EDMC Uses the Non-Profit Conversion Strategy Corinthian Created
Word is that The Education Management Corp. (EDMC), which owns for-profit chains Art Institutes, Brown Mackie, Argosy, and South University is going to be sold to the non-profit faith-based Dream Center Foundation. That means all of those for-profit colleges will suddenly become non-profit colleges (except Brown Mackie colleges, which EDMC will keep in order to shut down). There's no reason to think that's going to change anything else about these failing predators.
EDMC has been losing money for years, ever since it finally started being sued for engaging in the usual shady tactics of for-profit colleges. With this sale, it can get a last injection of money from its empire of lies and it can make these campuses somebody else's problem.
It's a crafty strategy to sell for-profit colleges to a non-profit company, especially one affiliated with a Christian church. Why?
It's good branding. More and more people know that "for-profit college" almost always means "scam". So making a college "non-profit" gets away from this image. People think of non-profits as committed to the public good. Also, people think as Christian institutions as committed to the public good. Nevermind that the head of this this particular institution has a past with for-profits. According to the Washington Post, he "led the transformation of Grand Canyon University into a for-profit school with a robust online presence, but resigned from his post in January, two years after shareholders made an unsuccessful bid to oust him for not attending enough board meetings."
Non-profit colleges are subject to different, even less stringent, regulations than for-profit colleges. So a non-profit company that owns a chain of predatory colleges can get away with it more easily.
Remember, selling campuses to a non-profit company was what that other predatory for-profit college company Corinthian Colleges, Inc. did, with the government's help. And it's not exactly going well.
When Corinthian was facing bankruptcy after multiple fraud lawsuits, the U.S. Department of Education bailed it out by getting ECMC, a guarantor of student loans with no experience operation any educational institution, to create a non-profit company to buy around half of Corinthian's campuses. Attorney Generals in California and Massachusetts prevented this from happening in their states, because they knew it was BS.
The Department of Education wanted everything to look good, so it appointed an "independent monitor" to supervise Zenith (the new non-profit company). Later an AP reporter discovered that that monitor was actually not independent at all, but was directly paid by Zenith and had formerly represented Corinthian. The Department of Education appointed a new monitor, which also had formerly represented Corinthian. Even with the Dept of Ed stacking the deck in its favor, Zenith hasn't been able to cover up how terrible its schools are.
Obviously the EDMC-Dream Center sale looks a lot like Corinthian-Zenith sale. We can probably expect more use of the non-profit conversion strategy moving forward.
We're not fooled. And we won't let this stop us. A change in ownership doesn't change AI students' rights to have their debts cancelled. And the blurring line between non-profits and for-profits means it's only more important that we continue to bring more student debtors into this fight.