Showing posts with label accountability. Show all posts
Showing posts with label accountability. Show all posts

Monday, February 19, 2024

Ambow Education Continues to School Naive Investors

The Higher Education Inquirer has been tracking Ambow Education (AMBO) for about two years.  Ambow Education is the owner of the NewSchool of Architecture and Design in San Diego (NSAD) and the former owner of Bay State College which closed in 2023. NSAD is facing serious accreditation issues.  The only other asset to speak of is an idea called HybriU, which may or may not be a real technology.  

Tomorrow, February 20, 2024, Ambow completes a 1-10 reverse stock split to pump up its stock price just enough to avoid delisting from the New York Stock Exchange (NYSE). The company, which until recently was based in Beijing, has a troubled history. At one time it was reportedly valued at $1 Billion. Today it's valued at about $9 million. The latest company headquarters is in a small, rented office space in Cupertino, California.  

What we saw in trading on Friday, one business day before the reverse stock split, was alarming: share volume was more than 280 times normal: 70 million shares versus a daily average of about a quarter million. The price more than doubled, from 12 cents a share to 30 cents at close. The highest price was 58 cents, almost five times the day's beginning price. What we were seeing was more than abnormal. Was it stock manipulation? We cannot say.  

HEI asked Ambow for a comment but they had no answer for this doubling in value in less than 24 hours and for any news of material change. We also reported the event to the US Securities and Exchange Commission (SEC)--twice in the same day. These reports were in addition to previous complaints to the SEC and the NYSE.
$AMBO is a Clown Car of Lies, Incompetence, and Poor Governance Speeding toward a Second Delisting (Ecliipse Research)

Tuesday, January 30, 2024

ED Completes Pre-Acquisition Review for University of Phoenix Deal. University of Idaho Continues Hiding Details of Transaction Fees, 43 Education "High-Risk" Bonds.

[Editor's note: This article will be updated as we receive more information.]

US Department of Education (ED) sources have told the Higher Education Inquirer that the Pre-Acquisition Review for the Idaho-University of Phoenix deal was completed in November 2023 in response to a request from the University of Phoenix in June of the same year.  

The University of Phoenix is currently owned by two powerful investment firms: Apollo Global Management and Vistria Partners. But those companies have been attempting to unload the for-profit college for more than two years. The latest potential owner is the University of Idaho's affiliate organization, Four Three Education--at an initial cost of $685 million.    

ED will not require anyone to post a Letter of Credit--despite the fact that Four Three Education currently has no financial assets and will likely have to issue high-risk bonds to acquire the University of Phoenix. 

Four Three Education, and the University of Idaho, may be responsible for compensating the Department of Education for successful Borrower Defense to Repayment (fraud) claims made by tens of thousands of consumers.  While that could amount to more than a billion dollars, the University of Idaho affiliate expects to spend much less by using aggressive legal means. 

Financing for the Phoenix project has been deliberately opaque. The University of Idaho, however, has acknowledged that it may be liable for some future losses, but only up to $10 million annually. And Idaho officials, including University of Idaho President C. Scott Green, seem undeterred by these potential problems.  

The Most Recent Court Case

A court case to determine whether the University of Idaho violated open meeting laws was completed last week.  Idaho District Judge Jason Scott ruled that the University of Idaho was not in violation for holding three secret meetings followed by a quick vote on May 18, 2023. The University of Idaho claimed that secrecy was essential for the deal to occur.

The State asserted that the Idaho Board of Education did not perform due diligence for the sale, relying on President Green and his word that this was a worthwhile deal for the University of Idaho. In turn, Green admitted he did not ask important questions about competition, for fear that he would be considered naive, and that he outbid the competition.  

As Judge Scott remarked, the wisdom of the deal was not on trial. If it had, perhaps the ruling would have been different. 

Information about the competition to buy the University of Phoenix continues to be sketchy. The University of Arkansas System rejected a deal from the University of Phoenix in April 2023, weeks before the last closed door meeting. UMass Global was mentioned in the court case, but with no evidence that they were ever a serious suitor. 

