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Manning, McBath, Jacobs Introduce Legislation Requiring Accountability Among For-Profit Institutions

April 21, 2021

Washington, DC —Representative Kathy Manning (NC-06) has introduced H.R. 2700, the For-Profit College Conversion Accountability Act with Representatives Sara Jacobs (CA-53) and Lucy McBath (GA-06). The bill would strengthen accountability measures at the Department of Education during the conversion or sale of a for-profit institution of higher education (IHE).

Between January 2011 and August 2020, the Government Accountability Office (GAO) identified 59 for-profit college conversions. All but two of these instances involved the sale of the for-profit to a nonprofit entity, and nearly one-third involved college officials who had a leadership role at the nonprofit institution. The legislation establishes explicit eligibility requirements, requires the conversion be made public with proper advanced notice, prohibits the institution from marketing itself as a nonprofit until the conversion has been given final approval by the Department, and creates an office within the Department to determine the eligibility of the for-profit institution and monitor the conversion.

During a hearing on for-profit conversions, hosted by the Education and Labor Committee, Rep. Manning raised concerns about the influx of donations from Keiser University to St. Andrews University, located in Laurinburg, NC, to assert control of the institution and potentially leverage that control to benefit Southeastern College, a for-profit school Dr. Arthur Keiser owns.The Century Foundation reported on documents obtained from IRS and the Department of Education showing that Dr. Keiser converted his for-profit college into the non-profit Keiser University to use it for increased cash flow.

“In North Carolina and across the country, we have seen the negative effects of bad actors seeking to convert for-profit colleges into non-profits, at the expense of students,” said Rep. Manning. “I’m introducing this bill with my colleagues to establish criteria that ensures institutions are held to a higher standard and can be properly monitored by the Department of Education. I’m proud to stand up for students and to demand increased accountability.”

“We must protect the success of our students as they pursue higher education. In my own district, we saw first-hand what happens when an institution of higher education attempts to evade accountability. The closure of Argosy University in 2019, after months of misleading students and an attempt to convert to nonprofit status, ripped off thousands of students and veterans, leaving them with untransferable credits, huge amounts of student debt, and degrees that aren’t worth anything,” said Rep. McBath. “I’m proud to introduce this bill with my colleagues. It will establish explicit criteria for institutions, root out improper actions by insiders, and allow the Department to monitor the nonprofit conversion process. Our students deserve better, and it is our duty as legislators to ensure institutions are adhering to a higher standard.

“San Diego students, many of which are veterans and members of military families, know all to well the cost of lax accountability for for-profit schools like Argosy University. That’s why I’m proud to co-sponsor this bill with Congresswoman McBath and Congresswoman Manning that will provide federal oversight to prevent this from happening again,” said Rep. Jacobs.

The House Committee on Education and Labor held a hearing this week on the GAO report, for-profit college conversions, and the impact increased accountability would have on students across the country.