Regulatory Changes and Their Implications for Higher Education Mergers:

Changing Higher Ed Podcast 190 with Host Dr. Drumm McNaughton and Guest Mike Goldstein

Table of Contents

Changing Higher Ed Podcast 190 - Regulatory Changes and Their Implications for Higher Education Mergers with Drumm McNaughton and Mike Goldstein
Changing Higher Ed Podcast | Drumm McNaughton | The Change Leader

16 January ·

Regulatory Changes and Their Implications for Higher Education Mergers

39 Min · By Dr. Drumm McNaughton

Insights on regulatory changes, negotiated rulemaking, NC SARA, and the impact on higher education mergers. Thinking about a merger? Listen in...


In the ever-evolving landscape of higher education, recent regulatory changes by the Department of Education, effective July 1st, have significantly redefined the processes for institutional mergers and acquisitions. These changes, emphasizing ownership and control, extend across all types of educational institutions – for-profit, nonprofit, and public. The new regulations introduce more comprehensive steps and extended timelines, adding complexity and burden to the merger process.


Implementation and Impact of July 1st Regulations

The primary intent behind these regulations is to enhance accountability within higher education institutions, especially in managing federal student loan and grant programs. The goal is to safeguard students from the weight of unaffordable college debt, shifting the focus from targeting primarily for-profit higher education to a broader scope that includes all educational institutions.


Department’s Focus and Intentions in Evaluating Mergers

The Department of Education is now placing greater emphasis on outcome-oriented evaluations rather than just the procedural aspects of institutional mergers. This shift towards assessing the potential of mergers based on the outcomes and capacities of the involved institutions marks a significant change in approach. Factors like graduation rates, employment outcomes, student persistence, and complaint rates are key metrics in evaluating the effectiveness of these mergers.


90-Day Review: Potential Risks for Acquirees in New Merger Processes

The introduction of a stringent 90-day review period for changes in ownership or control poses potential risks, especially for financially strained institutions. This policy shift, while intended to provide structured oversight, may inadvertently place additional burdens on these institutions.


Enhanced Scrutiny in New Rulemakings Impacting Accreditors and Mergers

Accreditors now face intensified scrutiny under the latest round of rulemaking. They are expected to adopt a more rigorous approach in examining and approving institutional changes, particularly mergers and acquisitions. State authorizing agencies are also experiencing heightened expectations for their reviews, reflecting a consensus that fundamental changes in institutions require more thorough and intense scrutiny.


Negotiated Rulemaking, Accreditation, and NC-SARA

The Department of Education’s ongoing negotiated rulemaking process, particularly concerning NC-SARA, indicates a push for accreditors to be more proactive and maintain greater independence from the institutions they oversee. This includes a potential shift in the role of states within NC-SARA’s leadership, emphasizing consumer protection and student rights. The proposal suggests limiting the influence of public members on NC-SARA’s board who have affiliations with member institutions, reflecting a broader trend of increasing distrust towards higher education.


Congressional Decisions on January 20th Regarding Federal Student Aid

A critical focus is on the actions of Congress on January 20th, which could substantially modify the current federal student aid landscape. A significant bill under consideration aims to make short-term training programs (8 to 15 weeks) eligible for full Pell Grant funding at accredited institutions. This initiative represents a potential major shift in workforce development and educational accessibility, offering skill acquisition and enhancement as pathways to more extensive educational pursuits, including degree programs.

These regulatory changes and discussions reflect a dynamic and challenging environment in higher education, with implications that extend beyond institutions to impact students and the broader educational system. The effectiveness and long-term outcomes of these changes remain a subject of ongoing debate and observation in the higher education community.


Three Key Takeaways for Higher Education Presidents and Boards

  1. Strategic Mergers for Institutional Benefit: If a merger can enhance an institution’s educational mission, service to the community, and financial health, it should be pursued. It’s crucial to ensure that potential partnerships are mutually beneficial and align with the institutions’ goals.

  2. Proceed with Caution: Institutions must choose their partners carefully, ensuring they are complementary and beneficial to each other. Merging two failing institutions could lead to a large failing entity. 