The Idaho-Phoenix Scheme

The University of Idaho spent a reported seven million dollars on consultants over two months to determine whether the deal would be profitable to the University of Idaho. But little is publicly known about how the funds were spent. Hogan Lovells, President Green's former employer, was one of the organizations involved in consulting the University of Idaho. A local law firm, Hawley Troxell was also involved.  

Idaho also created a non-profit organization, Four Three Education, to act as a firewall in the event the school loses money. The current President of the University of Phoenix, Chris Lynne, will remain in place and be a member of the Four Three Education Board. 

The University of Idaho claims that the University of Phoenix will make a $150 million annual profit but they have not produced evidence. Information about Phoenix's assets are also limited, but Idaho claims the for-profit college holds $200 million in cash. How liquid (or how restricted) the cash is has not been mentioned.

Funding for the sale will be through an initial debt of $685 million, which includes more than $100 million in transaction fees. When bond interest is included, the deal is likely to cost billions of dollars according to an industry source. In an opinion piece in the Idaho Statesman, Rod Lewis, a former attorney for Micron Technology and former president of the Idaho State Board of Education stated:

Phoenix will issue $685 million in corporate bonds anticipated to be “bb” rated (known as “high risk” or “speculative” bonds). Phoenix’s estimated debt service will be $60 million to $70 million per year. It sounds risky, and it is.

We will know more when the University of Idaho produces the bond contracts and names the bond underwriters.    

Poisoning the Public Higher Ed Well

The University of Phoenix relies heavily on obfuscation, intimidation, political lobbying, and lawsuits to reduce expenses related to fraud. Given recent data on consumer complaints about the University of Phoenix, University of Idaho officials say they are prepared for contingencies related to the tens of thousands of Borrower Defense to Repayment claims. But the school or its affiliated organizations could also be liable for claims related to questionable business practices in the present and future. 

It's too early to tell whether Idaho will profit from its acquisition. But if the sale is consummated, the University of Phoenix will join a growing list of state-affiliated and non-profit robocolleges, one that includes Purdue University Global (formerly Kaplan University) and University of Arizona Global Campus (formerly Ashford University), two schools that have not lived up to their parent company names.

Related links:

Predatory Colleges, Converted To Non-Profit, Are Failing (David Halperin, Republic Report)

Tuesday, January 16, 2024

My 2024 Higher Education Finance Reading List (Robert Kelchen)

[Editor's note: This article first appeared at the Kelchen on Education blog.]

As a department head, I typically only teach one class per year. This spring, I get to teach my PhD class in higher education finance again—the eighth time that I have taught it in my eleven-year faculty career. Each time, I have updated the readings considerably as the field is moving quickly and I figure out what works best for the students. I use articles, working papers, news coverage, and other online resources to provide a current look at the state of higher education finance.

The format that I have taught the class using has also changed frequently over time due to what works best for the program and other events of the past several years. Here are reading lists from previous years and how I have taught the class:

Summer 2023: Accelerated five-week format, mix of asynchronous and online synchronous

Spring 2022: Online synchronous, meeting one evening per week

Spring 2020: Met one Saturday per month, started out in person but moved to Zoom halfway through due to the pandemic

Fall 2017: In person, meeting one evening per week

This spring, I am back to teaching the class in person one evening per week for the first time in nearly seven years. Here is the reading list I am assigning my students for the course. I link to the final versions of the articles whenever possible, but those without access to an academic library should note that earlier versions of many of these articles are available online via a quick Google search.

