Home News House Education Hearing Details Spate of For-Profit Institutions Converting to Nonprofit and How ED Can Improve Oversight – NASFAA

House Education Hearing Details Spate of For-Profit Institutions Converting to Nonprofit and How ED Can Improve Oversight – NASFAA

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The House Education and Labor Committee on Tuesday held a hearing to detail the run of for-profit institutions converting to nonprofit, examining the impact those conversions have on students and taxpayers, honing in on a recent Government Accountability Office (GAO) report that found 59 for-profits have transitioned to nonprofits in the last decade.

Committee Chairman Bobby Scott (R-Va.) in his opening remarks argued the report’s findings show a need for increased oversight and accountability from Congress, the Department of Education (ED), and the Internal Revenue Service (IRS) over how these institutions transition and who benefits from such maneuvers.

“As a result of poor oversight by both [ED and the IRS], these conversions sometimes took place without the necessary oversight to prevent self-dealings,” Scott said. “We cannot allow these kinds of things to continue. As GAO found, both [ED] and IRS must do far more to prevent fraud by properly vetting for-profit to non-profit conversions. And they must ensure that, after the conversion, for-profit institutions uphold their obligations to put students first — not profits.”

Both the report, released late last year, and the hearing Tuesday sought to highlight the, at times, shady practices at play when a for-profit college converts into a nonprofit college when it’s sold to a tax-exempt organization.

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