Obama Empties Innovative Classrooms Carl Barney thought he was doing a good deed by going nonprofit. The feds still want to kill his schools.By Allysia Finley
http://www.wsj.com/articles/obama-empties-innovative-classrooms-1466635226
The Obama administration’s relentless campaign against for-profit colleges is succeeding: More than 180 have closed in the past two years. The Education Department projects that 1,400 vocational programs educating 840,000 students won’t survive its gainful-employment rule, which ties federal student aid to debt and earnings.
But the administration isn’t content with shutting down for-profits: Now regulators and prosecutors are even going after a businessman who waved the white flag and converted his vocational schools into nonprofits. With this administration, it’s a sin if you ever tried to make a buck.
In 2012 Carl Barney merged the CollegeAmerica, Stevens-Henager College, Independence University and California College San Diego with the nonprofit Center for Excellence in Higher Education (CEHE), which promotes reforms in college philanthropy. The 75-year-old British immigrant, who had been the for-profit colleges’ sole proprietor, tells me that he wanted to reduce his day-to-day responsibilities and channel more resources into education rather than paying taxes. “I didn’t want to be as involved,” he says. “I wanted to put more money back into the colleges.” He became the chairman of the new group of nonprofit colleges.
As the merger was being completed in 2012, Colorado Attorney General John Suthers, a Republican, began an investigation. In November 2014, the AG sued CEHE. According to the complaint, the colleges duped students into enrolling with deceptive ads such as one promising to help them “make more money and have a real career.”
The Colorado lawsuit cites poor graduate outcomes, yet Mr. Barney’s schools outperform local community colleges. The graduation rates at CollegeAmerica in Denver (43%), Cheyenne (47%) and Phoenix (55%) exceed those at the public Community College of Denver (12%), Laramie County Community College (17%) and Phoenix College (22%).
A peculiar aspect of the Obama administration’s education obsessions is that the White House wants to steer more young people to community colleges that often have worse student outcomes than competing for-profits.
In July 2015, Denver Judge Michael Mullins denied the attorney general’s motion for preliminary injunctive relief, finding that the state had not “established a reasonable probability of success” for most of its claims. The lawsuit has since moved to discovery, with a trial scheduled for next spring.
Meanwhile, the Obama administration has opened a fresh line of attack. In January 2015, the Education Department notified Mr. Barney that his colleges had failed its “financial responsibility” test, which incorporates dozens of metrics, including equity, income and reserves. CEO Eric Juhlin says the colleges scored low because they took on a large amount of “goodwill” during the 2012 merger. The department demanded an irrevocable letter of credit of $43 million—equal to 30% of the colleges’ federal student-aid disbursement in 2013—even though the norm is 10%.CONTINUE AT SITE
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