The higher education finance landscape and data sources

Chetty, R., Friedman, J. N., Saez, E., Turner, N., & Yagan, D. (2017). Mobility report cards: The role of colleges in intergenerational mobility. Working paper. (link)

Schanzenbach, D. W., Bauer, L., & Breitwieser, A. (2017). Eight economic facts on higher education. The Hamilton Project. (link)

Webber, D. A. (2021). A growing divide: The promise and pitfalls of higher education for the working class. The ANNALS of the American Academy of Political and Social Science, 695, 94-106. (link)

Recommended data sources:

College Scorecard: https://collegescorecard.ed.gov/ (underlying data at https://collegescorecard.ed.gov/data/)

Equality of Opportunity Project: http://www.equality-of-opportunity.org/college

IPEDS: https://nces.ed.gov/ipeds/use-the-data

NCES Data Lab: https://nces.ed.gov/datalab/index.aspx

Postsecondary Value Commission’s Equitable Value Explorer: https://www.postsecondaryvalue.org/equitable-value-explorer/

ProPublica’s Nonprofit Explorer: https://projects.propublica.org/nonprofits/

Urban Institute’s Data Explorer: https://educationdata.urban.org/data-explorer/colleges/

Institutional budgeting

Barr, M.J., & McClellan, G.S. (2010). Understanding budgets. In Budgets and financial management in higher education (pp. 55-85). Jossey-Bass. (link)

Jaquette, O., Kramer II, D. A., & Curs, B. R. (2018). Growing the pie? The effect of responsibility center management on tuition revenue. The Journal of Higher Education, 89(5), 637-676. (link)

Rutherford, A., & Rabovsky, T. (2018). Does the motivation for market-based reform matter? The case of responsibility-centered management. Public Administration Review, 78(4), 626-639. (link)

University of Tennessee System’s FY2024 budget: https://finance.tennessee.edu/budget/documents/

University of Tennessee System’s FY2022 annual financial report: https://treasurer.tennessee.edu/reports/

UTK’s Budget Allocation Model (responsibility center management) website: https://budget.utk.edu/budget-allocation-model/

Higher education expenditures


Archibald, R. B., & Feldman, D. H. (2018). Drivers of the rising price of a college education. Midwestern Higher Education Compact. (link)

Commonfund Institute (2023). 2023 higher education price index. (link)

Griffith, A. L., & Rask, K. N. (2016). The effect of institutional expenditures on employment outcomes and earnings. Economic Inquiry, 54(4), 1931-1945. (link)

Hemelt, S. W., Stange, K. M., Furquim, F., Simon, A., & Sawyer, J. E. (2021). Why is math cheaper than English? Understanding cost differences in higher education. Journal of Labor Economics, 39(2), 397-435. (link)

Korn, M., Fuller, A., & Forsyth, J. S. (2023, August 10). Colleges spend like there’s no tomorrow. ‘These places are just devouring money.’ The Wall Street Journal. (link)

The financial viability of higher education

Britton, T., Rall, R. M., & Commodore, F. (2023). The keys to endurance: An investigation of the institutional factors relating to the persistence of Historically Black Colleges and Universities. The Journal of Higher Education, 94(3), 310-332. (link)

Ducoff, N. (2019, December 9). Students pay the price if a college fails. So why are we protecting failing institutions? The Hechinger Report. (link)

Jesse, D., & Bauman, D. (2023, November 13). This small college was out of options. Will its creditors give it a break? The Chronicle of Higher Education. (link)

Massachusetts Board of Higher Education (2019). Final report & recommendations. Transitions in higher education: Safeguarding the interest of students (THESIS). (link)

Sullivan, G. W., & Stergios, J. (2019). A risky proposal for private colleges: Ten reasons why the Board of Higher Education must rethink its plan. Pioneer Institute. (link)

Tarrant, M., Bray, N., & Katsinas, S. (2018). The invisible colleges revisited: An empirical review. The Journal of Higher Education, 89(3), 341-367. (link)

State and sources of revenue

Chakrabarti, R., Gorton, N., & Lovenheim, M. F. (2020). State investment in higher education: Effects on human capital formation, student debt, and long-term financial outcomes of students. National Bureau of Economic Research Working Paper 27885. (link)

Gándara, D. (2023). “One of the weakest budget players in the state”: State funding of higher education at the onset of the COVID-19 pandemic. Educational Evaluation and Policy Analysis. (link)

Kelchen, R., Ortagus, J. C., Rosinger, K. O., Baker, D., & Lingo, M. (2023). The relationships between state higher education funding strategies and college access and success. Educational Researcher. (link)

