A little-known venture capitalist is on the verge of acquiring the largest for-profit college in the country, DeVry University. If the DeVry sale goes through, Bradley Palmer, the chairman of the Connecticut-based Palmer Ventures would be in control of the troubled chain. The DeVry sale will likely close in the early 2019 fiscal year.
Generally, companies spend significant amounts of money to influence a government or policy decision in their favor. However, the DeVry acquisition is the opposite of how Washington politics works. There are no indications that any of the parties involved in the acquisition have lobbied or made significant political contributions specifically to push the sale forward.
In June 2018, the U.S. Department of Education sent a letter to Adtalem Global Education Inc., DeVry’s parent company, saying it did not see foresee any impediment to the proposed ownership transfer. Under the terms of the DeVry Sale, Cogswell Education LLC will acquire at no cost. Cogswell Education LLC is a holding company registered in Delaware and run by Palmer. Cogswell Education currently owns the for-profit Cogswell College in San Jose.
Criticism of Cogswell Education Purchasing DeVry
Typically when a college changes hands, it is reviewed by the Education Department and the school’s accreditor. This is largely done behind closed doors and without public input. Although the Obama Administration called for greater scrutiny on school transactions, it never formally changed the procedure.
The deal between Cogswell and Adtalem was announced in December 2017. No money will change hands when the deal closes. According to the release, Adtalem will inject working capital into DeVry. In addition, the company will be paid out over the next few years based on DeVry’s performance. Like most transactions in the for-profit, there has been little public scrutiny on the DeVry deal. This is in spite of the fact that there are millions of dollars in federal financial aid at stake.
Still, despite objections from critics, the Trump Administration has given a tentative green light to the DeVry sale to Palmer Ventures. The chief complaint from critics is the challenge Palmer will face when taking over the large institution. Currently, Palmer’s company owns Cogswell College, a for-profit college in San Jose, California. With more than 46,000 in annual enrollment, DeVry is more than 60 times the size of the tiny California school he already owns. Critics believe this move puts profit over the best interests of students.
Detractors also allege that it is yet another indicator that the Trump Administration continues to put corporate interests and profits over the interests of consumers.
Cogswell past education ventures
Although Palmer Ventures isn’t typically viewed as a major player in the for-profit realm, it has quietly bought and sold several chains over the past three decades. Currently, the firm owns Nightingale College, a small for-profit nursing school in Utah. It also has a stake in Post University, a for-profit Connecticut college battling two federal lawsuits from former employees who say it uses unethical recruiting practices.
According to the Washington Post, Palmer’s firm acquired the nonprofit Heald College chain a little more than a decade ago. However, within the span of a few years, Heald was converted into a for-profit institution and sold to the Corinthian Colleges chain for $395 million. Corinthian collapsed in 2015 under Obama-era regulations aimed at protecting students and federal dollars. Cogswell College had 740 students throughout the 2016-2017 school year—up from 248 in 2010.
Breathing New Life into For-Profit Colleges
The Obama Administration enacted several regulations aimed at protecting students from for-profit predatory practices. The Trump Administration rolled back several regulations. For example, the gainful employment rule protected both students and federal dollars. It required schools to meet certain criteria before being eligible to receive federal funding. However, that rule was rolled back in August 2018 by the Trump Administration.
If the DeVry sale goes through, it will be yet another example of the revival of for-profit colleges. For example, Purdue recently bought the for-profit Kaplan University chain. Purdue converted the newly acquired Kaplan into a nonprofit to lead the school’s online programs. The move came after Kaplan agreed to a $1.3 million settlement in 2015 after accusations of hiring unqualified instructors.
In addition, just last year, the Dream Center Foundation, a religious charity, bought three chains from Education Management Corporation. Education Management Corporation agreed to pay nearly $200 million in settlements over allegation it used illegal recruiting tactics.
What does the DeVry sale mean for students?
Because the deal is still in its early stages, it is unclear what the Palmer-DeVry deal could mean for students. The Education Department requires DeVry to keep promises it previously made to its students. This includes a commitment to disclose a variety of information about costs and student debt. A spokeswoman for Cogswell education added that Palmer had no plan to seel DeVry in any timeframe.
“We are going into the DeVry investment with a long-term view focused on impact, quality and student outcomes,” spokeswoman Natalie Berkey said in a statement.
The Carlson Law Firm Lawsuit Against DeVry
In early 2018, The Carlson Law Firm filed a lawsuit on behalf of a growing list of defrauded students. The lawsuit we filed asserts similar allegations from the Federal Trade Commission lawsuit. The FTC lawsuit carried two important points:
- DeVry deceived consumers about the likelihood that students would find jobs in the fields of study; and
- those graduating with bachelor’s degree would earn more than graduating with equal degrees from other colleges or universities.
In the FTC lawsuit, DeVry agreed to pay a $100 million settlement. Under that settlement, DeVry paid $49.4 million in cash to qualifying defrauded students—averaging about $280 in payouts to students. The amount doesn’t even begin to touch the amount of debt many students incurred as a result of the for-profit college’s fraudulent practices.
Accepting the FTC settlement does not stop students from seeking additional redress through civil actions, such as the one filed in Texas.
The Carlson Law Firm Can Help
The Carlson Law Firm is investigating claims of former DeVry students that the for-profit college defrauded. If you decided to become a DeVry student because of ads claiming a high employment rate or higher income for graduates, you may be eligible to receive compensation. Our firm will fight for you to receive the refunds and compensation you deserve.
If you or someone you know attended DeVry in reliance on DeVry’s representations of high employment rates or higher income for its graduates, contact us to today for a free, no-obligation, consultation.
Our firm works on a contingency fee basis.