  3. Meticulous Planning and Professional Guidance: Mergers are complex processes involving intricate legal, financial, and academic considerations. Institutions must approach them with careful planning and seek professional guidance. The process should not be undertaken lightly, as it requires navigating through numerous regulatory and operational hurdles.


Final Thoughts

Higher education institutions face a rapidly evolving regulatory environment, especially concerning mergers and acquisitions. Leaders in this sector must navigate these changes with strategic foresight, understanding the implications of new regulations and ensuring that any mergers or acquisitions align with their institutional missions and enhance their ability to serve students effectively. As the landscape continues to shift, staying informed and adaptable will be key to thriving in this dynamic environment.


About Our Podcast Guest

Michael Goldstein has a long history of close engagement with higher education.  He was the founding Director of New York City Urban Corps, the nation’s first large-scale student intern program designed to support access for less affluent students through the use of the Federal Work-Study Program.  He went on to lead a Ford Foundation-supported effort to establish similar programs in cities across the U.S.  He returned to New York City government as Assistant City Administrator and Director of University Relations.  From there, Mike joined the then-new University of Illinois Chicago campus as Associate Vice Chancellor for Urban Affairs and Associate Professor of Urban Sciences.  In 1978, Mike joined the Washington, DC law firm of Dow Lohnes to establish a new legal practice focusing broadly on issues confronting higher education.

By 2014, when his firm merged with the global law firm Cooley LLP, the higher education practice he headed was the largest and one of the highest regarded in the country.  Mike has been a pioneer in developing alternative mechanisms and institutional structures for delivering high-quality postsecondary education, including helping to accomplish substantial regulatory reforms that made telecommunicated and then online learning broadly available.  He is the recipient of the WCET Richard Jonsen Award, CAEL’s Morris Keeton Ward, the President’s Medal from Excelsior College, and USDLA’s Distance Learning Hall of Fame Award, as well as an honorary Doctor of Humane Letters from Fielding Graduate University for his contributions to the field of adult learning.  He graduated from Cornell University and New York University School of Law and was a Loeb Fellow at Harvard’s Graduate School of Design.  He and his spouse Jinny, an education and media consultant and former head of education for the Public Broadcasting Service, live in Washington, DC.


Mike Goldstein on LinkedIn → 


About the Host

Dr. Drumm McNaughton, host of Changing Higher Ed®, is a consultant to higher education institutions in governance, accreditation, strategy and change, and mergers.


Transcript: Changing Higher Ed Podcast 190 

[00:31:05] Drumm: Thank you, David. Today, we welcome back a special guest, Mike Goldstein, Managing Director of the Center for Higher Education Transformation at Titan Partners. Mike is a pioneer in the development of the legal environment in higher education and a counselor at the highest levels of legislation in higher education.

[00:31:24] He founded the law firm Dow Loans in 1978, which merged into Cooley in 2014 and was a partner there for seven years before joining Titan about three years ago. Mike joins us today to discuss the regulatory changes from the department of education that are affecting mergers and acquisitions, along with a few tidbits about the new negotiated rulemaking that will be impacting accreditors and state authorization.

[00:31:50] Mike, welcome back to the program.

[00:31:53] Mike Goldstein: Well, thank you, Drumm. It’s really a pleasure.

[00:31:56] Drumm: Always a pleasure to have a good conversation with you, my friend, we’re going to talk about mergers, and there’s a lot going on. We all know there’s overcapacity with, with higher ed. There’s not enough students. We’re seeing far more merger activity, but before we get into that, If you wouldn’t mind giving folks just a little bit of background, why you’re an expert in this area.

[00:32:17] Mike Goldstein: Well, I don’t know whether the answer is why I’m an expert, but the background is that I’ve been involved in higher education and innovation in higher education for many decades. I was a, administrator at the University of Illinois Chicago in its formative years, as one of the first new breed of comprehensive urban public institutions, University of Illinois in Chicago, and developing an institution that was focused on “How does it serve multiple communities and multiple constituencies simultaneously while being true to the concept of providing a high level, high quality, accessible education?”