Kunkle, K., & Laderman, S. (2023). State higher education finance: FY 2022. State Higher Education Executive Officers Association. (link)

Ortagus, J. C., Kelchen, R., Rosinger, K. O., & Voorhees, N. (2020). Performance-based funding in American higher education: A systematic synthesis of the intended and unintended consequences. Educational Evaluation and Policy Analysis, 42(4), 520-550. (link)

Tennessee’s outcomes-based funding formula: https://www.tn.gov/thec/bureaus/ppr/fiscal-policy/outcomes-based-funding-formula-resources/2020-25-obf.html

Federal sources of revenue

Bergman, P., Denning, J. T., & Manoli, D. (2019). Is information enough? The effect of information about education tax benefits on student outcomes. Journal of Policy Analysis and Management, 38(3), 706-731. (link)

Black, S. E., Turner, L. J., & Denning, J. T. (2023). PLUS or minus? The effect of graduate school loans on access, attainment, and prices. National Bureau of Economic Research Working Paper 31291. (link)

Graddy-Reed, A., Feldman, M., Bercovitz, J., & Langford, W. S. (2021). The distribution of indirect cost recovery in academic research. Science and Public Policy, 48(3), 364-386. (link)

Kelchen, R., & Liu, Z. (2022). Did gainful employment regulations result in college and program closures? Education Finance and Policy, 17(3), 454-478. (link)

Ward, J. D. (2019). Intended and unintended consequences of for-profit college regulation: Examining the 90/10 rule. Journal of Student Financial Aid, 48(3), Article 4. (link)

College pricing, tuition revenue, and endowments

Baker, D. J. (2020). “Name and shame”: An effective strategy for college tuition accountability? Educational Evaluation and Policy Analysis, 42(3), 1-24. (link)

Baum, S., & Lee, V. (2018). Understanding endowments. Urban Institute. (link)

Delaney, T., & Marcotte, D. E. (2023). The cost of public higher education and college enrollment. The Journal of Higher Education. (link)

Kelchen, R., & Pingel, S. (2023). Examining the effects of tuition controls on student enrollment. Research in Higher Education. (link)

Knox, L. (2023, December 4). Seeking an enrollment Hail Mary, small colleges look to athletics. Inside Higher Ed. (link)

Ma, J., & Pender, M. (2023). Trends in college pricing and student aid 2023. (link)

Webber, D. A. (2017). State divestment and tuition at public institutions. Economics of Education Review, 60, 1-4. (link)

Financial aid policies, practices, and impacts

Anderson, D. M., Broton, K. M., Goldrick-Rab, S., & Kelchen, R. (2020). Experimental evidence on the impacts of need-based financial aid: Longitudinal assessment of the Wisconsin Scholars Grant. Journal of Policy Analysis and Management, 39(3), 720-739. (link)

Billings, M. S., Clayton, A. B., & Worsham, R. (2022). FAFSA and beyond: How advisers manage their administrative burden in the financial aid process. Journal of Student Financial Aid, 51(2), Article 2. (link)

Dynarski, S., Page, L. C., & Scott-Clayton, J. (2022). College costs, financial aid, and student decisions. National Bureau of Economic Research Working Paper 30275. (link)

LaSota, R. R., Polanin, J. R., Perna, L. W., Austin, M. J., Steingut, R. R., & Rodgers, M. A. (2022). The effects of losing postsecondary student grant aid: Results from a systematic review. Educational Researcher, 51(2), 160-168. (link)

Page, L. C., Sacerdote, B. I, Goldrick-Rab, S., & Castleman, B. L. (2023). Financial aid nudges: A national experiment with informational interventions. Educational Evaluation and Policy Analysis, 45(2), 195-219. (link)

Student debt and financing college

Baker, D. J. (2019). When average is not enough: A case study examining the variation in the influences on undergraduate debt burden. AERA Open, 5(2), 1-26. (link)

Black, S. E., Denning, J. T., Dettling, L. J., Goodman, S., & Turner, L. (2020). Taking it to the limit: Effects of increased student loan availability on attainment, earnings, and financial well-being. American Economic Review, 113(12), 3357-3400. (link)

