The gainful employment regulations on for-profit colleges issued by the Department of Education in June were designed to prevent abuses in the industry and protect students from incurring too much debt. The regulations, however, also helped some people make a great deal of money.
Who were this people? A lot of them were executives at for-profit schools. According to a piece by Zach Duffy at Campus Progress:
John Sperling [right], the CEO of the University of Phoenix, has cashed out $59 million in the company’s stock, according to the Huffington Post. Sperling’s shares have increased in value by almost twenty percent in the six weeks since the Department of Education issued a weaker-than-anticipated “gainful employment” rule governing the for-profit education industry.
After the somewhat watered-down final rule was issued, investors who were initially skittish about increased oversight of the for-profit education industry came flooding back into the market, and CEOs like Sperling have profited in the aftermath. Donald Graham, the main stakeholder in Kaplan University, reaped a gain of $12.5 million over the last month. Andrew Clark, the CEO of Bridgepoint Education, made a $2.5 million profit on his stock holdings. Dennis Keller of Devry University made $27.6 million.
According to the article the chief executives of America’s publicly-traded colleges have earned $2 billion since 2003 selling stock in their companies. The year before, in 2002, the Bush administration altered regulations for for-profit schools and essentially allowed proprietary colleges to pay recruiters for enrolling more students.