Little scrutiny in DeVry sale, as DeVos targets protections
By COLLIN BINKLEY and RICHARD LARDNER
Tuesday, October 2
WASHINGTON (AP) — A little-known venture capitalist is on the verge of acquiring one of the biggest for-profit colleges in the country, a transaction that would put him in control of a troubled national chain that’s more than 60 times the size of the tiny California school he currently owns.
The business friendly Trump administration has given a tentative green light to the sale of DeVry University to Bradley Palmer, chairman of Connecticut-based Palm Ventures, even as critics warn the deal raises red flags. Chief among them is the challenge of taking over such a large institution. DeVry, which has an annual enrollment of about 46,000, also faces thousands of fraud complaints filed by students.
The DeVry acquisition is the inverse of how Washington typically works. Often companies and their top executives spend heavily to influence a government decision or policy in their favor. But there’s no sign that any of the parties employed lobbyists or made significant political contributions specifically to push the sale forward.
Like most transactions in the for-profit world, the DeVry deal has received little public scrutiny even though millions of dollars in federal financial aid are at stake. And the change in ownership is moving along at the same time Education Secretary Betsy DeVos works to dismantle Obama-era regulations designed to better police the industry and increase protections for students.
If the DeVry deal is finalized, it would be another in a series of recent sales meant to breathe new life into troubled for-profit colleges. Purdue University recently bought the for-profit Kaplan University chain and converted it into a nonprofit to lead the school’s online programs. Kaplan agreed to a $1.3 million settlement in 2015 after it was accused of hiring unqualified instructors. Last year the Dream Center Foundation, a religious charity, purchased three chains from Education Management Corporation, which in 2015 agreed to nearly $200 million in settlements over allegations that it used illegal recruiting tactics.
Under the terms of the DeVry sale, the chain’s stock will be acquired at no cost by Cogswell Education LLC, a holding company registered in Delaware and run by Palmer. Cogswell Education currently owns the for-profit Cogswell College in San Jose.
The impact for students is unclear. The Education Department said DeVry must keep promises it previously made to its students, including a commitment to disclose information about costs and student debt. A spokeswoman for Cogswell Education added that Palmer has no plans to sell DeVry in any particular 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.
For DeVos’ detractors, the sale is more evidence that she’s putting corporate profits over the interests of consumers. A little more than a decade ago, Palmer’s firm acquired the nonprofit Heald College chain. In the span of a few years, Heald was converted into a for-profit school and then sold for $395 million to the Corinthian Colleges chain, which collapsed in 2015.
Bob Shireman, a former Education Department official during President Barack Obama’s first term and a frequent critic of for-profit colleges, questioned whether a similar fate awaits DeVry. Would Palm Ventures strip the chain down to make it as profitable as possible and then sell it off?
“Based on the way private equity firms have behaved generally, it would be reasonable to conclude that things are going to get worse for students and taxpayers,” Shireman said. “Not every lion kills its tamer, it’s not an absolute, but certainly it’s a reason for concern.”
Palmer declined to comment for this story. Berkey said in a statement that Palmer is “very private” and does not speak with media. She said if the transaction secures all necessary approvals, DeVry will be operated and governed by its own independent board of trustees, separate from Cogswell College.
“Further, it is not anticipated at this time that Brad Palmer or any employee or affiliate of Palm Ventures or any shareholder of DeVry will have a seat on the DeVry board of trustees,” Berkey said.
Ernie Gibble, a spokesman for Adtalem Global Education, which currently owns DeVry, declined to respond to questions about the deal, saying only that “the transaction is still tracking according to expectations.”
The sale is still awaiting final review by the Education Department but already has cleared several key hurdles, despite reservations voiced by regulators.
In an SEC filing Sept. 17, Adtalem said DeVry’s accreditor, the Higher Learning Commission, had approved a transfer of the school’s accreditation to the new owner. Gibble declined to provide a copy of the commission’s approval letter. Commission spokesman Steve Kauffman said the company does not make information about cases public.
