governor can, out of one side of his mouth, propose free tuition for a small group of select students while out of the other side of his mouth, advocate for tuition hikes on a dramatically larger set of students,” he said.

However, Cuomo spokesman Rich Azzopardi fired back at Skoufis over the comments. “If Skoufis thinks 80% of all New York families is too few students, he should go back to school himself and take a remedial math course,” he said.

More information on the Excelsior Scholarship and the state’s budget can be found here.

With the founder of Trump University in the White House, for-profit education is riding high once again. After years of increasing federal oversight, the for-profit college industry sees President Trump's regulation rollback as its ticket to renewed growth.

The Education Department last week announced it would delay enforcing the "gainful employment" rules drafted by the Obama Administration to crack down on schools that leave their students with huge debts and scant job opportunities.

“This action is taken to allow the Department to further review the GE regulations and their implementation,” the agency said.

The rules cut off access to taxpayer funds for colleges and vocational training institutions if their graduates spend at least 20% of their discretionary income, or 8% of their total earnings each year, paying off student debt.

Regulations challenged

Schools have challenged the data used to make the determinations. 

The industry's lobbying group, Career Education Colleges and Universities, has taken the position that all schools -- public, private, and for-profit -- should be treated equally.

Education Secretary Betsy DeVos is an advocate of private education and said during her confirmation hearings that she would work to promote trade schools as an alternative to four-year colleges. 

President Trump's now-defunct Trump University claimed to offer training in real estate and finance but closed after a series of lawsuits and challenges from regulators and former students who said they got little for their money but sales pitches.

In November 2016, Trump agreed to pay $25 million to settle a class action lawsuit filed on behalf of about 7,000 former students. 

One of the named plaintiffs in the case, Sonny Low, said he still had $9,000 in credit card debt and had to take a job at Home Depot to try to finally pay off the remainder, attorney Rachel Jensen said.

A group of state attorneys general are asking Education Secretary Betsy DeVos and Congressional leaders not to declare "open season" on students by rolling back regulations governing for-profit colleges.

"Over the past fifteen years, millions of students have been defrauded by unscrupulous for-profit post-secondary schools," said the nine-page letter signed by 18 attorneys general, who said they had been forced to step in to stop some of the worst abuses because accreditors had been "asleep at the wheel."

Regulations governing for-profit schools and their accrediting agencies were tightened over the past several years after a series of abuses, but the new chair of the House Education Committee -- Rep. Virginia Foxx (R-N.C.) -- has vowed to "do everything we can" to roll back the regulations.

"Now that Mr. Trump is the president-elect, I think [we’ll approach things] quite differently than the way we might have if it had been Mrs. Clinton," Foxx said in a November 2016 interview with Inside Higher Education.

Asked if she sees the federal government taking action to lower the cost of education, Foxx said she did not.

"No. Why should we? We have a $20 trillion debt," she said. "Why should we go into debt to pay for what the states should be doing? Have you read the Constitution lately? If you find the word "education" in there as a responsibility of the federal government, then I might change my mind."

Serious cases

The AGs listed some of the most serious cases, including American Career Institute; Ashford University/Bridgepoint Education, Inc.; Corinthian Colleges, Inc.; Career Education Corporation; Education Management Corporation; Daymar College; DeVry University; ITT Tech; National College of Kentucky; and Westwood Colleges, noting that students and taxpayers have lost millions of dollars paying for substandard programs, certificates, and degrees.

Illinois Attorney General Lisa Madigan and the other AGs pointed to a number of protections they believe should remain intact, including the Gainful Employment Rule, which ensures students who attend career training programs will qualify for employment and be able to repay their federal student loans once they graduate.

The AGs are also pushing to keep vigorous federal oversight of accreditors that are tasked with providing prospective students with quality assurance.

Loan forgiveness

In addition to today’s letter, Madigan has repeatedly called on the U.S. Department of Education to immediately forgive federal loans of students who attended fraudulent for-profit schools. Madigan reached a $15 million settlement with Westwood College in 2015 that forgave private debt owed by students of Westwood’s criminal justice program. 

Madigan’s investigation into Everest College, which was operated by Corinthian Colleges Inc., revealed widespread misrepresentations made to prospective students, supporting the Department of Education’s own findings of fraud.

Madigan was also the first attorney general in the country to take action against a new industry of student loan debt relief scams. These scams target student loan borrowers who are desperate for help to avoid defaulting on their loans and end up getting scammed into paying money that does not help with their debt. Once these scammers illegally take upfront fees from borrowers, they do little to help them with their payments.

"Deceptive and abusive"

"These schools, and others like them, engaged in a variety of deceptive and abusive practices," the letter said. "Some promised prospective students jobs, careers, and further opportunities in education that the schools could not provide. Many schools inflated job placement numbers and/or promised career services resources that did not exist. Many nationally accredited schools promised that their credits would transfer, even though credits from nationally accredited schools often do not transfer to more rigorous regionally accredited schools."

