Will Arkansas Become the Latest State U. To Acquire a Predatory College?
The University of Arkansas System board of trustees is meeting Wednesday morning to consider acquiring for-profit Grantham University.
The university announced it plans to pay $1 to buy Lenexa, Kansas-based Grantham, an online school with some 4000 students. The Level Playing Field Corp. owns Grantham.
UA System President Donald Bobbitt is calling the potential deal “a game-changer for our efforts to reach those adults who are underserved by public higher education because of their need to attend fully-online, flexible institutions.”
State universities should be commended for efforts to reach more underserved students, especially veterans, military spouses, single parents, immigrants, and others striving and struggling to build better lives. But enrolling students in online higher education does them no favors, and instead can subject them to a lifetime of crushing debt, if the online institutions lack quality and integrity.
The deal would follow the 2017 purchase by Purdue University, an Indiana state institution, of for-profit Kaplan University and the 2020 acquisition of for-profit Ashford University by the University of Arizona.
In each of those cases, a for-profit college with a documented record of deceiving and abusing students, and law enforcement actions against it, was able to escape the stigma of its own tarnished name, and of an industry it helped stain, by selling itself to a prestigious state school. In each case, the surviving for-profit company — Graham Holdings for Kaplan and Zovio for Ashford — locked in a lucrative contract with a lengthy term to keep running many aspects of the school it supposedly sold.
In each case, also, the state school administration seemed hypnotized by the promise of moving into a high tech online future, or perhaps terrified of being left behind, and in each case recklessly downplayed the predatory record of the acquired school and ambushed the faculty with a done deal.
And, at least so far, the results seem less than ideal, with both acquired schools struggling to maintain enrollments and revenues. In the case of Ashford, a detailed account by a current employee indicates that the predatory practices that led then-Senator Tom Harkin (D-IA) to call the school “an absolute scam” persist even though the school is now labelled “University of Arizona Global Campus.”
Both deals are an embarrassment for the state school systems that made them.
So what do we know about Grantham University, the for-profit school that the University of Arkansas administration now wants to slap its brand on and stand behind?
For starters, as I pointed out at a 2015 Federal Trade Commission meeting, Grantham was the sole school being sold to veterans and military students through a deceptive website at the URL army.com. In 2018, the FTC shut down the Army.com scam. The FTC charged that army.com “targeted people seeking to join the armed forces and tricked them by falsely claiming to be affiliated with the military in order to generate sales leads for post-secondary schools.” Grantham University was one of those schools.
Then-FTC chairman Joe Simons said at the time, “Those who are considering a military career deserve to have confidence that the recruitment site is legitimate and their personal information will not be misused.”
With Army.com shut down, did Grantham straighten up? It seems otherwise. Now Grantham peddles itself, among other places, on a deceptive site called military-colleges.com. Grantham has also been pitched on another deceptive site, The Best Schools, which has exploited anxieties in the COVID era to offer prospective students deceptive pay-to-play recommendations of predatory schools, including also — yes — Purdue/Kaplan and Ashford.
Is Grantham sorry it keeps selling itself on websites that deceive our veterans, troops, and others?
Beyond the $1 price tag, what is in the fine print in terms of future big profits, and institutional control, for Grantham’s current owners? And even if it’s true that Grantham’s owners actually are getting nothing from the deal but an exit, what do Arkansans want to know about the integrity — and quality — of a school that apparently feels the need to advertise on such deceptive websites, and about Grantham’s own operations?
The University of Arkansas trustees should ask some hard questions instead of rushing into a marriage with serial cheater Grantham University.
UPDATE 08-10-21 8:08 pm:
More info on the deal from the Democrat Gazette:
The proposed deal calls for the UA System’s board to take on “certain discrete liabilities” while acquiring — for $1 — “substantially all the assets” of a school that, according to federal data, enrolls about 5,600 students and has one out of every four go on to graduate within eight years.
Financial details about the liabilities the UA System would take on were not disclosed in agenda documents made public ahead of Wednesday’s meeting, despite a 44-page proposed asset purchase agreement referencing an “Exhibit D” listing assets and liabilities that would transfer as part of the deal.
The UA System declined to provide the “Exhibit D” document after reviewing a request for public records submitted by the Democrat-Gazette. The “Exhibit D” documents were exempt from public disclosure Monday “because they involve proprietary data of a private, for-profit entity and doing so would provide a competitive advantage,” UA System spokesman Nate Hinkel said in an email, citing Ark. Code Ann. § 25-19-105(b)(9)(A).
An acquisition proposal states, however, that “there would be no long-term service agreement, revenue sharing, or ongoing relationship with the current owners of the university after the transaction is complete.” As part of the deal, the UA System would “initially” employ about 240 faculty members and pay for the services of about 170 Grantham University staff employees.
UPDATE 08-10-21 8:50 PM:
The trustees meeting agenda, asset purchase agreement, and other materials are here.
You can register to watch Wednesday’s trustees meeting, which starts at 9 am Central Time, here.
At the August 11 meeting, the University of Arkansas trustees approved the deal to acquire Grantham.
A UA official told the trustees at the meeting regarding the amount of Grantham liabilities that UA would assume, “the estimate as of June would be approximately $4.5 million.”
Thomas Macon, CEO of the company that owns Grantham University, told the trustees that the school has been focused on enrolling military students, and said “it’s very unlikely Grantham University can be successful anymore, and certainly not successful at the level that we expect,” in light of Congress’s recent amendment to the federal 90-10 rule, a provision requiring for-profit colleges to get at least 10 percent of their revenue from sources besides federal student aid.
The purpose of the 90-10 rule is avoid giving federal aid, and thus sending students, to for-profit schools that cannot attract significant revenue from students, employers, and scholarships and thus depend mostly on taxpayer dollars. The rule applies only to for-profit colleges, so turning Grantham into a unit of the University of Arkansas ends its obligation to comply.
Previously, the 90-10 law counted only grants and loans provided through the U.S. Department of Education as federal aid, but the bipartisan 90-10 rule amendment, which was widely supported by veterans organizations and was signed into law by President Biden in March, will start counting G.I. Bill and Defense Department student aid on the federal side of the ledger, ending a situation where for-profit schools were hyper-motivated to recruit veterans and military troops in order to meet their 90-10 obligations — which has led to deceptive and aggressive recruiting practices, such as the scam Army.com website Grantham used.
In sum, Grantham’s owners admitted they were motivated to sell the school to UA because Grantham could not comply with a new bipartisan law aimed at protecting U.S. military troops and veterans.
Newsweek just published a list of “The 30 Colleges With the Highest Dropout Rates.” Grantham was ranked #11.