[00:33:02] I moved on to that, to leading the education practice at a large Washington law firm, which we then merged into a large global firm, Cooley, and dealing with the very rapidly evolving regulation of higher education substantially through the Title IV student aid programs, but also significantly through changes in both accreditation and state regulation that I think over the years has made higher education, perhaps, the most highly regulated industry in the United States.

[00:33:39] And most recently, I’m a managing director at the firm Titan Partners, which is a unique mix of a investment banking firm that is intimately coupled with a strategic advisory. So we work both with doing M& A. But also in providing very sophisticated analysis, not just to institutions, but to other entities such as the Gates Foundation that are major players in the education space.

[00:34:16] And I have the pleasure of serving as a chair of a small college up in Northern Vermont, Vermont College of Fine Arts. And Fielding Graduate University in California,

[00:34:29] Drumm: which just happens to be my alma mater,

[00:34:34] Mike Goldstein: which, which explains a lot.

[00:34:36] Drumm: I don’t know if that’s good or bad. I think it’s good, but

[00:34:39] Mike Goldstein: I think it’s, I think it’s very good.

[00:34:42] Drumm: Thank you. You’ve been involved with a lot of mergers over your years and doing this. Can you talk a little bit about them and, you know, to provide a baseline context to what’s going on in the industry with mergers and acquisitions?

[00:34:56] Mike Goldstein: Well, there, there’ve always been mergers in higher education and whether you call it a merger or an acquisition is really semantic. You’re taking two institutions and you’re pouring them into one, and the distinction is in part, you know, what does the remaining institution look like? What name is it using? How much has the other institution remained visible? And there are models where, the two institutions remain, clearly visible, but they’re under a common, a common leadership, a common model. So there are models where they become undifferentiated. A very interesting example is the Parsons School of Design in New York and the New School for Social Research.

[00:35:43] They were independent institutions for a great many years. Different models. Parsons, a very distinguished design school, one of the finest in the country. The new school, one of the most innovative, progressive, post secondary institutions in the United States with a focus on social impact. They merged, they became, “The New Schools, Parsons’ or ‘Parsons, The New School”, depending upon how you read it. They became a single institution. But again, we retained a distinctive character for each of their elements, but they were poured into a single mold. Another model was New York University acquiring control of New York Polytechnic University. NYU, one of the largest, richest universities in the United States, up until the 1970s had a large, if not terribly distinguished engineering school. It sold that to the City University of New York, which has developed it quite nicely. And then, in recent years, they made the judgment that they’re really missing a significant part of their curriculum. They were very strong in the sciences, extremely strong in mathematics with the Curran Institute but didn’t have an engineering program. And they felt this particularly in computer sciences. New York Polytechnic Institute, which originally was Brooklyn Poly and then changed its name, was a very well established, excellent engineering school, at a level below MIT, but not far below. And, New York University acquired control of New York Poly but did not merge into it, did not merge it into NYU at the point of acquisition. It kept it as a separate institution with its own board, albeit a board that was now controlled by New York University. And that went on for about five years. And then at the end of that time, NYU merged New York Poly into NYU. And we named it, as a result of a multi hundred million dollar gift from a donor, into the Tandon School of Engineering of New York University.

[00:37:58] So it remains a named institution, but now operationally fully merged into NYU. So those are. are models. but a not uncommon model is a school that is having difficulty sustaining itself. It can’t maintain its campus. Its enrollment has dropped, simply merging into another institution so as not to vanish from the face of the earth.

[00:38:24] And there are a lot of those models, particularly among smaller, liberal arts institutions. And there’s no question that we are overpopulated with small undifferentiated liberal arts institutions. The overpopulation is a result, partly of new institutions arising and partly a simply a demographic shift that the number of 18 to 22 year olds is dropping and dropping rapidly. The number of college age students who are electing to go to college is flattening out, and that’s separate and apart, the proportion, that’s separate and apart from the absolute numbers, and that has enormously stressedall private institutions. Tuition dependent institutions. And the way the institutions have made up for this old aphorism in retail trade, you lose money on every sale and make it up in volume. They have increasingly reduced the actual tuition and that is they’ve taken the base tuition and then given a increasingly large proportion of students a discount. I’m not talking about federal student aid, I’m talking about straight institutional discounts. They call them scholarships, but they’re simply discounts.

