A letter from Chairman Scott to Secretary Cardona on for-profit conversions – shared by the CECU Government Relations team
Committee on Education and Labor
June 3, 2021
The Honorable Miguel Cardona
Secretary
U.S. Department of Education
400 Maryland Avenue, SW
Washington, D.C. 20202
Dear Secretary Cardona:
I write regarding the U.S. Department of Education (Department) process for reviewing,
approving, and monitoring for-profit college conversions to non-profit institutions. The U.S.
Government Accountability Office (GAO) recently investigated the conversion process and
found serious shortcomings in the Department’s monitoring of converted institutions, which
gives rise to risks of insiders taking advantage of non-profit institutions at student and taxpayer
expense.1
These issues combined with concerns raised at a Committee hearing this April2
demonstrate that the Department and the Internal Revenue Service (IRS) must take steps to
reform their processes and halt the approval of all conversions until they finalize those reforms.
GAO’s findings indicate that lapses in Department oversight have allowed billions to flow
annually to institutions it treats as non-profits, but which may operate as for-profits.
GAO found that the Department allowed numerous concerning conversion transactions to
proceed under its current process. These transactions often consisted of a for-profit college
selling its institution, or component parts such as the institution’s brand, to a newly created non-profit.
