Conflicts of Interest Seen as For-Profit Schools Eye Nonprofit Status

Several for-profit universities attempting to convert to nonprofit status appear to have plans with potential conflicts of interest that could allow the heads of newly created nonprofit institutions to reap financial benefits, accrediting agencies and analysts say.

Among the examples flagged are:

  • Grand Canyon University’s plan to convert to a nonprofit that would allow the school’s president to serve also as head of a for-profit servicing company that would work with the school.
  • The sale of Education Management Corp. colleges to the nonprofit Dream Center Foundation, through a loan partially financed by the CEO of the nonprofit’s subsidiary overseeing the schools.
  • The chairman of the nonprofit Center for Excellence in Higher Education’s plan to structure the sale of his for-profit schools to receive more than $400 million from the resulting nonprofit school.

The cases highlight the shifting commercial and regulatory landscape for the for-profit universities industry, which the Obama administration targeted with stricter regulation and penalties for bad actors. The Trump administration has shown more of a willingness to work with the schools.

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