Department officials gave preliminary approval in a June 19 “pre-acquisition review” to Adtalem, although the document suggested there would be some connection between DeVry and Cogswell College. The department has concerns about combining two institutions of “vastly different size,” the letter said, adding that DeVry “dwarfs” Cogswell College.
The department’s proposed solution is to let DeVry’s new owner operate the chain at current enrollment levels, with a ban on expansion for at least a year. The department also plans to continue holding $68 million that DeVry was previously required to pay as a form of insurance in case the chain fails.
The Illinois Board of Higher Education voted over the summer to grant DeVry the authority to operate and grant degrees in Illinois under Cogswell Education. Adtalem is headquartered in Chicago, and eight of DeVry’s 52 campuses are in Illinois.
The state board’s approval came even as a coalition of student and taxpayer advocacy groups raised numerous concerns about the transaction, including Palm Ventures’ history with Heald and what they said was a “lack of clarity” about the potential role that Palm Ventures may have in operating DeVry’s programs.
In a June 1 letter to the Illinois board, Palmer declared that the objections the groups raised were “replete with errors.” Heald thrived while owned by Palm Ventures, he wrote, and the firm had no dealings with Corinthian before the sale.
But Sen. Dick Durbin, D-Ill., a critic of DeVry who had urged DeVos and the board to carefully scrutinize the deal, said students in Illinois and across the country should be wary of signing up at the new institution. DeVry agreed in 2016 to a $100 million settlement to resolve an FTC lawsuit alleging the school misled students through deceptive ads.
“I’ve raised my concerns about this transaction from the get-go,” Durbin said in a statement. “DeVry has a proven track record of misconduct and Cogswell is ill-equipped, even unlikely, to turn it around.”
When a college changes hands, it’s typically reviewed by the Education Department and by the school’s accreditor, but it’s largely done behind closed doors and without public input. The Obama administration began calling for greater scrutiny of school transactions in its final years but never formally changed procedures.
“They have tended to happen in a black box, where it’s never been clear who is making these decisions, on what basis they are making them or what criteria are being used,” said Shireman, a senior fellow at The Century Foundation, a progressive Washington think tank.
The DeVry sale is expected to close in early fiscal year 2019, which began in July, according to an SEC disclosure filed last month by Adtalem. Even though DeVry has fallen behind in certain performance benchmarks that the deal rested upon, Palmer hasn’t signaled any plans to change course.
The December 2017 purchase agreement permits Cogswell Education to walk away if the Education Department receives more than 2,250 fraud claims from former DeVry students on or before the deal’s closing date. As of May, there were approximately 10,275 complaints against DeVry pending review, according to department data, including more than 3,700 filed since January 2017.
Barmak Nassirian, director of federal relations and policy analysis for the American Association of State Colleges and Universities, said it’s no coincidence that DeVry and other for-profits are attempting a comeback at the same time the Trump administration moves to eliminate policies that Nassirian describes as “governmental safeguards.”
“It’s precisely the administration’s elimination of oversight that has created this new frenzy in the marketplace, where the veterans of the previous round of rip-offs are basically taking their winnings and handing the toxic assets to new owners,” Nassirian said.
Although Palm Ventures isn’t seen as a major player in the for-profit realm, it has quietly bought and sold several chains over the past three decades, generating millions of dollars by flipping brands like Heald College, UEI College and American Education Center. It also owns Nightingale College, a small for-profit nursing school in Utah, and a stake in Post University, a for-profit in Connecticut that’s fighting two federal lawsuits from former employees who say it uses unethical recruiting practices to drive profits.
Palmer’s father, Russell Palmer, who led a predecessor of the Deloitte firm, has bought and sold several for-profit chains through his Philadelphia investment firm, the Palmer Group.
