Govt Allows Conversion of Two For-Profit Schools to Nonprofits



Two large for-profit colleges, Kaplan University and the Art Institutes, have been approved to become nonprofits this year by the Education Department, BuzzFeed News reported Monday.

Purdue University in April announced it was buying Kaplan University in an unprecedented move as Kaplan mostly has an online footprint. In March, a philanthropic foundation in Los Angeles said it was purchasing most of the career colleges owned by Education Management Corp., including the 31 Art Institute campuses in the U.S.

The Obama administration rejected similar deals and some higher education experts criticized the moves as end-runs around regulations aimed at for-profit colleges.

Nonprofit universities operate independently of an owner structure and are not subject to what is known as the 90/10 rule, a federal law which bars for-profit colleges from receiving more than 90 percent of their revenue from federal student aid. And few nonprofits have to adhere to “gainful employment” rules to repay student loans, which means that all career education programs receiving federal student aid “prepare students for gainful employment in a recognized occupation.”

Monday’s announcement is a sign of a shift in how the federal government will treat conversions, specifically under new Education Secretary Betsy DeVos.


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