[00:39:49] To which at today, the average non profit institution discounts in excess of 55% of its standard rate. That means if their tuition is $15, 000 a year, they are actually collecting on average $7, 500, and that includes federal student aid. So the economic model for operating institutions has becoming increasingly stressed, which has encouraged the merger and acquisition process, among nonprofit institutions.

[00:40:25] Now there’s always been an M& A with regard to for profit schools. Because primarily they have been owned by private equity and private equity owners have a timeline for the funds that they use to acquire, and that is that they need to cash out the funds in anywhere between five and eight years. And that requires, that essentially establishes a churn.

[00:40:51] The other thing that’s happened is that many for profit institutions were family owned. And there is the generational issue of the founder aging out and the family, the children saying this is wonderful, but that’s not what we want to do. And they’ve come up on the market. And finally, there’s been the movement of for profit institutions from being owned privately, either by private equity or by families, becoming publicly traded and then going out of being publicly traded, either back to private equity or what’s happening increasingly now in the university of Phoenix, a very good example of a school that was privately held, became publicly traded, went back to being privately held, and is now in the process of being acquired by a large state university, the University of Idaho.

[00:41:48] Drumm: So that’s a really great baseline for what’s been going on in the industry now we throw in a new wrinkle. There’s new guidance that came out middle of last year it’s funny to say middle of last year because I still think it’s two thousand twenty three and it’s actually twenty four, but there’s new guidance that came out from the department that is regulating The merger, the acquisition pieces more than it has been.

[00:42:16] Can you go into that a little bit, please?

[00:42:18] Mike Goldstein: It’s actually, 2021. I have eliminated the pandemic years completely.

[00:42:23] Drumm: Oh, okay. Thank you. Well, you know, that means we can take three or four years off of our age.

[00:42:28] Mike Goldstein: yeah,

[00:42:28] Drumm: does that work too?

[00:42:29] Mike Goldstein: Absolutely. And you’re looking better already.

[00:42:31] Drumm: Thank you. You too.

[00:42:33] Mike Goldstein: The, um, I want to correct one thing. It’s not guidance. What Department of Education did last year is it promulgated regulations that significantly change the manner through which the department processes institutional merges or acquisitions.

[00:42:55] Drumm: A change of ownership.

[00:42:56] Mike Goldstein: Change of ownership. And the language needs to be clear, change of ownership or control. And, the reason that’s important is that a nonprofit institution is not owned by anyone.

[00:43:10] Drumm: Mm hmm.

[00:43:10] Mike Goldstein: It’s, in theory at least, it’s a public good, but it’s controlled by a board. It’s controlled by people.

[00:43:17] So it’s, the term is ownership. or control. And they promulgated regulations that go into effect on July 1. And they have issued some further guidance in terms of initial interpretation. They also have a new rulemaking that is now actually underway that is speaking specifically to accreditation and state authorization, and also going to the issue of ownership and control and changes of ownership and control of all institutions, for profit, non profit and public.

[00:44:01] And there’s a lot of detail there. And there’s been a lot written on what these regulations say and do and why they’re, they’re good, bad, burdensome or otherwise, and whether they’re good or bad, they’re certainly more burdensome. There are more steps. There is a longer timeline. Many, many more trees are going to be killed in the process of applying for and getting approvals.

[00:44:26] But I think what we’ve neglected is a conversation about why these regulations are being promulgated. What is the federal government, the Department of Education, seeking to accomplish with these regulations? It used to be the abiding assumption was, that all of this is aimed at crushing for profit higher education.

[00:44:53] And one can make a pretty good argument that there’s a significant sense, in the Department of Education, certainly, under Democratic administrations and certainly during the Obama administration and,and now the Biden administration, that for profit higher education is, I’ll be charitable, problematic.

