Laureate Education, the seedy, telemarketing-happy international conglomerate of for-profit colleges that paid Bill Clinton $16.5 million to be its pitchman, announced on Friday that it has filed an initial public offering and will become a publicly traded corporation once again.
The huge Baltimore-based company — America’s largest for-profit education corporation by enrollment — has also filed paperwork to become a public benefit corporation, reports Inside Higher Ed.
The shift to public benefit corporation status allows Laureate, which owes $4.7 billion in debt, to continue to rake in profits but also to focus on pursuits that aren’t solely profit-driven.
“Most of our operations are outside of the United States, where there are many barriers that inhibit participation in higher education,” Laureate CEO and noted high school graduate Douglas L. Becker said in a statement. “In 2010, we took notice when the first state in the U.S. passed legislation creating the concept of a public benefit corporation, a new type of for-profit corporation with an expressed commitment to creating a material, positive impact on society. Our public benefit is firmly rooted in our belief that when our students succeed, countries prosper and societies benefit.”
Laureate boasts more than 1 million students and over 50,000 employees worldwide. There are 75 schools across 30 countries. Many of the schools are located in Latin America.
The company has been beset by charges of financial instability and grossly unethical practices.
Laureate came into existence in 2004 as the successor to Sylvan Learning Systems Inc. The basic business model is to buy struggling private colleges and turn them into zombie shell colleges. The company aggressively sacks professors and increases the number of paying students by massively lowering admission standards. Another core company practice has been obscene expenditures — in the hundreds of millions — on advertising and (where it’s legal) hardcore telemarketing.
Since 2007, the for-profit education giant’s annual revenue has more than tripled. It’s now $4 billion.
Overseas, Laureate is notorious for implementing its model of increased enrollment coupled with a lack of spending increases — and, generally, in fact, staff cuts.
The company generates two-thirds of its revenue in Latin America, where the public schools and Catholic schools that dominate the higher education landscape don’t offer enough enrollment spots to meet rising middle-class demand.
Unchained from American customs concerning modesty in education ads and American laws banning shady telemarketing techniques, Laureate spends over $200 million each year on highly aggressive advertising. It saturates with TV commercials and billboards.
The company also pays recruiters in other countries a commission based on the number of students they enroll. Congress banned this practice outright in the United States in 1992.
Involvement with Laureate by both Hillary Clinton and Bill Clinton has been deep and abiding. (RELATED: Why Are The Clintons Hawking A Seedy, Soros-Backed For-Profit College Corporation?)
Bill Clinton was paid a whopping $16.5 million from 2010 through 2014 by a for-profit education company, recently released Clinton tax returns show.
Clinton signed on as the honorary chancellor of Laureate International Universities, a subsidiary of Laureate Education, in 2010. Despite the honorary nature of his position, that didn’t stop the company from paying him on average approximately $3 million a year. (RELATED: Bill Clinton Was Paid More Than $16 MILLION By A For-Profit College Company)
The investment likely paid off, though, as Clinton has lent Laureate significant legitimacy and has served as an advocate for the company overseas, making appearances in countries like Peru and Malaysia to praise it. In addition to these direct payments, Laureate also donated to the Clinton Foundation and has cooperated with the Clinton Global Initiative.
Democratic presidential hopeful Hillary Clinton has also been squarely in cahoots with Laureate as well. As secretary of state, she helped legitimize Laureate in the eyes of the world by making the for-profit education behemoth part of her State Department Global Partnership.
The sheer scale of the company’s payments raise additional questions about possible conflicts of interest for Hillary Clinton. While Hillary oversaw the State Department, Laureate was made part of the State Department’s Global Partnership, and its non-profit affiliate received millions of dollars in grants from the State Department.
In July, Moody’s Investors Service downgraded Laureate by demoting the company to an investment grade of B3. The definition of a B3 rating is “highly speculative.” The bond rating giant advises that unfavorable economic circumstances “will likely impair” Laureate’s “capacity or willingness to meet its financial commitments.” (RELATED: Seedy, Clinton-Backed For-Profit College Company Downgraded To JUNK BOND STATUS)
Laureate is one of 30 large American companies criticized in a scathing 2012 report by Iowa Democratic Sen. Tom Harkin on for-profit colleges. These companies absorb well over $30 billion each year from U.S. taxpayers. Most students never get a degree, though. Many drop out within a couple months.
While Laureate operates chiefly overseas, the company runs five schools in the U.S. (and manages a sixth). Among the schools is Minneapolis-based Walden University, which grants most of its degrees through online graduate programs in fields such as nursing and education.
Walden is geared toward making cash hand over fist by taking taxpayer funds. Almost 80 percent of Walden’s cash flow comes from federal coffers. In 2009, the school devoted $101 million to a vast array of marketing efforts and another $101 million to profit. Together, these spending categories constituted close to 60 percent of the for-profit school’s total annual outlays.
Walden took much more profit per student than it spent on instruction per student. Its 2009 expenditure per student of just $1,574 per student is laughably low. By contrast, the University of Minnesota spent $13,247 per student in 2009. The University of St. Thomas, a Catholic school in Minnesota, spent $11,361 per student.
Internal Walden documents “reveal an enrollment-driven culture.” Used car-salesman-esque tactics used by the sales staff included “‘overcoming objections’ scripts that anticipate and rebut” doubts about cost, credibility and lack of face-to-face instruction.
Also, over 90 percent of Walden’s faculty is employed on a part-time basis.
Laureate’s investors include Soros Fund Management LLC, chaired by billionaire progressive leftist George Soros; SAC Capital Advisors LP, a hedge fund that recently settled insider trading allegations to the tune of $1.2 billion; and KKR, a private-equity firm based in New York.