Stevens-Henager College Changes from For Profit to Non-Profit

What is the main purpose changing from profit to non-profit institutional status? Will they decrease tuition and fees?

 

non-profit does not mean anything. They will give themselves more salaries and bonuses. Students are actually charged a little too high. There are many examples of this practice.

 

There is the perception that non-profit is somehow better. However I am not sure if it really changes anything. If they go all the way and get tax-exempt status is could allow them to keep more of their tuition, which maybe they would pass along, however I have never seen this happen.

 

The main reason is that federal regulating bodies have added a significant number of rules and regulations that for-profit schools must follow and that non-profits do not. The current administration in Washington is hostile toward private-sector education, so there is a great deal of incentive to move from for-profit to non-profit tax status. Of course the irony is that for-profit schools pay income and property taxes and non-profit schools do not, so switching the for-profit education sector to non-profit would mean over 3 billion dollars in lost income tax revenue for the government (and these taxes go to subsidize state schools, community colleges and universities).

 

For-profit education maybe? I don't think the administration has a problem with Harvard or Yale.

 

Private-sector education and for-profit education are synonyms. Harvard and Yale are private universities, but not private sector.

 

I don't think for-profit education has to do with anything, I think it's the recruiting practices they performed. The whole "getting as many students to sign up" is probably why they have gotten so much attention in the past years.

 

Actually, having dealt with this issue for more than two years, for-profit education has EVERYTHING to do with it. It is true that, of the more than 3,000 for-profit schools, colleges and universities, several have been found to engage in practices that put recruiting of students far above educating and retaining them (the latest being Ashford University). Some have engaged in dishonest and illegal practices and deserved the punishments that they have received.

The difference here is that when multiple "non-profit" law schools and the likes of Emory University, George Washington and, most recently Tulane University, admit to having falsified data (motivated by wanting to increase enrollments), we do not hear federal legislators launching public attacks on all private non-profit universities. Stanford, Harvard, Yale, Notre Dame, BYU. NYU, Excelsior and over a thousand other non-profit private universities should not have to suffer for the sins of a few peer institutions. When Compton College goes under and City College of San Francisco is inches away from doing so, no one accuses all 2,000 community colleges of mismanagement. Northern Virginia Community College, Fresno City College and College of Lake County should not have to suffer for the sins of a few peers.

The current administration has made its position on the private sector in general very clear. "For-profit" is currently deemed a nasty phrase, be in corporations, hospitals or colleges. Private sector schools that are not University of Phoenix, Kaplan or Ashford should not have to suffer for the sins of a few peers--but they do. American Military University, Walden University, Rassmussen College, Sullivan University, American Public University and numerous others have not been found to engage in the recruiting practices that caused trouble for other private-sector schools, yet they are consistently lumped in the same bag as the University of Phoenix, even by those who should know better.

Tom Harkin, Dick Durban and Arne Duncan treat "for-profit" schools differently than they treat "non-profit" schools. It is so obvious that it is not even controversial. It is, in fact ALL about being a for-profit. Some, like Arthur Keiser and the owners of Stevens-Henager, have decided that being on the "enemies" list is more trouble than it is worth.

 

Hey, maybe the University of Phoenix could "go Galt" on us and cease selling educational services. Truly this would stop the motor of the world.

 

I appreciate the concern about disproportionate regulation, but doesn't almost all of any regulatory 'burden' these people might add targeting for-profit schools target them on the basis of their collecting large amounts of federal money through student financial aid?

Here's a university that just went for-profit while also choosing to walk away from that system (see point 3). They don't seem to be complaining.

 

*If* the IRS actually investigated and used the Intermediate Sanctions Rule that was created some 15 years ago, then the profit-to-nonprofit conversion would have real teeth, because IRS regs actually set pretty severe limits on how funds can be used, what people can be paid, and, in short, nonprofit funds cannot be transferred to individuals, paid as bonuses, etc. However... in practice, the IRS almost never uses the power granted by the Intermediate Sanctions Rule.

California and a few other states have a charitable trust enforcement board that has substantialy stronger teeth than the IRS intermediate sanctions rule, and they used to be pretty aggressive about enforcing policies against nonprofits. Alas, I suspect that, with budget cuts, that enforcement has probably gone out the window.

 

You know schools are worried about the for-profit perception when they actually go so far to put the words "Non-Profit" in big letters on their advertising graphics. These schools don't even want to be mistakenly associated with being for-profit.

 

The reason all for-profits get lumped in the same bag is simple: the for-profits themselves do nothing whatsoever to exclude, distinguish, or reprimand the "bad players". They don't police themselves -- even in the case of obvious abuses. Then they complain when government steps in.

This criticism doesn't come from government, and it doesn't come from the non-profit education sector. It comes from Wall Street -- which is a place where "for-profit" is not a "nasty phrase". Here's how one stock analyst put it last year:

If the for-profit sector wants government off their backs, then they need to take some responsibility themselves. Instead, they are "blowing it".

 

The cited article is clearly talking about policing by trade associations, in this case the Association of Private Sector Colleges and Universities, which was mentioned by name. Any private association obviously can set standards for membership, and for sanctions or expulsion. Accreditors are private associations that do this, but there is nothing whatsoever to stop the APSCU -- or any other alternative group of for-profit schools -- from doing the same sort of thing. Accreditors don't have a monopoly on rigorous ethical and academic standards.

If APSCU chooses to sit on its hands rather than take action against their worst-behaving members, they certainly have the right to do so. But in that case, the members of APSCU should not be surprised if the public takes their inaction as a sign of tacit approval by APSCU member schools.

If the members of APSCU want to stop the growing stigma associated with "for-profit education", then they need to do something more than sit on their hands. That's just the opinion of one Wall Street analyst, but it's a reasonable one, and I suspect that many shareholders would agree.

 

It's all in the accreditation!

#4profit schools are nationally accredited which is a lower level of accreditation than private liberal arts schools or community colleges or State Universities, which are regionally accredited. National accreditation is generally PAID FOR which accounts for the substandard education offered at the for-profit colleges. Also, the low level of national accreditation at the for-profits is why credits from a for-profit school WILL NOT TRANSFER to any regionally accredited school.

The for-profits substandard educational levels and fraud-infested practices prohibit them from being eligible for regional accreditation so they try to gain regional accreditation (read respectability here) by piggybacking it in when they BUY a regional accredited school, usually one that is in deep financial trouble.

 

The U.S. Department of Education exists primarily to distribute federal taxpayer funds to all schools. Private sector (for-profit) schools are not the only recipient of taxpayer funds and, as a relatively small sector of higher education, receive a minority of the total taxpayer allotments. If the regulations were so well-reasoned, then they should apply to all recipients of taxpayer funds.

If one has multiple venture capital firms that are willing to invest into your model and supply a large amount of capital (well over 20 million thus far), then you are correct that there would be few complaints. Although it should be mentioned that the university in question is currently under probation by its accrediting body. Frankly, I hope that the experiment works--we could use some viable alternative models in higher education.

 

Non-profits do exactly the same thing. How many non-profit public and private institutions are railing against George Washington, Emory, Tulane, Dickinson State, Claremont McKenna or Bucknell, each of whom has recently falsified information in order to positively affect enrollments. What effort has been been made in the non-profit education sector to "exclude, distinguish, or reprimand" these "bad players"?