None of the Palm Ventures’ officers listed on the company’s website comes from a career in academia, and the firm just as frequently invests in tech companies, hotels and the food industry. Palmer, who got his start in the restaurant industry, typically stays out of the limelight, even in marquee education deals. When he bought Heald College in 2007, a news release announcing the sale said the buyer “wishes to remain undisclosed.”
Founded more than a century ago, Cogswell College had 740 students throughout the 2016-17 school year, according to Education Department data. Most of its students are California residents, taught by 19 full-time faculty members.
The school’s revenue has skyrocketed since Palmer bought it, growing from $1.3 million in 2010 to nearly $10 million in 2015, according to Education Department data analyzed by The Associated Press. The growth has been tied to a rapid rise in enrollment, from 238 students to more than 600, with a sharp increase in the number of low-income students who receive federal Pell Grants.
Contact Collin Binkley at https://twitter.com/cbinkley and Richard Lardner at https://twitter.com/rplardner
Why we’re training the next generation of lawyers in big data
October 2, 2018
Anne Tucker and Charlotte Alexander
Associate Professors of Law, Georgia State University
Charlotte Alexander receives funding from the United States Department of Labor. She works for Georgia State University. She is affiliated with Spread the Vote. Anne Tucker does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
Georgia State University provides funding as a founding partner of The Conversation US.
Artificial intelligence is transforming the traditional delivery of legal services.
In general terms, the set of tools broadly called “legal analytics” promises to do two things: increase the efficiency of tasks that once required substantial time and human effort, and mine masses of data to discover new insights that were previously inaccessible.
As legal scholars, we’re excited about the promise of applying these tools to legal research questions. At Georgia State, we’re building interdisciplinary research teams with lawyers and data scientists working side by side. Students are involved too, so that we can educate the next generation of lawyers to leverage these tools in their own practices.
Transforming legal tasks
Suppose that a company wants to forecast which employee complaints lead to lawsuits. Historically, the company might assign a team of analysts and lawyers to comb through complaint records, personnel files and court documents, searching for some pattern that might signal litigation risk. This painstaking process could take months and require an army of people to process thousands of pages of text.
Treating this task instead as a data science problem dramatically improves speed and efficiency. An algorithm could extract key text in bulk and assemble it for analysis. Human time and attention would then be trained only on the relevant information. The labor-intensive search process would be eliminated.
The new generation of analytics tools can do more than simply reduce labor hours. Techniques like machine learning – a type of artificial intelligence where computers can recursively learn from a set of examples without being explicitly programmed to do so – can enable the discovery of new patterns that are beyond the reach of manual analysis. For example, in the scenario above, an algorithm might be able to predict whether any given employee complaint will result in a lawsuit.
At our lab, we are testing the application of analytics tools to a broad range of legal questions. We analyzed all employment lawsuits in the U.S. District Court for northern Georgia to understand which cases win and lose and to identify case features like judges, attorneys and motions that might influence a case’s ultimate outcome.
For example, we found that, when a motion was referred by the presiding district court judge to a magistrate judge for a preliminary report and recommendation, the magistrate judge’s recommendation was the strongest predictor of the judge’s ultimate decision. This raises interesting questions, which we are researching further, about decision-makers’ roles in resolving legal disputes.
Harnessing big data
Legal analytics has captured the imagination of lawyers and researchers alike. In a recent contest in the United Kingdom, 100 lawyers from top London firms were pitted against an artificial intelligence tool to predict the outcome of hundreds of simple financial disputes. The robot won by a wide margin, predicting 86.6 percent of cases correctly, while the humans correctly predicted only 66.3 percent. The tool was “learning” something about the disputes that the humans were missing, beating lawyers at their own prediction game.
Of course, not all legal problems neatly reduce to a set of variables, and human behavior does not always follow detectable patterns. Predictive tools work less well when the relevant dataset is small, or when the text that is subject to analysis is so varied and idiosyncratic that patterns are difficult to detect.