[00:45:18] Drumm: Mm hmm.

[00:45:19] Mike Goldstein: And that was very clear under the Obama administration. I think what we’re seeing now, and I think it’s partly the result of the folks who felt that way were rather more successful than they anticipated.

[00:45:37] Drumm: Mm hmm.

[00:45:38] Mike Goldstein: It’s sort of like the guaranteed student loan program wiping out the private loan programs. this was during Obama, they never expected it to succeed. It did. And it was sort of the dog catching the car, you know, oops, now we’ve got the student loan program. What do we do with it?

[00:45:52] Drumm: Yeah.

[00:45:53] Mike Goldstein: for profit higher education is a fraction what it once was. The large for profit systems have pretty much all but disappeared. And it’s important to understand who hasn’t. Strategic education, which is a combination of Strayer University and Capella University, has prospered.

[00:46:17] Drumm: Mm hmm.

[00:46:18] Mike Goldstein: Why? It has had virtually no regulatory problems. It has admirable student outcomes, graduation rates, placement rates, et cetera. So it has operated under the radar, so to speak, of the department looking for problems in higher education. And there are other models of that, but not many. And what’s happened now is attention is now shifted to the broader higher education community and what is the effect of institutional mergers and how should the federal government respond to that?

[00:47:01] And it’s proxies, accreditors, and state authorizing agencies manage those mergers. Now, I will say immediately that I think the complexities and the timeframes that are built into the new structures are excessively burdensome.

[00:47:22] Drumm: Mm hmm. I would agree there.

[00:47:24] Mike Goldstein: I think the time to complete, the time to get out from under more restrictive regulations, such as limitations on adding new programs, are longer than necessary. But I think it’s important that we look at why this is occurring and the language that is being used by the department is, and this is a quote from their news release that the changes in the administration of the federal student loan and grant programs are intended to quote, “hold colleges accountable and protect students from unaffordable college debt.”

[00:48:10] Drumm: Mm hmm. Mm

[00:48:12] Mike Goldstein: And what they are saying, and I’ve had this interpreted for me by numbers of folks, both inside and outside the administration who are involved in this process. What they’re really saying is we’re less concerned about the mechanics and we’re more concerned about the outcome with regard to how well is an institution going to do its job, and its job being to educate and to graduate students who can then achieve their occupational, vocational, human goals. So, there seems to be a shift towards looking at outcomes, and the capacity to achieve outcomes, as a way of measuring whether or not a merger is a good thing. First starting off with what the parties look like. At the inception, are they good institutions? Are they quality institutions? Quality as in what are their graduation rates look like? What do their outcomes, employment outcomes look like where you can measure that, what is the persistence of students? What is the complaint rate? And what they’re trying to parse is differentiating between schools that need to be supported and where a merger is going to make for a better institution and schools where that shouldn’t be supported. And perhaps the institution would be better off simply teaching out its students. Now that’s not explicit, but I’m reading that as implicit.

[00:50:18] Drumm: Mm A question along those lines, with these new processes that are being put in place, which we’re going to go into in just a moment, isn’t that going to extend the time for a merger to take place? You know, I mean, if you’ve got to get the departmental approval for the change of control, change of ownership, and then secondly, the approval of the integrated organization.

[00:50:46] If you’ve got an institution that is running out of cash, but still a good institution, doesn’t that put that acquiree at risk?

[00:50:57] Mike Goldstein: The short answer is yes. I’m not at all sure that the people who put together the regulatory package fully accounted for that additional burden. I don’t think it’s as severe as some have put it to you, there is now a hard 90 day period that you have to apply for a change of ownership prior to the closing date. That was not previously the case. As a matter of fact, you did not have to apply at all before the closing. It was long as you filed your application for a change of ownership within 10 days of the closing having occurred. They’ve flipped that. But given the timeframes that the accreditors require for review and approval of a change of control, which is typically six to nine months,

[00:51:48] Drumm: Mm hmm.

[00:51:49] Mike Goldstein: That’s probably not going to have as severe an effectas one might think. Now, what it does do it forces the institutions to move more quickly in terms of getting to the point of having everything in place so that they can make an application to the Department of Education.

