August 2, 2018

DeVos Aide Tailors Decisions to the Predatory Colleges That Employed Her

In a meeting early this year at the U.S. Department of Education headquarters, a group of Department staffers led by senior adviser Diane Auer Jones told a delegation from Dream Center Education Holdings (DCEH) led by CEO Brent Richardson to publicly represent that two of the company’s Art Institutes schools remained accredited, even though the schools’ accreditor had written the company a letter indicating that the schools were presently “not accredited.”

A source close to and supportive of DCEH management provided this account to Republic Report and defended the Department’s decision and DCEH’s subsequent action to post on the schools’ website the words “We remain accredited.” The source argued that the accreditor, Higher Learning Commission (HLC), had acted inappropriately in placing the schools on “candidate” status following DCEH’s takeover of their operations and that no student was misled because the schools remained eligible to receive federal student financial aid and because the retroactive restoration of the schools’ accreditation was inevitable. This source says that HLC’s action to move the schools to candidate status was “all about a political war between the accreditors and the Department.”

But the Art Institutes students who suddenly learned they were attending a non-accredited school certainly do feel misled, as reflected in, among other things, this video of a meeting between some of them and an HLC official and numerous discussions on the Facebook page “I am Ai.” HLC has not yet restored the accreditation of the schools, the Illinois Institute of Art, which has campuses in Chicago and Schaumberg, Illinois, and Novi, Michigan, and the Denver-based Art Institute of Colorado — and now both schools are slated to close amid a nationwide shutdown of many of DCEH’s campuses. In addition, DCEH’s false representation to students, which was first reported by Republic Report, prompted a letter from Senator Dick Durbin (D-IL) charging that it would provide a basis for students to receive discharges of their loans and “should put future accreditation by HLC in serious doubt.” And DCEH has now eliminated from its website the false assertion that the two schools are accredited and now says, consistent with the HLC letter, that each school “is in transition during a change of ownership. We are a candidate school seeking accreditation under new ownership and our new non-profit status.”

At the center of this controversy over DCEH’s accreditation is Diane Auer Jones, now bestowed by Education secretary Betsy DeVos with the elaborate title “Principal Deputy Under Secretary delegated to perform the duties of Under Secretary and Assistant Secretary for Postsecondary Education,” basically meaning she’s in charge of the Department’s higher education work, even though there is no indication that she, or anyone, will be formally nominated to the Under Secretary or Assistant Secretary job, which would require Senate confirmation. (On her LinkedIn page, at this writing, Jones describes herself as “Principle” Deputy Under Secretary of Education; I’ll just leave that there.)

It seems clear why even the brazen Trump administration would not want to present Diane Auer Jones at a Senate confirmation hearing. Her involvement is apparent in a range of regulatory and enforcement decisions that have tailored the Department’s policies to the wish list of the worst predatory actors in the for-profit college industry. Jones’s involvement in this abandonment of accountability measures is particularly troubling because before joining the DeVos Department she worked for some of those same egregious actors, including the college chains Career Education Corp. and CollegeAmerica, both of which have extensive records of deceiving and abusing students, and the trade association CECU/APSCU, which has harbored some of the industry’s worst predators.

Last week the Department published a proposed regulation that would thoroughly destroy the Obama borrower defense rule, which was aimed at providing some student loan relief to people ripped off by predatory colleges that have been getting billions of taxpayer dollars each year. Later in the week it leaked that the Department plans to simply cancel the Obama gainful employment rule, which would have penalized federally-funded career and for-profit college programs that consistently leave graduates with overwhelming debt.

The New York Times last week noted that ethics disclosure forms show that, while working as senior vice president and chief external affairs officer at Career Education Corporation, Jones lobbied for a measure to defund the gainful employment rule. Yet Jones reportedly has not recused herself from working on the DeVos Department’s repeal of that rule or on any matters related to career education, even after ten Senate Democrats wrote to DeVos in April raising concerns about Jones’s conflicts of interest.

In March, during the final round of public rule-making meetings on the DeVos Department’s plan to gut the gainful employment rule, Jones could be seen sitting with other Department officials behind the negotiating table.

This week, the Department announced it planned to re-plow even more regulatory terrain — reconsidering rules that govern the accreditation process and that seek to ensure that online programs provide serious instruction. In an interview Jones gave to Inside Higher Ed, she stressed, as did the Department’s announcement, that the goal was to open up new opportunities for “innovation,” which sounds nice in theory but is generally Department code for providing companies with greater access to student aid dollars with less accountability for delivering results.

“If we really want innovation to take place,” Jones said, “we have to give accreditors a safe space to support that innovation.”

Jones also indicated that accreditors should focus on academics and stop evaluating the financial stability of colleges and complex financial deals they make, like the current wave of conversions of for-profit schools to nonprofit status — tasks she said were better suited to government overseers.

Jones’s stance on accreditation sounds like another shift from the Obama administration, which moved in 2016 to de-recognize the accreditor ACICS, a body that seemed to be allowing a bit too much innovation, in the form of fraud, at companies including ITT Tech, Corinthian Colleges, Kaplan, EDMC (prior owner of the DCEH schools), and Jones’s own Career Education Corporation — all of which have been under investigation by law enforcement for deceptive practices.

DeVos has now placed Jones in charge of deciding whether the Department will reinstate ACICS.