Progress can also bring peril. Historical data about past events often contain bias and inaccuracies, meaning that even the most sophisticated computer code, when fed garbage, can produce only garbage in return. Bail-setting algorithms, for example, have been criticized for perpetuating racial bias in criminal justice.
If lawyers delegate too much of our decisions to algorithms, then we are destined to repeat our historical patterns and mistakes. For instance, litigation prediction algorithms trained on cases from retired judges or outdated case law may miss new developments and recommend an unnecessarily conservative course of action.
In the end, a robot lawyer is a poor substitute for a human lawyer. Human judgment will remain a crucial ingredient in law practice. What will change is when it’s used to augment intelligence gleaned from other systems.
What new lawyers need to know
If the practice of law changes, then that means parts of legal education must change, too.
Some future lawyers will graduate as computer programmers, able to write the code that underlies legal analytics tools. Others will become knowledgeable consumers of the results produced by these tools, able to critically assess the output. Our institution is developing a dual degree in analytics and law, as well as concentrations within the J.D. and LL.M. programs.
We believe that all law schools should wrestle with how to educate today’s students for a future practice. However transformative, in the end, legal analytics is a tool. Tomorrow’s lawyers should be prepared to exploit its advantages, while also understanding where those advantages end and human judgment begins.
The Catholic Church resists change – but Vatican II shows it’s possible
October 2, 2018
Associate Professor of Sociology, University of Pennsylvania
Melissa Wilde, Ph.D. has received or receives funding from the National Science Foundation (Dissertation Improvement Grant (SES-0002409), the Woodrow Wilson Foundation (via a Charlotte W. Newcombe Dissertation Writing Year Fellowship, the American Sociological Association’s Fund for the Advancement of the Discipline, the Society for the Scientific Study of Religion, and research funds and a junior sabbatical from Indiana University, the University of Pennsylvania, and Penn’s Program for Research on Religion and Urban Civil Society.
Pope Francis has asked the heads of every bishops’ conference around the world to gather for a summit in February to discuss the issue of sexual abuse in the church.
Even as the pope takes these steps, debates continue about what he knew and whether there was a better way of dealing with the perpetrators of abuse. There have been many specific recommendations about what Francis could now do to fix the mess the church faces. These include everything from reforming canon law to elevating nuns to the position of Cardinal.
Many of these discussions acknowledge that bringing any real change in the Roman Catholic Church is hard, even for a pope. However, as a scholar of religious change, I believe what’s missing in these discussions are examples when significant change was achieved in the church.
The pope’s options
So what exactly can a pope do to change things? First of all, of course, the pope can make many administrative changes. For example, he can modify canon law or the rules that govern the behavior of all priests and members of the hierarchy. He can “reorganize” different Vatican offices, such as the conservative Roman Curia and issue encyclicals to set the tone and tenor of the church.
Pope Francis, for example, is well-known for decisions that emphasize simplicity and modesty. For example, after taking office he wore ordinary black shoes to office and chose to ride in an everyday car like a Fiat.
But the issue is that the next pope could reverse some or all of these changes. For a change to be permanent, the pope needs to exercise his right to speak infallibly – meaning that what he is saying can never be wrong, and in essence, cannot change.
Speaking infallibly is an incredible burden, in no small part because a pope must do it alone. It has only been done once since papal infallibility was officially declared by the First Vatican Council in 1898. That was in 1950, when Pius XII declared the doctrine of the Assumption of Mary, that she was bodily assumed into heaven upon her death.
What about a council?
But there is a way for a pope to speak authoritatively and with great legitimacy about doctrine: he can call an ecumenical council. In fact, only a pope can call a council, and he does not have to do so in concert with anyone else.
An ecumenical council, by definition, means a gathering of all of the leaders of the world church.
