NYT: "Some Owners of Private Colleges Turn a Tidy Profit by Going Nonprofit"

[whenhen]

From the New York Times
http://www.nytimes.com/2015/03/03/business/some-private-colleges-turn-a-tidy-profit-by-going-nonprofit.html?_r=0

After a recent government crackdown on the multibillion-dollar career-training industry, stricter limits on student aid and devastating publicity about students hobbled by debt and useless credentials, some for-profit schools simply shut down.

But a few others have moved to drop out of the for-profit business altogether, in favor of a more traditional approach to running a higher education institution.

And the nonprofit sector, it turns out, can still be quite profitable…

As president of Everglades, Arthur Keiser earned a salary of nearly $856,000, more than his counterpart at Harvard…

Keiser University, which has about 20,000 students spread over 15 campuses, is one of a handful of for-profit colleges that have switched to the nonprofit arena or are considering that move…

In November, Robert Shireman, a fierce industry critic and former Education Department official, filed a complaint with the Internal Revenue Service accusing Mr. Keiser and three board members of violating tax regulations and using the nonprofit “for personal gain.”

[soccerguy315]

the higher education bubble…

[katliamom]

It would burst if the feds didn’t allow federal aid money to be used by these for-profits

[DmitriR]

There are rules against “excessive” compensation paid to management of non-profits for reasons touched on in the article.

Someone might start a “not for profit” solely for the purpose of personal enrichment, paying themselves “dividends” in the form of inflated salaries, huge interest payments, and other perks while at the same time benefiting from tax-exemptions that actual businesses don’t get to use. The IRS is supposed to scrutinize these activities by reviewing the colleges’ tax form 990, but who knows if they will see this college’s behavior as violating those rules.