Weekly Market Update

DEPARTMENT OF EDUCATION CONTINUES PUSH FOR DEREGULATION

Thursday, August 2, 2018

As part of a recent push for deregulation, the U.S. Department of Education has announced a rulemaking session aimed at reexamining several Obama-era policies. The announcement cited the need for more innovation in higher education as the driver behind this proposed regulatory overhaul. Education Secretary, Betsy DeVos, wants to "rethink" higher education in part by reducing compliance requirements and easing scrutiny of accreditors. The Department hopes that reduced accreditation requirements will encourage organizations to explore less traditional education models.

Among the proposed changes is the elimination of the "credit-hour," which is used to measure academic work and, in turn, determine the amount of federal student aid the school receives. The Obama administration issued the credit-hour standard after colleges were found to be inflating credits to claim more student aid. The credit-hour standard is seen by some in the Department as a barrier to innovation for providers of nontraditional educations like online colleges, which, they claim, have sufficient data to measure academic workload with alternative methods. Other targeted policies include the borrower-defense rule and the gainful-employment rule. The proposed rulemaking session is set to launch in 2019.

In Other News

  • Two professors at the University of Virginia's Miller Center, a nonpartisan organization that studies the U.S. Presidency, resigned in response to the appointment of Marc Short to a yearlong fellowship at the center. The professors claim that Short's affiliations--especially his previous position as President Trump's legislative affairs director--will prevent him from providing meaningful and unbiased academic insight.
  • Sixteen universities came forward to support Harvard University in its recent affirmative-action lawsuit. Harvard has been accused of racial discrimination against Asian-Americans in its admissions process. The supporting institutions argued that the federal government would be overstepping its jurisdiction if it were to prohibit consideration of race in admissions decisions.
  • The Department of Education opened applications for the first open education resources ("OER") grants, totaling $5 million. The grants, which aim to reduce the cost of college textbooks, will be awarded in late September to one to three applicants.
  • UCLA's humanities division received a $25 million gift, $20 million of which will be allocated to the school's philosophy department. The gift was made by local real estate executive, Jordan Kaplan, in honor of his parents and longtime UCLA faculty members Renee and David Kaplan.
  • The College of Charleston quietly stopped considering race in its admissions decisions in 2016. The University claimed to have seen substantial increases in student-of-color enrollment despite infrequent, prior use of race in its admissions process, which motivated the shift to what it describes as a "holistic" review process.
  • Keck Graduate Institute in Claremont, CA announced plans for a new medical school. An anonymous $5 million gift will fund the recruitment and hiring of a new dean for the school.

Rating Agency Update

  • Moody's affirmed Adam State University's A3 underlying rating. The outlook for the underlying rating is negative.
  • Moody's affirmed Wright State University's Baa2 rating. The outlook remains negative.
  • Moody's affirmed Connecticut College's A2 rating. The outlook is stable.
  • S&P downgraded Northern Illinois University's Series 2011 Student Housing Revenue Bonds from BB- from B+. The outlook is stable.
  • S&P affirmed the National Academy of Sciences' AA- rating. The outlook is stable.
  • S&P assigned BB to the Cleveland Institute of Art's Series 2018 Facility Revenue Bonds. The outlook is stable.
  • S&P affirmed Goucher College's A- rating. The outlook is stable.
  • S&P assigned BBB+ to Lake Superior State University's Series 2018 General Revenue Bonds. The outlook is stable.
  • S&P affirmed Northeast Ohio Medical University's BBB+ rating. The outlook is stable.
  • S&P assigned A rating to Los Angeles-based Mount Saint Mary's University's Series 2018A Taxable and 2018B Revenue Bonds. The outlook is stable.