Better in their words…

I’m betting Obama will have a special “News Q & A” on this one…
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WSJ 2/17/2016

President Obama’s Department of Education has been waging a seven-year war against for-profit colleges. So it’s a lesson in the self-interested ways of the modern regulatory state to see a veteran of that war now seeking to profit from education.

Check out last week’s proposed sale of Apollo Education, parent company of the University of Phoenix. When Mr. Obama was preparing to take office in January 2009, Apollo stock hit a multiyear high above $78 per share. Seven years later, after Washington’s regulatory onslaught that favored nonprofits over for-profits in doling out federal subsidies, the shares had recently fallen below $7.

The University of Phoenix was once educating close to half a million students but last month reported an enrollment below 180,000. And with Apollo recently trading below book value, it might be a real bargain—especially for an investor betting that the next Administration might go easier on for-profit colleges. Now comes news that Apollo will be sold to several private equity firms. And coincidence of all coincidences, after the sale closes the company will be run by a former top official in the Obama education department, the same outfit that led the attack on Apollo.

The Vistria Group is a Chicago private-equity firm. The company was founded around the time that Mr. Obama was beginning his second term and its founders include Marty Nesbitt, who began playing pick-up basketball with Mr. Obama years before he became President, and Tony Miller, who was the second highest-ranking official in the Department of Education from 2009 until 2013.

Once the sale closes, Mr. Miller will become chairman of Apollo’s board. Mr. Miller said in a press release put out by Apollo: “For too long and too often, the private education industry has been characterized by inadequate student outcomes, overly aggressive marketing practices, and poor compliance. This doesn’t need to be the case. We are committed to accelerating and enhancing efforts to establish University of Phoenix as the leading provider of quality higher education for working adults and to continue supporting the organization’s commitment to operating in a manner consistent with the highest ethical standards.”

So the for-profit education industry was allegedly a student-abusing wreck. But now we are told that under Mr. Miller Apollo will be a paragon of virtue. When did this alleged corporate villain of the Obama era suddenly become dedicated to the welfare of its customers? According to Mr. Miller’s statement, he’s hoping “to build on the transformational work being done by the company,” so apparently the change began before he even set his virtuous foot on campus.

But perhaps not long before. Last June the Department of Education said it had created an interagency task force to bring more accountability and oversight to for-profit colleges, so it’s hard to believe that at that point Team Obama viewed companies like Apollo as operating with “the highest ethical standards.”

As recently as October the Journal reported that the “Justice Department and the Department of Education are coordinating on ongoing investigations of the University of Phoenix, a government official said Friday, a day after the Defense Department barred the for-profit giant from recruiting on military bases because of alleged recruiting violations.”

Last month the Pentagon took the school off probation so Apollo can again benefit from military subsidies. Mr. Miller tells us, “We believe there is an opportunity to improve student outcomes that distinguishes the University of Phoenix with employers and in the marketplace.”

By the way, the Obama education department will have to approve Vistria’s purchase of Apollo, and we’re told the guidelines for approval are notably vague. What better way to win a regulatory blessing than have a former senior education official like Mr. Miller commune with his old regulatory comrades. Hey, Tony, great to see you; any job for me after, say, Jan. 20, 2017?

Mr. Miller says the University of Phoenix’s “investment in and commitment to” regulatory compliance, “coupled with our commitment to sustain and improve” such practices, “gives us encouragement as we proceed with the regulatory and accreditation approval process.”

To summarize, an Obama pal is the day-today boss of a department that succeeds in destroying 90% of the value of a politically targeted company. Then he leaves government, buys the company at a fire-sale price and announces that the problems that attracted so much negative government attention are ending— just in time for a new Administration that might not hate for-profit education as much as this one. Government mediation sure can be a lucrative business model.