"Many students were placed in loans that the schools knew from experience their graduates could not pay back. The schools were overseen by accreditors who failed to take action to protect students or the taxpayers who funded their federal student loans, despite ample evidence of these and other problems. In short, the entire for-profit education system was failing students and taxpayers," the letter continues.

Joining Madigan in sending the letter were attorneys general from Connecticut, Delaware, Hawaii, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and the District of Columbia, as well as the Executive Director of the Office of Consumer Protection of Hawaii.

DeVry University has agreed to pay $2.25 million in restitution to New York graduates, wrapping up charges that the for-profit school lured students with ads that exaggerated both graduates’ success in finding jobs and potential salary figures. DeVry will also pay $500,000 in penalties, fees, and costs.

“DeVry used misleading claims to lure in students who were simply seeking a college degree, greatly exaggerating job and salary prospects for graduates” said Attorney General Eric Schneiderman. “I’m pleased that this settlement provides much-deserved restitution to students who were misled, and requires DeVry to stop its false advertising.” 

DeVry graduates eligible to participate in the claims process include: 

(1) graduates of associates and bachelor’s degree programs at DeVry campuses in New York who began their program between July 2008 and September 2015; and

(2) New York residents that graduated from DeVry online associates or bachelor’s programs and who began their program between July 2008 and September 2015. 

Those graduates will be eligible to receive restitution if they submit a claim form that indicates that the graduate was not employed in her field of study within six months of graduation, despite seeking in-field employment.  

Graduates eligible to participate in the claims process will receive a claim form by mail.   

DeVry recently reached a separate settlement with the Federal Trade Commission (“FTC”) concerning its advertising practices. New York DeVry graduates may be eligible to receive restitution under both settlements.

DeVry is headquartered in Illinois and operates fifty-five campuses throughout the country, including three in New York City.  DeVry also offers online college programs.

"90% success"

Many of DeVry’s advertisements centered on a claim that 90% of DeVry graduates who are actively seeking employment obtain employment in their field of study within six months of graduation. The investigation revealed that the 90% claim was misleading because a substantial number of the graduates included in the 90% figure were graduates who were already employed prior to graduating from DeVry, Schneiderman's office said.  In fact, many of the graduates included in the 90% were employed before they even enrolled at DeVry. 

In addition, DeVry’s employment outcome statistics inaccurately classified a significant number of graduates as employed in their field of study, when in reality the graduates were not working in their field. 

For example, DeVry counted graduates of DeVry’s Technical Management program as “employed in field” where the graduates were employed as retail salespersons, receptionists, bank tellers, and data entry workers. In some cases, graduates were counted as employed in their field of study despite holding positions that did not require a college degree.

The University of Phoenix is one step closer to being sold and going private. The U.S. Education Department approved the $1.14 billion sale of parent company Apollo Education Group to three private equity firms on Wednesday.

But before that happens, the new owners, including two executives with close ties to the Obama Administration, must agree to the conditions set forth by the department.

The conditions require the company to submit a letter of credit totaling about $386 million to be used as collateral if the company can't pay back funds advanced to it by the federal government. Apollo would also agree not to change or add any new programs until June 30, 2018 and to maintain enrollment levels at or below current levels.

The agreement would apply to both the University of Phoenix and Western International University, both owned by Apollo.

Republicans have been questioning the deal because of the involvement of Marty Nesbitt, a close friend of President Obama who runs the Vistria Group, one of the equity firms. Also, Vistria's co-founder is Tony Miller, who was deputy secretary of education from 2009 to 2013.

The Trump Effect

The apparent close ties to the Obama White House have brought calls for tighter scrutiny of the arrangement from educators as well as political interests.

“It’s entirely reasonable to ensure that an ownership group with no prior experience running a college of any sort should abide by certain restrictions,” said Ben Miller, senior director for postsecondary education at the Center for American Progress, according to Inside Higher Education. “It’s very clear the department is taking a real risk that Tony Miller and others who have no experience in running a college will be able to do so successfully.”

Some analysts suggested the requirement for the letter of credit was "onerous" and would push an already troubled institution further into the red. But some also suggested the buyers might go ahead with the deal in hopes that the incoming administration of President-elect Trump -- no stranger to the for-profit education business -- might take a kinder view and loosen the restrictions. 

The University of Phoenix has for years been the largest and best-known for-profit college, with an enrollment nearing 500,000 in 2010. But after a series of lawsuits, scandals, and governmental pressure, enrollment is now down to about 175,000 and the company's future prospects are unclear.

The Obama Administration has cracked the whip on for-profit schools, which critics say charge high tuition, make unrealistic promises of future employment, and deliver degrees and certificates that are often viewed as worthless by prospective employers.

Consumer advocates have for years encouraged students to look to community colleges, which tend to be much less expensive and deliver training that is more widely accepted in the marketplace.