The Clinton University Problem: Laureate Education Lawsuits Present Problem For Clintons [Updated]

The Clinton University Problem: Laureate Education Lawsuits Present Problem For Clintons [Updated]

1, June 8, 2016 jonathanturley

While largely ignored by the media, the Clintons have their own university scandal. Donald Trump has been rightfully criticized and sued over his defunct Trump University. There is ample support for claiming that the Trump University was fraudulent in its advertisements and operations. However, the national media has been accused of again sidestepping a scandal involving the Clintons that involves the same type of fraud allegations. The scandal involves a dubious Laureate Education for-profit online college (Walden)and entails many of the common elements with other Clinton scandals:huge sums given to the Clintons and questions of conflicts with Hillary Clinton during her time as Secretary of State. There are distinctions to draw between the two stories, but the virtual radio silence on the Clinton/Laureate story is surprising. [I have updated the original column with some additional thoughts, links, and clarifications for readers).

I have long been a critic of many online courses, though I am increasingly in the minority even on my faculty. However, the rise of online courses has allowed for an increase in dubious pitches and practices that prey upon people who cannot afford or attend a traditional academic institution.  I should also reveal a general opposition to for-profit universities, a viewshared by many teachers and experts.  While there are some good for-profit programs from student camps to specialized training courses, Laureate is a massive, mega-corporation that is often criticized for its impact on education.  As companies maximize profits, students often become a mere cost of doing business.  The rate of default has been higher at such for-profit universities and less than half of students at for-profit schools actually finish such programs accordingly to Brookings.  Laureate is often cited as the leader in reducing education to a commodity in a mass for-profit enterprise.  The company has made huge profits and is worth over $4 billion.

Laureate Education was sued over its Walden University Online offering, which some alleged worked like a scam designed to bilk students of tens of thousands of dollars for degrees. Students alleged that they were repeatedly delayed and given added costs as they tried to secure degrees, leaving them deeply in debt.  Laureate itself has been criticized for “turbocharging” admissions while allowing standards to fall and shortchanging education.

The respected Inside Higher Education reported that Laureate Education paid Bill Clinton an obscene $16.5 million between 2010 and 2014 to serve as an honorary chancellor for Laureate International Universities.  Various news outlets said that neither Clinton nor Laureate were forthcoming on how much he was paid for the controversial association.

Bill Clinton worked as the “honorary chancellor” which sounds a bit like the group’s pitchman. He gave speeches in various countries and was heavily touted by the for-profit company to attract students.  The size of this payment (which has been widely reported) raises obvious concerns as to what the company was seeking to achieve and whether Laureate received any benefit from the association with the State Department given its massive international operations.

Various sites have reported that the State Department funneled $55 million in grants during Hillary Clinton’s tenure to groups associated with Laureate’s founder.  That would seem a pretty major story but virtually no mainstream media outlet has reported it while running hundreds of stories on the Trump University scandal.  The stories on the grants do not name Laureate directly.  Accordingly, the company might have not received direct grants (my first column did not make that clear and, in fairness to Laureate, there is no evidence of a quid pro quo arrangement or even direct grants).  However, there are references to the International Youth Federation (connected to Laureate chairman Douglas Becker) as receiving USAID funding.  Becker, who reportedly did not graduate college,is a controversial figure and the Washington Post wrote that “Becker’s peers in the education industry paint him as a tireless promoter, skilled at pitching Laureate to investors and persuading universities to sell to him.”  Becker is reportedly a major donor to the Clintons and the Clinton Foundation.

The Wall Street Journal reported that Laureate was able to “skirt” regulations on reporting “gainful employment” due to its large number of schools and students outside of the country who do not receive federal aid.  The Journal noted “[o]nly 31% of students who enroll at another Laureate school, Santa Fe University of Art and Design, graduate. After 10 years, a mere 58% earn more than Americans with a high school diploma.”

Clinton resigned from his post just before his wife declared her candidacy but praised the company for producing high quality education.  Yet,MarketWatch reported “five out of its six U.S. campuses are on a list of 544 schools the Department of Education is monitoring over concerns about shaky finances or regulatory compliance.”

Indeed, Laureate has come up in the Clinton email scandal.  In her first year as Secretary of State, Clinton is quoted as directly asking that Laureate be included in a high-profile policy dinner — just months before the lucrative contract was given to Bill Clinton. Hillary Clinton later references “Laureate Universities, started by Doug Becker who Bill likes a lot.”

Of course, there is a good reason why Clinton would ask for a more inclusive listing since “It’s a for-profit model that should be represented.”  Even though most teachers (including the unions supporting Clinton) tend to be opposed to such for-profit companies, there is no denying that this model is on the rise.  Later, Clinton called for a crackdown on for-profit companies but was criticized for the former association with Laureate.

There was even a class action — like the Trump University scandal. Travis et al v. Walden University LLC, was filed in U.S. District Court in the District of Maryland but dismissed in 2015. It is not clear why it was dismissed. However, the size of the contract to Clinton, the grants from State and the complaints over alleged fraud should warrant a modicum of attention to the controversy. The controversy has many of the familiar complaints over fraudulent online programs that take advantage of hard working people.

As an academic, I find both Trump University and Laureate to be deeply troubling stories. Yet, only one has been pursued by the media to any significant degree. I am not suggesting that Laureate as a whole is fraudulent.  It clearly is a large for-profit educational company that has far more to show for its work than Trump University.  Indeed, this is a huge global company with tremendous financial assets and profits.   Moreover, there are distinctions that can be drawn with a university like Trump that is based entirely on the presumptive nominee and his promises in advertising. However, the money given to the Clintons, the involvement of the State Department, and the claims of fraud make this an obviously significant story in my view.  The ridiculous amount of money given to Clinton alone raises legitimate questions.  This is a company that was expanding exponentially in foreign countries. The association with Clinton was obviously greatly desired by the company.  The question is whether the association with the Clintons resulted in any favorable treatment for the company or its affiliates.

Update:  Walden University President Jonathan Kaplan was kind enough to respond to my query for a comment to this story.  He maintains that Walden has been misrepresented in terms of its program and success with students.  He noted:

Walden University is accredited by the Higher Learning Commission, and was founded in 1970.  We are committed to delivering quality degree programs and to focusing on student outcomes. More than 80% of our students are enrolled in masters or doctoral programs. Walden has programmatic and professional accreditations in key areas serving the public good such as social work, teacher education, mental health counseling, nursing, and more.

Walden University takes its financial aid responsibilities very seriously and has worked hard over many years to be good stewards of federal financial aid. This is demonstrated by our three-year cohort default rate of 6.8%, which is well below the national average of 11.8%, including all nonprofit and for-profit institutions.

Additionally, we have achieved a rigorous form of certification for social responsibility through Laureate Education and Walden University becoming Certified B Corporations® in 2015.

Walden University is a part of the Laureate International University Network.  We are proud of our association with President Clinton and his role as honorary chancellor at Laureate from 2010 to 2015. It is unfortunate that this association has now drawn us into a political debate.

I should further note that Laureate has claimed a higher than average success yet with its students and currently has almost one million students in its various schools around the world.




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