Boatman, A., Evans, B. J., & Soliz, A. (2017). Understanding loan aversion in education: Evidence from high school seniors, community college students, and adults. AERA Open, 3(1), 1-16. (link)

Dinerstein, M., Yannelis, C., & Chen, C. (2023). Debt moratoria: Evidence from student loan forbearance. National Bureau of Economic Research Working Paper 31247. (link)

Levine, P. B., & Ritter, D. (2023). The racial wealth gap, financial aid, and college access. Journal of Policy Analysis and Management. (link)

Free college/college promise programs

Carruthers, C. K., Fox, W. F., & Jepsen, C. (2023). What Knox achieved: Estimated effects of tuition-free community college on attainment and earnings. The Journal of Human Resources. (link)

Gándara, D., & Li, A. Y. (2020). Promise for whom? “Free-college” programs and enrollments by race and gender classifications at public, 2-year colleges. Educational Evaluation and Policy Analysis, 42(4), 603-627. (link)

Monaghan, D. B. (2023). How well do students understand “free community college”? Promise programs as informational interventions. AERA Open, 9(1), 1-13. (link)

Murphy, R., Scott-Clayton, J., & Wyness, G. (2017). Lessons from the end of free college in England. Washington, DC: The Brookings Institution. (link)

Perna, L. W., Leigh, E. W., & Carroll, S. (2018). “Free college:” A new and improved state approach to increasing educational attainment? American Behavioral Scientist, 61(14), 1740-1756. (link)

Map of college promise/free college programs (Penn AHEAD) (link)

Returns to education

Conzelmann, J. G., Hemelt, S. W., Hershbein, B. J., Martin, S., Simon, A., & Stange, K. M. (2023). Grads on the go: Measuring college-specific labor markets for graduates. Journal of Policy Analysis and Management. (link)

Darity, Jr., W. A., & Underwood, M. (2021). Reconsidering the relationship between higher education, earnings, and productivity. Postsecondary Value Commission. (link)

Deterding, N. M., & Pedulla, D. S. (2016). Educational authority in the “open door” marketplace: Labor market consequences of for-profit, nonprofit, and fictional educational credentials. Sociology of Education, 89(3), 155-170. (link)

Ma, J., & Pender, M. (2023). Education pays 2023: The benefits of higher education for individuals and society. The College Board. (link)

Webber, D. A. (2016). Are college costs worth it? How ability, major, and debt affect the returns to schooling. Economics of Education Review, 53, 296-310. (link)

Monday, November 27, 2023

Sotheby's Institute of Art on Department of Education's Heightened Cash Monitoring 2 List

Sotheby's Institute of Art (SIA) in New York City is one of only three institutions under the US Department of Education's Heightened Cash Monitoring 2 list for "financial responsibility" problems. 

SIA is owned by Cambridge Information Group, which is the parent company of ProQuest, The School of the New York Times, Hammond's Candies, the Scranton/Wilkes-Barre RailRiders minor league baseball team, and other investments. 

(Seven NY institutions were under HCM2. Source: US Department of Education)

According to the US Department of Education (ED), "schools may be placed on HCM1 or HCM2 as a result of compliance issues including but not limited to accreditation issues, late or missing annual financial statements and/or audits, outstanding liabilities, denial of re-certifications, concern around the school's administrative capabilities, concern around a school's financial responsibility, and possibly severe findings uncovered during a program review."

Also according to ED, "a school placed on HCM2 no longer receives funds under the Advance Payment Method. After a school on HCM2 makes disbursements to students from its own institutional funds, a Reimbursement Payment Request must be submitted for those funds to the Department." Schools in this position are often in such financial hardship that they may close.  

The September 2023 Heightened Cash Monitoring 2 list includes less than 100 schools nationwide and seven schools in New York. A disproportionate number of schools are small religious-based institutions and for-profit vocational colleges. 

