October 24, 2019

House Chairman Threatens to Subpoena DeVos Over Dream Center Debacle

House Chairman Threatens to Subpoena DeVos Over Dream Center Debacle

House Education and Labor Committee chairman Bobby Scott (D-VA) is threatening to subpoena Trump Secretary of Education Betsy DeVos, citing her Department’s failure to provide documents responsive to the Committee’s probe of the collapse of Dream Center Education Holdings.

DCEH was a non-profit entity that acquired and, for about a year until it shut down, operated many of the colleges formerly owned by for-profit Education Management Corporation. Scott now charges that the DeVos Department effectively aided in DCEH’s deception of students.

Among several abuses at DCEH first exposed by Republic Report in May 2018, the operation falsely informed students that two of its Art Institutes campuses, in Illinois and Colorado, remained accredited, when in fact their accreditor, Higher Learning Commission, had suspended accreditation for the schools pending further review.

A letter sent Tuesday from Scott to DeVos reveals that Scott already has documents showing DeVos’s Department sent $10.7 million in taxpayer-funded student grants and loans to those two Art Institutes campuses despite it being clear to Department officials that the schools were not eligible for that federal aid.

The documents expose a plan relayed to DCEH on May 3, 2018, by a senior Department of Education official, Michael Frola, to keep federal aid flowing to the schools despite the loss of accreditation. DCEH had petitioned the Department to start treating all its schools as non-profits for purposes of federal regulations, which impose some particular requirements only on for-profits. But the Department had not yet acted on the petition. One of those regulations permits the Department to send student grants and loans to schools awaiting accreditation, but only if they are non-profit. So the Department, via letters to DCEH from Frola, committed to retroactively, and temporarily — in advance of final approval — treat those two Art Institutes campuses as non-profit.

Scott’s letter to DeVos notes that there is no evidence that the Department ever diligently reviewed the evidence to determine if the two schools actually met the Department’s standards for non-profit status. Indeed, in February 2019, as DCEH was completing its meltdown, Diane Auer Jones, the top DeVos aide who has mismanaged Department actions and policy on for-profit colleges, determined that DCEH schools did not meet those standards.

Scott’s letter also details, as Republic Report has previously noted, that the timeline of events casts severe doubt on Jones’ claim that she was not aware until July 11, 2018, of DCEH’s false statements about the schools’ accreditation.  The facts also undercut Jones’ assertion in sworn testimony to Congress that the Department’s 2018 decision to permit retroactive accreditation of colleges was unrelated to the Dream Center’s predicament.

After granting DCEH such special favors, Jones soured on the operation, eventually turning over the surviving DCEH schools to another non-profit group linked to for-profit interests.

Angela Morabito, a spokesperson for the DeVos Department, responded to Scott’s letter by issuing a statement claiming the Department acted in the best interest of students. “It seems to us that the chairman is cherry-picking facts and lacking important context,” she said, without explaining why that would be the case.

The National Student Legal Defense Network, which already has been pursuing litigation against DCEH for lying to students about the campuses’ accreditation issue, on Tuesday filed a new lawsuit against DeVos for her Department’s alleged role in deceiving the students via the scheme exposed in Scott’s letter.