[00:52:10] Drumm: Mm hmm.

[00:52:11] Mike Goldstein: But I don’t think anybody has contemplated that you can do a, an institutional merger in under three months were it not for the Department of Education’s rule.

[00:52:22] What they’ve done is they’ve said, you’ve got to have it all in place with regard to the regulatory components 90 days in advance. Now, again, you don’t have to have your approval by your accrediting agency, you just have to have that in advance of closing. Likewise state authorization, but they’re requiring that 90 day review period to give the Department more of a chance to go in and look and say, are we happy with this? Are we happy with who the new leadership is going to be? What’s the new governance is going to be? Are there questionable people? They’ve, increased the issue of scrutiny of disqualified people, disqualified control entities, and, again, made that more of a forward looking review rather than a backwards looking review.

[00:53:15] So this is all going into what the department is thinking about is in terms of the integrity of the merged institution, but they’re also looking at Is the merged institution going to have the financial wherewithal to be able to succeed, to be able to manage its student aid funds? And if that’s questionable, the Department has a fairly significant armature of things it can do. To, in its view, protect the Federal funds and everything from requiring the posting of a letter of credit, which can be very simple in the case of a large, strong institution that makes an acquisition to a deal killer, in the case of smaller, weaker institutions,

[00:54:11] Drumm: St. Leo’s for example.

[00:54:12] Mike Goldstein: Exactly the example, if you’ve got to put up a substantial letter of credit or close and you can’t do it, then the deal dies.

[00:54:19] Restriction on new programs, the rationale behind that is the Department, and this has been in the books for a long time, the Department wants to be able to see whether the new institution, the merged institution, can operate properly for a period of time before it expands.

[00:54:38] Drumm: Mm hmm.

[00:54:40] Mike Goldstein: But a component of that has been rarely used, but maybe used more often is not just new programs, but also caps on enrollment growth

[00:54:49] Drumm: Wow. That’s huge.

[00:54:50] Mike Goldstein: And that has been rarely used. It’s been used basically when there is a serious concern about either integrity or finances. And the question, and we don’t know the answer to this, is to what extent is the department going to begin to rely on more burdensome restrictions while they satisfy themselves that all is well. And the problem with that is if a purpose of the merger is to be able to build out the merged institution so as to be more viable.

[00:55:30] Drumm: Mm hmm.

[00:55:30] Mike Goldstein: And you’re saying at the same time, that’s great, but by the way, you can’t add programs and you can’t add students. To the extent that that’s actually implemented, that’s going to have a clear negative effect on a lot of these mergers that are premised on being able to reverse enrollment decline.

[00:55:56] If you say we’re going to peg you at where you are at merger, and that is a point at which there was already a lack of viability, and you’re restricting growth away from that, that’s very risky. Now we don’t, we have no idea how that’s going to play out. One of the things that’s important here is that there were certain regulatory requirements, you know, the 90 day rule, for example, but so much of what the department is putting into play is discretionary. Is a wide range of discretion being given to the people who run Federal student aid and they’re by and large not political, which is not to say that they don’t have a social view,which they do. And these are folks who’ve been in Federal student aid for a very, very long time across administrations. In a sense, the political people who were put over them are regarded by the, the folks who run the agency as summer help. They’re going to be there and then they’re going to be gone and someone else is going to be there. But it’s not to say that the political folks can’t make change, the dramatic change in accreditation that occurred towards the end of the Trump administration, when Diane Howard Jones was the assistant secretary, has persisted and has tremendously changed the way the accreditors function. I think very much to the better. It’s made accreditation much more willingness to be innovative and much more willingness to look at new models and new approaches.

[00:57:35] Drumm: I agree.