Jones’s assertion that accreditors should not be messing with decisions about conversion to non-profit status is also troubling, given that many of these conversions have been done in a way that allows for-profit interests to maintain strong control over and continue to profit heavily from the supposedly non-profit institution. One example of such a faux conversion is the CollegeAmerica chain, for which Jones in 2017 served as an expert witness seeking to rebut a fraud case brought by the Colorado attorney general. In 2016, the Obama Education department refused to recognize the chain as non-profit, concluding that the operation was being run primarily to benefit Carl Barney, the prior for-profit owner, rather than to benefit students. The DeVos Department has indicated that it may reverse that decision, which would benefit the company that hired Jones as an expert.

Another troubling converted for-profit is the Art Institutes, Argosy, and South University schools sold by EDMC to DCEH, where it appears, as we have reported, that the new management team under Brent Richardson has been seeking to leverage the operations of the newly non-profit schools to provide revenue opportunities for for-profit companies controlled by Richardson, family members, and long-time associates. (The source close to DCEH management insists that, instead, Richardson has been trying to use his for-profit entities, including the Steve Wozniak-branded Woz U, to jump-start the ailing former EDMC schools.)

As we recently reported, DCEH chief operating officer John Crowley in July visited the Chicago campus of the Illinois Institute of Art — one of the two schools whose accreditation was changed by HLC and one of 30 schools DCEH is closing — and indicated to assembled faculty and staff that Jones was trying to get the chain’s accreditors in line. According to an audio recording of the meeting, Crowley said, “We have met with DoE. The DoE is working with HLC to get this accreditation issue gone. They went so far as to change a regulation at DoE to make it easy for HLC to help us…. There’s a real good shot that everything’s gonna be fine.” He continued, saying the Education department “have been working with us really well. They have been unbelievably cooperative. A woman named, uh, Diane Jones who is literally undersecretary of education called all the accrediting bodies together and said, listen you guys have to work with DCEH to accommodate these students because everybody thinks this is a business deal; this is about getting the students accommodated.”

— UPDATE 09-05-18:  I’ve been alerted that on July 25, 2018, Diane Jones sent a letter to all accreditors stating that the Department was retracting a 2017 guidance letter and now would permit retroactive application of a date of accreditation. This apparently is what Crowley was referencing when he told the Chicago faculty and staff that the Department “went so far as to change a regulation at DoE to make it easy for HLC to help us.” The issuance of the new Department policy means that if HLC decided to reinstate the accreditation of the Ai campuses and made the reinstatement retroactive, the Department would honor that, and the students would be considered to have attended an accredited institution for purposes of federal law.—

Senator Durbin told Republic Report last month, regarding Crowley’s comments, “Any pressure from the Department of Education on HLC to reinstate accreditation in the face of continuing concerns about Dream Center’s management and, now, its failure to provide timely and accurate information to students about its campus closures would be extremely troubling.”

The allegation from the DCEH-connected source that the DeVos team actually instructed DCEH to tell students that the two Art Institutes schools remained accredited heightens concerns even more.

(A new lawsuit brought this week by Massachusetts attorney general Maura Healey against that state’s now-closed Art Institute underscores how egregious the recruitment and financial aid practices of those former EDMC schools, which in 2015 agreed to a $200 million settlement of previous federal and state fraud charges, have been.)

The Department of Education has not responded to multiple requests to discuss Jones’s actions with respect to DCEH. In response to the senators’ April letter questioning Jones’s conflicts of interest, DeVos spokeswoman Liz Hill told the Washington Post that Jones is “complying with all ethics rules” and that the senators’ new letter “is just another red herring thrown up to distract from the important work we are doing on behalf of schools and students.”

Jones is not doing this work alone. DeVos has filled many of the key higher education positions in her department with former executives of and lawyers for predatory for-profit colleges. (Last week, The Atlantic revealed Department emails, obtained by the Century Foundation, showing that Taylor Hansen, a former lobbyist for the CECU for-profit college trade association who joined the Department as part of the Trump “beachhead” team after the election, quickly got to work setting up meetings to discuss the Obama gainful employment rule, which CECU and Hansen had aggressively opposed. The Department’s ethics office later told Hansen not to work on matters involving CECU or gainful employment. Soon after leaving the Department in March 2017, Hansen spoke to ProPublica and, according to that outlet, said “he wasn’t working on the gainful employment regulations at the department.”)

Toward the end of the Obama Administration, after she left Career Education Corp., Diane Jones presented herself to the media, and to others she approached in Washington on these issues, according to some of those people, as a senior fellow at the Urban Institute, which she was. Not mentioned was that Jones was also a consultant for for-profit college interests. Colleagues of mine say that Jones can talk a good game about concern for low-income students and educational outcomes. But her record in the DeVos Department indicates that she spends her time building safe spaces for predatory practices that rip off taxpayers and ruin students’ lives.

UPDATE 08-31-18:

Late yesterday, four Democratic senators — Dick Durbin (IL), Elizabeth Warren (MA), Richard Blumenthal (CT), and Sherrod Brown (OH) — wrote to DeVos about the “troubling allegations” in this article that a Department of Education team led by Diane Auer Jones encouraged DCEH to misrepresent the accreditation status of its Illinois Institute of Art and Art Institute of Colorado campuses. “If true,” the senators wrote to DeVos, “Ms. Jones’ actions would amount to a serious breach of the public trust… the Department of Education could be complicit in the illegal deception of students – taking this deception of students under your leadership to an unimaginable level.” The senators’ letter requested a response from DeVos about what occurred at the meeting and whether the Department’s enforcement unit has opened an investigation into allegations that DCEH misrepresented the accreditation status of its schools.

In late July I gave the Department of Education a chance to address this allegation — I asked them specifically. They did not respond.