Lawmakers Push for Stronger Oversight of For-Profit College Conversions

Senate Democrats are asking the federal government to investigate a wave of "troubling" for-profit to nonprofit conversions, reported Politico Morning Education.

For-profit education providers—including Kaplan, Grand Canyon, EDMC, Bridgepoint, CollegeAmerica, Ultimate Medical Academy, and Keiser—have recently finalized or proposed changes to their legal status to become nonprofit entities.

A group of 11 lawmakers, led by Sen. Elizabeth Warren (D-MA), urged the Internal Revenue Service (IRS) to "closely scrutinize" such applications from for-profit colleges amid a recent spike in these transactions. In a letter to IRS Acting Commissioner David Kautter, the senators stated that they are "concerned that these recent attempts by for-profit colleges to convert to nonprofit organizations with tax-exempt status may violate federal tax law." The colleges are "being organized and operated exclusively for undue private interest rather than for the purposes of serving the public," they added.

A separate letter—sent last week by Sens. Dick Durbin (D-IL), Patty Murray (D-WA), and Maggie Hassan (D-NH)—asked the watchdog Government Accountability Office (GAO) to examine the performance of the Education Department and the IRS in reviewing these non-profit conversions, reported Republic Report. Specifically, the lawmakers request that the GAO investigate whether these agencies are acting to ensure that the new non-profits are being operated for the benefit of students, not the prior for-profit owners.

The letters from Senate Democrats come as Education Secretary Betsy DeVos has taken a friendlier approach to approving for-profit college conversions than her predecessors, Politico reported. The Obama administration sought to crack down on the practice, arguing that some for-profit schools were seeking to convert to nonprofit schools as a way to skirt federal regulations. The transactions typically require the approval of the IRS, Education Department, and accreditors as well as state regulators.


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