US: Taxes support for-profit firms acquiring colleges

07 March 2010

America's ITT Educational Services Inc paid US$20.8 million for debt-ridden Daniel Webster College last June, writes Daniel Golden for Bloomberg. In return, the company obtained an academic credential that may generate a taxpayer-funded bonanza worth as much as $1 billion.

ITT Educational, the US's third-biggest higher education company with a market value of $3.8 billion, may increase it by 26% (or $1 billion) within five years because of the purchase of 1,200-student Daniel Webster in Nashua, according to Michael Clifford, an investor who has participated in the acquisitions of four non-profit colleges. At least 75% of new revenue would come from access to the more than $100 billion a year in financial aid the US hands out to college students, he said.

The nation's for-profit higher education companies have tripled enrolment to 1.4 million students and revenue to $26 billion in the past decade. Now they're taking a new tack in their quest to expand. By exploiting loopholes in government regulation and an accreditation system that wasn't designed to evaluate for-profit takeovers, they're acquiring struggling non-profit and religious colleges - and their coveted accreditation. Typically, the goal is to transform the schools into online behemoths at taxpayer expense.
Full report on the Business Week site

Receive UWN's free weekly e-newsletters

Sponsored Article

Getting to net zero, one community at a time

University of Victoria staff

Accelerating Community Energy Transformation is a University of Victoria-led collaborative initiative that brings together over 40 partners, including Indigenous knowledge keepers and community leaders, to create innovative place-based solutions for energy system transformation.

Promoted by the University of Victoria.

Sponsored Article

Africa pays a premium for global climate change sluggishness

Stellenbosch University staff

Africa needs to stop paying the price for the rest of the world’s recalcitrance to act fast enough in response to the irrefutable conclusions that climate change is real and that the impact of global warming could be devasting, says Professor Guy Midgley, interim director of the School for Climate Studies at Stellenbosch University, South Africa.

Promoted by Stellenbosch University.

Sponsored Article

Innovations to ensure energy savings in a hot, arid climate

UAE University staff

Researchers from the United Arab Emirates University have shown that the potential benefits of building energy savings and a cooler indoor environment, as well as improved cooling effect on air temperature at pedestrian level, strongly indicate that a cool roof with high solar reflectance and albedo is a promising strategy for buildings in regions with hot, arid climates.

Promoted by United Arab Emirates University.

Sponsored Article

A new global university ranking with an ethical mission

Aftab Dean

A new university ranking system aims to serve as a catalyst for positive transformation in higher education, ensuring that universities create an environment grounded in integrity and sustainability that inspires and supports students and staff in the development of novel solutions to global challenges.

Promoted by Globethics.net.

Sponsored Article

SDG progress report launches university into new territory

University of Pretoria staff

In the publication of its first progress report on its contribution to the Sustainable Development Goals, the University of Pretoria is navigating new territory at the same time as it is acknowledging its clear stewardship role in protecting the environment and biodiversity.

Promoted by the University of Pretoria.