Higher ed groups call on Ed Dept to scrutinize Walden U sale

Dive Brief: 

  • Several higher education groups and policy organizations are opposing the planned sale of Walden University, an online institution, from one for-profit college operator to another, they wrote in a letter to U.S. Education Secretary Miguel Cardona this week.

  • The organizations called out Adtalem Global Education, which plans to acquire Walden, for its record of running an online university accused of engaging in misleading and aggressive recruiting practices. 

  • They also expressed concerns with Adtalem seeking “unrestricted ability” to expand programs and enrollment levels at Walden and are asking the department to instead put caps on both. 

Dive Insight: 

Adtalem announced plans in September to acquire Walden from Laureate Education, a for-profit college operator, for $1.5 billion in cash. However, the Education Department must sign off on the sale, which is expected to be finalized toward the end of 2021

The Ed Department notified Walden last month that it completed its pre-acquisition review of the sale, saying it did not find any reason that the university’s ability to receive federal financial aid would be discontinued after the deal closed, according to SEC filings

The organizations objecting to the sale — which include the Center for Responsible Lending, The Institute for College Access and Success and the American Federation of Teachers — urged the Ed Department to place limits on Adtalem’s ability to grow programs and enrollment at Walden after the deal closes. They also called out long-running issues with the online university and its future owner. 

“We just believe that the Department of Education should (have) more scrutiny and more review, specifically of these two institutions,” said Julia Barnard, researcher at the Center for Responsible Lending. “Both of them have troubling track records with misleading recruitment and other unlawful practices.”

Walden has faced multiple lawsuits alleging the school has intentionally misled students. Meanwhile, DeVry University was under Adtalem’s management when the Ed Department found it ran an ad campaign touting employment outcomes that it couldn’t substantiate. The groups opposing the sale argue the department must consider Adtalem’s past performance when evaluating whether the company can bring Walden into compliance with the rules governing federal student aid. 

Adtalem’s plan to acquire Walden has been fraught from the start. When the company announced the deal, it was billed as a way to expand its healthcare offerings. 

Two months later, however, the companies told investors in SEC filings that the U.S. Department of Justice had launched an investigation into Walden over allegations it misrepresented aspects of a nursing program to students. 

Walden’s accreditor, the Higher Learning Commission, gave it a governmental investigation designation, which could have made it harder for the school’s owner to complete the planned sale of the school. However, HLC dropped the label in May after the Justice Department declined to intervene in the lawsuit. 

That isn’t the only trouble the investigation stirred. Activist investors called on Adtalem to try to end its planned purchase of Walden, labeling the university a “substantially inferior asset” in an open letter. 

They suggested that the federal investigation into Walden gave Adtalem an opening to ditch the deal. Still, Adtalem executives stood by the purchase. 

Representatives from Adtalem, Laureate and Walden did not immediately respond to Higher Ed Dive’s request for comment Thursday.

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