• August 2, 2014

Keiser U. Goes Nonprofit

Keiser University, a Florida-based for-profit institution that has been active in the fight against the Education Department's proposed "gainful employment" rule, has converted to nonprofit status.

The sale of the university to Everglades College Inc., a nonprofit entity that operates Everglades University, was finalized this week, Keiser's chancellor, Arthur Keiser, confirmed in an interview today. He would not disclose the sale price.

Mr. Keiser and his wife, Belinda, purchased Everglades University, then known as American Flyers College, in 1998, and created Everglades College Inc. as a nonprofit corporation in 2000.

Mr. Keiser said the sale of Keiser University to the nonprofit corporation was designed to ensure the university's survival after his death. But he hinted that the increased pressure on the for-profit sector also played a role in the decision to convert.

"It was part of family planning," he said. "And obviously the environment is pretty tough."

For-profit colleges have been under intense scrutiny over the last year, with members of Congress raising concerns about their high costs and low graduation rates, and with some states' attorneys general looking into their recruiting practices. Keiser University is one of several Florida for-profits under investigation by that state's attorney general.

Mr. Keiser, who is also chairman of the board of the for-profit sector's chief lobbying organization, the Association of Private Sector Colleges and Universities, has been a vocal opponent of the proposed gainful-employment rule, which would cut off student aid to programs whose students have high debt burdens and low loan-repayment rates. Asked about his involvement in the fight over the rule, he said the proposal was bad policy "regardless of the tax status of the institution."

In October, Keiser University sued officials at Florida State College in Jacksonville, accusing them of smearing the college and the for-profit sector in derogatory e-mails sent to investors and others. It dropped the lawsuit a month later, saying the colleges had "agreed to put their differences behind them."

The Keisers will remain involved in Keiser University, though it will be run by an independent board.

"It's operating in the same way, with the same people, the only difference is that its owned by a nonprofit," Mr. Keiser said.

Everglades College Inc. became independently operated by a Board of Trustees in 2002, and Mr. Keiser donated the value of the stock of American Flyers to the corporation.

Comments

1. n8snake - January 14, 2011 at 10:33 am

So, this illustrates how wrong it is to hold one category of institution to different standards. If nothing else changes but the designation, all that happened here is the state of Florida just reduced its tax revenues.

2. blesch - January 14, 2011 at 11:19 am

Interesting. A family member of mine works for Keiser, and he knows nothing about this. Mr. Keiser needs to have an all-hands meeting.

3. merita - January 14, 2011 at 12:55 pm

This is, of course, going to be a common response to increased regulation of only the for-profit sector of higher education. Unless a small private owner like Art Keiser thinks they are going to strike it rich with an IPO or sale, this route would still guarantee wealth-generating cash flows on a sustainable basis with much less onerous regulation. Higher ed watchdogs are going to start sharpening their critiques and widening their focus if they really care about protecting students' interests.

4. betterschools - January 14, 2011 at 06:29 pm

merita,

"Higher ed watchdogs are going to start sharpening their critiques and widening their focus if they really care about protecting students' interests."

Indeed! Are you really so naive as to believe ED's initiatives are about protecting students' interests? It matters not. The Department's intentions to hamstring the for-profits, and only them, and transfer enrollments to the publics is already backfiring as illustrated by the American Council on Education's letter to Secretary Duncan, one of many examples emerging almost daily now in which the Department is seen shooting itself in the foot with the blunderbuss of incompetence. ACE is calling for clarification on key points of the Incentive Comp rulemaking, suggesting that many hidden ways publics routinely pay for enrollments are now in in jeopardy. There is no clarification that can be logical and equitable with respect to some of the new rules. Assuming the Department will not be honest and state that they simply don't like for-profits and the idea was to hurt them, the only way to save the good old boy's club will be to place obfuscating work-arounds in place. Unfortunately, the for-profits are too angry to let that slip by. At the same time I am counseling my for-profit colleagues to be more vigilant in establishing and managing scrupulously honest processes, I have counseled my non-profit colleagues to begin their own audits and to be less gleeful at the for-profits' pain. The public spotlight is swinging ineluctably toward the publics. This fate was sealed when Harkin refused to examine all three sectors. He got away with it temporarily but Americans' hate this kind of politicking. For four reasons, we will dislike the public's dirty linen more than we dislike what we see in the for-profits. First, the problems are almost universal in the publics; second, there are more problems affecting students in more ways; third, more taxpayer funds and total costs are at stake; fourth, the disservices to the students are more costly to them.

I'll stipulate that you disagree with all of this. No need do respond. Just watch.

5. goxewu - January 16, 2011 at 04:03 pm

The unintentionally-not-for-profit (that is, suddenly unprofitable) Murray's Discount University (formerly Regents Academy of Idaho Ski Retreats) has been sold to the educational corporation, CosmoTeach International, which has branches in Cancun, Biarritz, Palm Desert, and Macao and specializes in furnishing consultants to educational consultants who consult with other educational consultants about educational consulting.

No need to respond. Just watch and, as the kids say, SOH.

6. merita - January 17, 2011 at 08:06 pm

Betterschools, I think you're misreading me. I don't disagree with much of what you've written. Harkin has identified some real problems with higher ed in this country, but most of what he has highlighted isn't unique to the for-profit sector, and as you say, some of it is even worse in the public sector. Whether there will be an attempt to put a lid back on the can of worms that has been opened, or whether the scrutiny will spread further, I'm not so sure about. But what is for sure is that if the rules remain disparate for different sectors you'll start to see more blurring of the lines between sectors (cf., Ivy Bridge University, 2tor, etc.).

7. amy_metnick - January 23, 2011 at 08:02 pm

We were just down there and noticed Keiser University next door to a Pepperidge Farm plant. We assumed the institution was a for-profit extension with culinary focus, specializing in keiser rolls. How wrong we were! :-)

8. thetruth - January 26, 2011 at 05:15 pm

I use to work for Everglades< keiser has been planning this for years. This way when they got busted for scamming students they couls quickly change over to everglades university! The reason there is no telling of sale price is because it was a dollar!b now keiser can still profit of FA and not pay the state any taxes!

people he is a smart one and he just pulled off a huge ponzi scam

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