Unlike most of the schools on the HCM list, Sotheby's has a prestigious name--and it uses its relationship with the auction house to elevate its brand. According to its vision statement, "Sotheby’s Institute of Art is the global leader in art world education, shaping future generations of cultural stewards and art market professionals."  

And according to its website "Sotheby’s Institute of Art alumni form a network of over 8,000 talented individuals around the world. Our graduates hold leading positions at renowned international arts organisations including Frieze, 1-54 Contemporary African Art Fair, M+, the Institute of Contemporary Photography, the Victoria & Albert Museum, the Guggenheim Abu Dhabi, the Smithsonian Museum of Natural History, the Fine Art Group, the UK National Archives, Cartier, and numerous other galleries, auction houses, museums, luxury brands, art fairs, advisories, law firms and beyond."

The US Department of Education's College Navigator indicates that SIA's student population in the US is about 200. Tuition alone is $56,340 per year. The school's US faculty includes one full-time instructor and 35 part-timers. 87 percent of the students are female; 49 percent are Asian. The school only offers certificates and graduate degree programs. SIA's website does not appear to name any Board members.  

US Department of Education (IPEDS) data also suggest that SIA's expenses have surpassed revenues since 2016-17.  


(Source: US Department of Education)

The Higher Education Inquirer is in the process of gathering more information about the school's finances and whether students should be aware of the HCM status. Other schools on the list have recently closed or are in the process of closing, including Bay State College, King's College, and Union Institute.  

Related links: 

Ambow Education Facing Financial Collapse

A preliminary list of private colleges at risk

Monday, December 26, 2022

How You Pick Your College Could Cost You Lots (Mark Salisbury, TuitionFit*)

[Editor's Note:  Mark Salisbury will be appearing at the Future Trends Forum on Thursday, January 12, 2023, from 2-3 PM EST.  To sign up as an audience member, visit the link at Students, families, colleges, and tuition - Shindig.comUpcoming Forum sessions – The Future Trends Forum (futureofeducation.us)

No matter if it’s cars or candy bars, every marketplace has one thing in common. The seller hopes to influence the buyer’s decision by appealing to their emotions. That’s the best way to get the buyer to pay more than they would otherwise. But the buyer knows that if they can keep their emotions in check and stick to a rational comparison of pros and cons, they have a better chance of paying less than they would otherwise. In every marketplace, underneath the layers of give and take, ebb and flow, sturm und drang, the battle between the rational and the emotional – the head and the heart – rages on.

There’s no better place to watch this epic struggle play out than college admissions. Colleges and universities spend billions every year trying to find just the right emotional trigger. The idea of the “dream” college experience has been stitched into our psyche by popular culture for more than a hundred years, and colleges and universities have no problem subtly (and sometimes overtly) pointing out how much their campus looks like that idyllic dream school. Mix in a healthy dose of FOMO (fear of missing out) by telling folks all the reasons why applying early makes everything better, and you have yourself a powerful cocktail of emotional allure.

But hold on a second! Why go to college? Isn’t going to college – surviving the inevitable ups and downs and making the financial sacrifices required to pay for it – about something more than just four years of fun?

Of course it is. The goal is to learn a lot, grow a lot, graduate on time, and head off into young adulthood with a job that pays well enough to live independently and plan for the future. To hit all of those milestones in order, the college decision has to be heavily influenced by rational considerations. Which college cultivates an environment that is most likely to foster success and growth? Which college provides the best “bang for the buck”? Which college offers the support systems necessary to help students when they struggle?

So here’s one way to push through the cacophony of marketing and angst-inducing urgency messaging that you’ll encounter throughout the college admissions process. Ask yourself the question: is this college’s marketing, and the way they are trying to communicate their message to me, designed to make me think more rationally or react more emotionally? Just knowing which trigger a college is trying to pull will help you keep calm when things get crazy, be confident when you feel overwhelmed, and keep your feet squarely on the ground when you need to make the right decision.

Related link: How TuitionFit Works



*Mark Salisbury is CEO of TuitionFit and Executive Director of My College Planning Team.  This article originally appeared at MCPT Blog.