In what has been a controversial announcement, the Education Department has decided to allow tow large for-profit colleges to become nonprofits. The colleges in question are the Art Institutes and Kaplan University. Both of them will become public colleges and this is something that is going to be closely watched as other colleges look to do the same thing.
There are a lot of concerns that these colleges will not in actuality operate as nonprofits but just utilise the lucrative tax breaks as a way to generate great levels of net profit. On the other side of the coin, certain colleges are struggling financially as the number of people attending them are dropping lower and lower.
There were many people who were unsure as to whether to not this move would be allowed by the federal overseers. Under the previous administration these types of deals had been blocked as they believed that these colleges may attempt to avoid certain regulations and take advantage of certain tax breaks.
This decision was rubberstamped by the Education Secretary Betsy DeVos and it looks set to not be the last of its kind under her reign. It is the department alongside the accreditors (college watchdogs) who have the final say on these conversion decisions.
Kaplan University was only recently purchased by the biggest public college in Indiana, Purdue, for a single dollar.
The Art Institutes has been purchased by the Drama Center which is a small and inexperienced nonprofit group that has Christina roots. There has been trouble with this sale already, as many have voiced concerns that students in the troubled college would not be adequately helped and that financial incentives could be masked.
This is a space that should be closely watched.