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Diverse Coalition Urges Department of Education to Scrutinize Sale of Walden University

Wednesday, July 21, 2021

WASHINGTON, D.C. — Today, the Center for Responsible Lending (CRL), the Institute for College Access and Success (TICAS), the American Federation of Teachers (AFT), New America’s Higher Education Program, and Veterans Education Success (VES) submitted a letter to the U.S. Department of Education opposing the proposed acquisition of Walden University by Adtalem, a corporation that operates for-profit educational institutions.

Adtalem has reached agreement to acquire Walden from another for-profit operator, Laureate Education. The Department gave preliminary approval for the change of ownership last month.

The coalition made the following statement:

Changes in school ownership can be used to evade regulation in the for-profit space; therefore, acquisitions should trigger heightened review and closer scrutiny of institutions, not less.

The recent Department of Justice investigation into Walden University for potential violations of the False Claims Act, combined with the university’s failure to qualify for federal funding, and Adtalem’s history of poor management— including that of DeVry University before it was divested — will potentially spell disaster for both students and taxpayers if the Department of Education allows the change in ownership to take place without serious consideration.

Additionally, Adtalem sought special conditions from the Department for its purchase of Walden. Specifically, Adtalem sought assurances that the Department would not increase oversight, limit growth, or secure financial protections. Yet, given the histories of predatory practices associated with both Walden and Adtalem, those are just the types of protections that are needed in this case to ensure quality standards. If the Department of Education approved this deal with the special conditions Adtalem previously disclosed, this failure of oversight would mark a new low by an Administration that promised to do better.

We urge careful review of the risks involved with this deal and implore the Department to impose guardrails to protect vulnerable students and taxpayers from the effects of mismanagement.

The coalition’s main concerns, stated in the letter, hinge on the following:

  • Walden University has a history marred with student’s reports of misleading practices — More than 1,000 former students have submitted borrower defense claims and multiple have sued the university alleging that they were intentionally misled during the enrollment process, and that requirements were changed mid-program, which forced students who wanted to graduate to take additional courses that increased both the program length and students’ loan debt. Additionally, employees of the university have said the university has not met its obligation to arrange clinical opportunities for students, which are required to graduate and work.
  • The University has failed to meet financial responsibility standards — Walden University has been on Heightened Cash Monitoring since at least the 2015-2016 award year. During that time, it has received more than $4 billion in federal aid. Further, Walden and Laureate, its current parent organization, have not reported a passing financial composite score in more than a decade. The university is not certified to receive federal student aid funds.
  • Adtalem has a poor management record — Adtalem was responsible for operating DeVry University, which faced thousands of fraud complaints filed and nearly 19,000 borrower defense claims by students before it divested of the institution in 2018. Under Adtalem’s ownership and oversight, DeVry University engaged in recruitment practices that gave rise to findings of misrepresentation by the Department of Education and the only limitation action in ED’s recent history. Moreover, a recently-settled whistleblower action alleged that Adtalem was unable to stop DeVry’s unlawful practices even after it entered a settlement with the Federal Trade Commission in December 2016.
  • Adtalem is seeking special conditions with the acquisition — Conditions include unrestricted ability to expand programs, locations, and enrollment levels at Walden and other subsidiaries; immunity for Adtalem subsidiaries from the limitation conditions imposed on DeVry as a result of unlawful actions that occurred during Adtalem’s management; and a cap on financial guarantees for Walden University or any other Adtalem subsidiary.

As a result of these and other concerns, Walden University has not been certified to participate in Title IV programs for the last 15 months.

The coalition is urging the Department to impose serious growth limitations on programs and enrollment, which it says would help hold the company accountable for its past performance and ensure protections for students and taxpayers.

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Press Contact: Vincenza Previte vincenza.previte@responsiblelending.org