clock menu more-arrow no yes mobile

Filed under:

Bill Clinton’s $18 million job as “honorary chancellor” of a for-profit college chain, explained

Bill Clinton Campaigns For Hillary In Durham, North Carolina Sara D. Davis/Getty Images
Libby Nelson is Vox's policy editor, leading coverage of how government action and inaction shape American life. Libby has more than a decade of policy journalism experience, including at Inside Higher Ed and Politico. She joined Vox in 2014.

For five years while Hillary Clinton was secretary of state, Bill Clinton made $18 million as the “honorary chancellor” of one of the largest for-profit colleges that bought up colleges and universities around the world.

For-profit colleges have a terrible reputation within the Democratic Party. The defense of Bill Clinton’s role with Laureate has been that, so far as for-profit colleges go, it’s not that bad. But for the past eight years, the Obama administration hammered the business model of for-profit higher education — with critics pointing to high levels of student debt, poor graduation rates, and an industry-wide tendency to engage in manipulative student recruitment practices.

As a result, nearly every high-profile Democrat has lined up on the side of increased scrutiny of for-profit colleges. Elizabeth Warren rails against them. Hillary Clinton herself has promised to do even more than President Obama to crack down on them.

During that time, Bill Clinton … was paid millions of dollars to advocate for the biggest for-profit college network in the world, Laureate Education.

As in many Clinton scandals, the facts are a little less damning up close. Compared to other for-profit colleges in the US, Laureate looks better than most. Bill Clinton’s work apparently hasn’t changed Hillary Clinton’s mind on for-profit colleges. There’s a presumption that something is wrong here, but it’s unclear what the actual wrongdoing is.

Clinton’s work for Laureate — which ended in 2015 — is a typical Clinton controversy: There’s a vague aura of seediness and evidence of questionable judgment, but no evidence of any actual wrongdoing.

Laureate is selling for-profit higher education around the world

Laureate Education is a sprawling for-profit college network with 70 universities, both online and campus-based, in 25 different countries.

Bill Clinton lent his reputation and gravitas to the company as it continued to grow, including during a period when an arm of the World Bank made a $150 million investment. His role, until it ended in 2015, was to travel to campuses around the world to speak to students — something that Laureate was apparently willing to pay $18 million for.

Laureate created its network by buying already-existing universities and taking over their management, boosting enrollments, and growing rapidly. It typically has focused in developing countries where the number of students who want to go to college far outstrips the capacity of public universities. Among its 70 universities are a petroleum engineering school in India, a 35-campus behemoth in Mexico, an art school in Berlin, and several women’s colleges in Saudi Arabia.

Laureate talks about its mission as expanding educational opportunity, and it’s cultivated a humanitarian halo. It hopes to offer an IPO soon as a public benefit corporation, meaning that it’s supposed to provide a social good as well as making a profit.

Still, Laureate’s global sprawl — and lack of consistent and comprehensive oversight — makes it particularly difficult to determine if its colleges are providing students with a good education.

In Brazil, according to the New York Times, test scores went up at all but one of nine colleges after Laureate purchased them. Inside Higher Ed reported in 2013 that a study commissioned by Laureate found that students who graduated between 2009 and 2011 didn’t earn significantly less than a random sample of college graduates of around the same age in their country.

At some locations, Laureate has been accused of boosting enrollment and cutting costs, rather than trying to ensure a good education. A Laureate university in Chile lost its accreditation, and regulators said it grew too quickly while maintaining mediocre graduation rates.

Like its American cohorts, Laureate has been accused of recruiting students too aggressively, relying too heavily on part-time teachers, and letting in students who aren’t capable of college-level work. A Bloomberg Markets article outlined particular concerns at colleges in Rio de Janeiro and Turkey.

Laureate’s colleges in the US are better than many, but the bar is low

Laureate operates five for-profit colleges in the United States: Kendall College, Walden University, NewSchool of Architecture and Design in San Diego, Santa Fe University of Art and Design, and University of St. Augustine for Health Sciences. Walden is its most high-profile domestic university, and by far the biggest.

Even amid carnage in the for-profit sector — ITT Tech and Corinthian Colleges have both closed in the past 18 months, and stock of publicly traded for-profit colleges has plunged — Laureate has preserved a mostly good reputation. Former Sen. Tom Harkin, in a 2012 report that was harshly critical of the industry, singled out Walden for praise. Walden’s prices were generally on par with other nonprofit universities’, students weren’t dropping out at out-of-ordinarily high rates, and they weren’t falling drastically behind on their loan payments.

Still, there are some troubling signs. Walden has more outstanding federal student loan debt than any US college but the University of Phoenix — more than $80,000 per borrower, on average. Although default rates are low, nearly all the principal of those loans hasn’t yet been repaid, the Brookings Institution concluded in a July study. A lawsuit against Walden University, alleging that Walden dragged out the time it took students to earn degrees in order to make more money off of them, was dismissed.

Meanwhile, undergraduate students at Laureate’s US colleges take on significant debt and don’t always graduate, according to the federal government’s College Scorecard. Kendall College has a graduation rate of 45 percent, above average for a for-profit; the typical student takes on $29,000 in debt.

NewSchool and the Santa Fe University of Art and Design both have lower graduation rates — just over 30 percent, still above average for for-profits but hardly anything to boast about. (Laureate recently sold the Santa Fe college to another for-profit chain.) Laureate is low-profile, and it’s avoided major scandals, but that doesn’t mean it’s perfect.

Clinton doesn’t appear to have done anything wrong, but the optics are bad

Activist Demonstrate Against High Cost Of College Education In U.S.
Just bad optics all around. (A protest about student debt in 2012.)
David McNew/Getty Images

Clinton’s association with Laureate, in other words, is a typical Clinton controversy. He didn’t publicly lobby on Laureate’s behalf with the State Department or with foreign governments, but he did accept a large amount of cash from a corporation in an industry with a reputation for shadiness.

Laureate hasn’t been accused of defrauding students, as other US for-profit colleges have, and Clinton apparently didn’t go to bat for Laureate as it tried to expand abroad. What he was being paid to do was to impute reputation and gravitas to an American company doing business globally. It certainly didn’t hurt Laureate to make clear that the husband of the US secretary of state was on its side.

But it’s not difficult to predict that high-profile ties to such a large company in a sector many Democrats see as problematic or even fraudulent could make Hillary Clinton’s political career a little more difficult. The best analogy is Hillary Clinton’s speeches to Goldman Sachs. Bill Clinton associated himself with an industry — for-profit colleges — that other Democrats strongly criticized, and made a substantial money off it.

Hillary Clinton, however, seems unmoved by her husband’s association with Laureate, and has said she’d continue the Obama administration’s policy of cracking down on for-profits.

And unlike the Goldman Sachs speeches controversy, Bill Clinton isn’t the one running for president. His position at Laureate is no more likely to affect his wife’s education policy, probably, than Michelle Obama’s high-ranking post at the University of Chicago’s hospital was to influence health care reform.

Bill Clinton’s relationship with Laureate is the kind of controversy that so often plagues the Clintons — there’s a lot of smoke, but very little fire.