Attorneys General from across the U.S. called last week for “stronger oversight by accrediting agencies” in order to “protect vulnerable students from predatory schools, ensure accountability to taxpayers, and level the playing field for career schools that are delivering quality, affordable programs.” At issue is the system for accrediting colleges and universities. Accreditation, for the purposes of receiving federal funds, is accepted from organizations recognized by the U.S. Department of Education, and the renewal period for such agencies is currently underway. (Letter of 4/8/16 [PDF])

The attorneys general, representing 12 states and the District of Columbia, asked the U.S. DOE to look more carefully at the renewal process. It also called, specifically, for denial of recognition to the Accrediting Council for Independent Colleges and Schools (ACICS). The attorneys general said ACICS “decisions to accredit low-quality for-profit schools have ruined the lives of hundreds of thousands of vulnerable students whom it was charged to protect.”

The letter cites low graduation rates at schools ACICS accredited coupled with high default rates on student loans. The attorneys general also outline actions taken on behalf of consumers in their 13 jurisdictions and others against schools which ACICS continued to accredit without consequence.

Lapses that we have encountered,” write the attorneys general, “include a failure to take action when improper job placement statistics are reported, inadequate job placement verification processes, and a lack of transparency and cooperation with investigations into student outcomes.”

Laureate: For Profit

Among the schools accredited by ACICS are the now-defunct Corinthian Colleges and Laureate’s NewSchool for Architecture and Design (NSAD). According to the US DOE’s College Scorecard, NSAD retains only 50% of its first-year students, has a graduation rate of 33% – far below the national average – and student loan payments averaging $482 per month.

NSAD is part of the for-profit Laureate Education network, one of the largest degree-granting operations in the world, with 64,000 faculty and employees and over one million students in colleges around the world. The Laureate network includes other schools with problems similar to those cited by the attorneys general.

These problems are only of tangential concern for investors and others who profit from these enterprises, however. Consider, for example, the CNBC global investing report of December 2015.

Laureate: the Numbers

capdollars.jpgIn contrast to the recent letter from the attorneys general, CNBC’s report does not speak of lives ruined. Instead it notes that Laureate operates in a “sector plagued by government scrutiny in the U.S.”

Laureate’s numbers are not as bad as critics imply,” CNBC writes, offering statistics about Laureate’s Walden University:

At Walden, for example, the U.S. Department of Education’s “College Scorecard” website says the median annual income of graduates 10 years after getting their degree is $54,900. That’s higher than for the University of Texas at Austin, one of the nation’s top public universities, and $100 more than graduates of Rutgers University’s flagship New Brunswick campus make.

What CNBC doesn’t say is that Walden student loan payments average $354/month, compared with $247/month for Rutgers and $246 for The University of Texas. The rate of student debt repayment is 66% at Rutgers and 90% at UT, according to the scorecard, but only 44% at Walden. Rutgers graduates 80% of its students and retains 90%, UT graduates 79% and retains 67%. Walden’s grad and retention data is missing from the College Scorecard. (see College Scorecard)

Laureate and the Clintons

CNBC mentions former president Bill Clinton’s position with Laureate, referencing “the reflected glow of his popularity,” and noting that the position earned the former president more than $16 million over the course of four years. It doesn’t mention another aspect of that tale:

Last fall, Inside Higher Ed reported on a 2009 email from then Secretary of State Hillary Clinton telling staff to include Laureate in a higher education policy dinner hosted at the U.S. Department of State. The email mentions that Laureate Education is an operation “Bill likes a lot.” Shortly after that, her husband became Laureate’s honorary chancellor. He kept the position until August 2015. An aide to Bill Clinton told Bloomberg news service at the time that his resignation was unrelated to his wife’s candidacy for president, declared two weeks earlier.

Bloomberg also reports that Laureate gave seven figures – between one- and five-million – to the Clinton Foundation and another set of large commitments to the Clinton Global Initiative. (See Bloomberg)