Despite the fact that technically, any pope can call a council anytime, councils are rare events – occurring less than once a century on average. The church’s last council before Vatican II, Vatican I, ended prematurely in 1869 as a result of the Franco-Prussian War and did little of note besides declaring the doctrine of papal infallibility.
Prior to Vatican I, the church had not held a council since the Council of Trent in 1563.
The most recent, and most important, example of change occurring in the Catholic Church is the Second Vatican Council, or Vatican II. In 1998 I started research on Vatican II and gained access to everything from council leaders’ personal correspondence to votes from the Vatican Secret Archive.
I believe, this is a moment to revisit Vatican II and examine what it can tell us about how the church can, and did, renew itself.
When Pope John XXIII called the council in 1958, the world was surprised as were, by all accounts, the Vatican bureaucracy. The council created a “political opportunity” in the church for those who wanted to bring change.
Vatican II was a monumental task. It took four years of preparations and four sessions of debates over three years, between 1962 to 1965.
Almost 3000 bishops, cardinals, heads of religious orders and theologians from all over the world participated in the council. What is noteworthy is that these participants were not members of the Curia, the administrative offices of the Vatican that oversee the day-to-day workings of the church.
These were people usually focused on administering to their local dioceses. But when the opportunity came to change the church, they took it.
The process was difficult and full of set backs. During council preparations and over the course of council itself, the Curia tried to prevent changes. Indeed, deeming the council complete was in and of itself, an ongoing, uncertain and often fraught process.
The initial drafts of statements about church doctrine that the Curia prepared before the council, did nothing other than enumerating errors and reiterating current church doctrine. These, however, were rejected in a dramatic confrontation during the first days of the council.
As I demonstrate in my book on Vatican II, such progressive victories were a result of the efforts of a group of bishops who believed in the “doctrine of collegiality.” Approved at Vatican II, this doctrine states that the bishops convening together have the same authority to discuss, debate or change doctrine as the pope. These bishops listened to each other and, most importantly, developed compromise positions that the majority of bishops could support.
Thus, for example, bishops who carried historic animosities toward Protestant missionaries learned how important it was to improve those relationships. My analysis of council votes that I obtained from the Vatican Secret Archive demonstrated that ultimately, a majority of Latin American bishops voted for reforms that helped in better relationships with Protestants.
As a result of many other such dialogues, real changes came about.
The changes from Vatican II
Among the noteworthy ones were those that changed the way the church worshipped. The altar, for example, was turned around to face the people. Mass was changed to be in the vernacular, no longer in Latin. And women no longer had to cover their hair in church.
And these are but the most practical.
Many of the bigger doctrinal changes were those that most Catholics were oblivious to, or knew about only in passing. The biggest of these was the Declaration of Religious Liberty.
By declaring that the only just form of government was one under which people were free to worship as they pleased, the church relinquished centuries-old preferential treatment for particular governments. Prior to the declaration, the church had benefited from governments that either repressed other religious organizations, or otherwise provided financial or legal support for the Catholic Church.
In doing so the church gained more than it lost. Most of all, it gained legitimacy throughout the globe. Just one indication of this was that during the first papal visit to the United States in 1965, Pope Paul VI was invited to speak at the United Nations.
Time for Vatican III?
When Pope John XXIII announced the council in 1958, there was no real crisis in the church. It was, by many measures, a healthy, if ancient institution.
But today, the Catholic Church is facing a crisis: In many places of the world, mass attendance is down and a growing number of young Catholics are leaving the church.
In addition to these challenges, fewer and fewer men are willing to enter the priesthood. This trend, which began long before the clergy sex abuse scandal, is raising questions around whether the church needs to reconsider its insistence on a male, celibate priesthood.
And, of course, there are many other concerns that the church might want to engage with – for example, whether the 98 percent of practicing Catholics who use “artificial means” of contraception – meaning anything other than the rhythm method – are sinners.
It seems possible to me that given the depth and breadth of the issues it is facing, the church needs more than reflection. The church, I would argue, needs change. It needs another council.