Senate Democrats press education chief to take action against covert for-profit colleges
Lawmakers are calling on the Department of Education and the Internal Revenue Service to crack down on for-profit colleges that are converting to nonprofits to evade federal income taxes and regulations.
On Friday, a group of Senate Democrats, including Sens. Elizabeth Warren (Mass.) and Richard Blumenthal (Conn.), sent a letter to Education Secretary Arne Duncan and IRS Commissioner John Koskinen demanding they “prevent former for-profit education companies from abusing their tax-exempt status and to protect students from predatory actors.”
“These sham non-profits make a mockery of traditional non-profit governing and accountability structures. Their incestuous leadership arrangements and troubling debt structures enable them to continue posting hefty profits while providing questionable results for students,” the senators wrote.
The letter comes two weeks after a report from the Century Foundation questioning whether some of the newly minted nonprofit schools are still reaping the financial benefits of operating as for-profit institutions.
“This is a problem that has fallen through the cracks. I am hopeful that the senators’ recognition of the urgency will elevate the issue at the IRS and at the Department of Education,” said Robert Shireman, author of the report and a senior fellow at the Century Foundation.
Shireman examined records and communications between the IRS, which grants nonprofit status, and four schools that recently shed their for-profit status. He found conflicts of interest with owners of former for-profits still being paid millions of dollars and remaining heavily involved in the governance of the new nonprofits. The findings run counter to what it means to become a nonprofit school, relinquishing ownership and placing control in the hands of trustees who operate in the interest of the public good with no financial benefit, the report said.
In the example of Everglades College, Arthur Keiser lent the nonprofit school $321 million to purchase and convert his eponymous for-profit university in Florida. Everglades, where Keiser serves as president, paid more Senate Democrats press education chief to take action against covert for-profit colleges - The Washington Post:
