Keiser University has given up its status as a for-profit university, in a move that that could get the Fort Lauderdale-based school more respect and government money.
Boca Raton-based Everglades University, a nonprofit institution created by the Keiser family, bought Keiser University last week for an undisclosed sum and converted it into a nonprofit.
The status means that any surplus money must go back to the school, not to the school’s owners, and the school does not have to pay taxes.
The change won’t affect tuition rates for the school’s 19,000 students, but they will likely be able to get more state aid. The school offers two- and four-year degrees in such areas as nursing, education, accounting and homeland security.
Keiser chancellor and co-founder Art Keiser said the school’s mission will be tweaked to include a larger focus on research and philanthropy, but most students won’t notice.
"As both a for-profit and now a nonprofit, our mission is quality education," he said.
The change will not affect Keiser Career College, which focuses on teaching vocational skills to about 1,500 students at six locations. It will remained privately owned by the Keiser family, officials said.
For-profit schools have faced government state and federal investigations and regulations in the past year because of concerns over their admissions practices and high volume of student loan defaults.
Art Keiser, 57, is one of the sector’s strongest advocates, serving as chairman of the Association of Private Sector Colleges and Universities, an industry lobbying group.
But he said the sale has been in the planning stages for about five years, long before the recent scrutiny. He said he wants the school to remain a legacy of the Keiser family, something that might be hard to achieve if he sold it to another for-profit company. He and his mother, Evelyn Keiser, 87, created Keiser in 1977.
Art Keiser said unflattering media coverage has hurt the image of for-profits and the university’s new status "will help my students and faculty and staff get credit they deserve for their training and work."
The move could also mean more state aid for Keiser and its students. The state gives a grant of $2,425 a year to students who attend eligible nonprofit colleges, compared to $945 for students who attend eligible for-profits. Keiser charges about $14,000, which has been the same for two years. Keiser officials said they will determine next year’s tuition in May, but the nonprofit status won’t be a factor.
Everglades, which has about 1,200 students, started in 1990 as American Flyers College. Art Keiser and his wife, Belinda, bought it in 1998 and converted it into the nonprofit Everglades, which contracted with Keiser for many of its administrative functions.
Everglades offers four-year degrees in such areas as aviation, alternative medicine, business administration and construction management.
The private colleges association which Keiser heads has been actively lobbying against a proposed U.S. Department of Education rule known as "gainful employment." This rule would strip for-profit colleges of federal aid money if too many of their students are unable to repay their student loans.
As a nonprofit, Keiser University would be exempt from many of the regulations. That has led some for-profit critics to question whether this change was a way to avoid taxes and the proposed rules, charges that Art Keiser denies.
"Until now, the very purpose of this entity was to be a profit-maximizing firm. Now we’re being told it has suddenly done a 180-degree turn and become a charity?" asked Barmak Nassirian, executive director of American Association of Collegiate Registrars and Admissions Officers.
Keiser dismissed the criticism, saying for-profit opponents "made allegations when we were for-profit. Now they make allegations when we’re not for profit. We’re giving up the ownership of our organization. I’m not sure some of our critics would be willing to do that."
As a nonprofit, Keiser must submit the salaries of its five highest paid employees to the Internal Revenue Service, and those salaries are open to public inspection.
Keiser’s change of status received approval last month from the Southern Association of Colleges and Schools, which accredits it and Everglades. The U.S. Department of Education has also given the deal preliminary approval, Art Keiser said.
It’s unclear whether any other schools will follow Keiser’s lead. Industry observers say it would be difficult for a publicly traded company, such as the University of Phoenix or Kaplan University, to become a nonprofit because they are accountable to shareholders. But a few other privately owned colleges are considering similar changes, said Harris Miller, president of Association of Private Sectors Schools and Colleges.
"This may give them the impetus to move forward," Miller said.
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