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Pepperdine University School of Law

Sunday, August 6, 2017

Bloomberg: DeVos Offers Lifeline To For-Profit Law School That Hired Her Former Advisor

Charlotte Logo (2016)Following up on my previous posts:

Bloomberg, DeVos Offers a Lifeline to For-Profit Law School That Hired Her Former Advisor:

The feds had cut off federal student aid to Charlotte School of Law. Then it hired Betsy DeVos’s confirmation “sherpa.”

Early this year, Charlotte School of Law looked ready to collapse. The government had cut off the private equity-backed, for-profit law school’s access to federal student loans, determining in a review that it had violated federal law and misled students, allegations the school denied. But for a school that more than nine in 10 students borrow money to attend, the decision had the ring of a death knell.

Until Donald Trump took office.

One day before Betsy DeVos was confirmed as secretary of education, Charlotte Law hired the adviser who had just steered her through her confirmation hearings to lobby her agency on its behalf. Lauren Maddox, a lobbyist with the Podesta Group in Washington and a former Education Department spokeswoman, has worked for senior Republicans in Congress. But in lobbying for Charlotte Law, she and her colleagues would appear to have a tougher task: Charlotte graduates are leaving school owing more than three times as much on their loans as they wind up earning every year. Fewer than half pass the bar in their first try.

Some $130,000 in fees later, the lobbying effort appears to have paid off. Last week, according to a copy of official correspondence reviewed by Bloomberg News, DeVos's agency told the law school that — provided it puts up $6 million in collateral and agrees to certain conditions, such as offering refunds to first-years and hiring a monitor — it would consider reinstating its access to the federal student-aid program.

Such a move could bring in tens of millions of dollars in annual revenue for the school, federal data suggest, if the state of North Carolina reverses its June ban on enrolling new students and lets the school start recruiting them. The resumption of federal student-aid cash could boost the school’s case before the state, which has questioned Charlotte Law’s finances and whether the school can stay in business for at least three years. The school has said it believes that’s the case. ...

The typical Charlotte Law graduate leaves school owing $167,000 — nearly the amount needed to buy the typical Charlotte-area home — and making $49,000 a year. More of its 2016 grads were unemployed and looking for work than were employed in full-time, long-term jobs that required them to have passed the bar, according to an April disclosure. Its recent grads pass the bar at a rate nearly 20 percent lower than the statewide average. ...

But by at least one measure, Charlotte Law is doing great. Its annual income per student has almost doubled since 2012, to $30,588, according to a May report prepared for the UNC board of governors. Meanwhile, it's now spending half as much on education as it used to, relative to its other expenditures — suggesting to consultants working for the state licensing board that its "initiatives may be designed to maintain profitability at the expense of [its] core educational programming."

Prior TaxProf Blog coverage of Charlotte Law School:

Legal Education | Permalink


All goes to show that the legal education industry is no different from any other when it comes to politicians. A high-price lobbyist gets the desired results. Business owners look at lobbying as part of the cost of doing business, and they pass the costs along to their customers. One would presume CSL will do the same with this $130,000 fee?

Posted by: Old Ruster | Aug 7, 2017 12:57:58 PM

Charlotte School of Law claims to have accepted the conditions, but is obviously still trying to renegotiate them, as the clock ticks down to the state compliance deadline of August 10.

Posted by: B. McLeod | Aug 8, 2017 6:35:53 AM