[00:57:36] Mike Goldstein: But there is an institutional persistence, but I think what they’re also doing, and this is the new round of rulemakings, is putting more pressure on the accreditors to use a stronger microscope in looking at and in approving mergers and digging deeper into the institutions. It looks like they’re going to go the same way with regard to the state authorizing agencies in raising higher expectations with regard to state level review. The department has tried to impose that on the states in the past, and it has failed miserably. There was the state post secondary review entities that the Department of Education tried to create in the ’90s that went down in flames. But I think there is this overall sense that fundamental institutional changes, mergers, acquisitions, joining together of institutions, need to be reviewed far more closely, far more intensely than has been the case in the past. Whether that is justified is questionable. I think there’s an overreach in terms of what they’re doing. But again, the rationale is we want to weed out the failing institutions and the definition of failing institutions is “institutions that are failing its students.” That’s different, and that’s going to, I think, create a different calculus.

[00:59:10] Drumm: Will this do that?

[00:59:12] Mike Goldstein: Yes and no. I think it is going to prevent some mergers involving the weak institutions, including some that had they been allowed to go forward would have had a positive outcome for the institutions.

[00:59:30] Drumm: Mm-Hmm.

[00:59:31] Mike Goldstein: So yes, but with a perverse effect in some cases. Is it going to significantly improve student outcomes across higher education?

[00:59:43] I am highly doubtful.

[00:59:45] Drumm: Yeah. I would agree with that. Just real quickly ’cause we’re getting to the end of our time. The neg reg guidance that’s going on right now, having to do with accreditors and with the state authorization NC-SARA, what’s your read on that?

[01:00:05] Mike Goldstein: The Department and the people who are advising the Department don’t like the accreditors. They view the accreditors as not quite rubber stamps, but certainly not as aggressive guardians. And they want to push the accreditors to be more aggressively looking at institutions. They want the accreditors to be more independent of the institutions.

[01:00:33] The department just issued its position paper on the state authorization reciprocity agreement and the administration of NC SARA. And in full disclosure, I was recently elected to be a member of the NC SARA board of governors. And they are looking, interestingly, to increase the role of the states in the leadership of NC-SARA, viewing NC-SARA as purely a consumer protection agency, as a surrogate, for the individual states in terms of consumer protection and ensuring that the rights of students are protected ultimately by a state consumer agency, by a state attorney general. And they have specific proposals that saying that the public members of NC-SARA should essentially not have connections with the institutions that are the NC-SARA members.

[01:01:38] Doesn’t make a whole lot of sense. It’s like saying accrediting agencies should not have on their commissions, the institutions that are accredited.

[01:01:48] Drumm: Mm-Hmm.

[01:01:49] Mike Goldstein: Think it’s indicative of a belief that institutions are firmly in support of reduced oversight and reduced consumer protection and anything they can do to avoid that is what they want. And that they need to be pushed back from the table. I think that’s wrong. I think it’s counterproductive because the whole premise of SARA of reciprocity is that the institutions all agree and the accreditors all agree and the states all agree to a common standard and common mechanisms and you can’t take one leg out of that tripod and say, we’re fine, you know, we’re going to manage this process. It’s like airline regulation and taking the airlines out of it.

[01:02:41] Drumm: Mm-Hmm.

[01:02:41] Mike Goldstein: There’s got to be a full partnership. So I think it’s all of a piece of a, unfortunately, a distrust of higher education generally.

[01:02:53] Drumm: Mm hmm.

[01:02:54] Mike Goldstein: And I think that part of that was brought on by higher education itself over the years.

[01:03:01] Drumm: Mm hmm.

[01:03:02] Mike Goldstein: But I think the pendulum here is swinging way too far.

[01:03:07] I think ultimately I don’t think that SARA, is going to be dramatically changed. Remember the department SARA is not a Federal agency. It is a agreement, among the states with the institutions, with the regional compacts. It’s for them to agree.

[01:03:26] Drumm: Mm hmm.

[01:03:26] Mike Goldstein: The Department of Education can determine not to recognize SARA and say that institutions have to get individual state recognition if they want to do that.

[01:03:38] Drumm: That won’t happen.

[01:03:40] Mike Goldstein: That I would very much politically, I would very, very much doubt that will occur. I think the pressure on the accreditors is consistent, but I think the accreditors are responding by virtue of their willingness to be open to more innovative, more student centered approaches, is going to really, in a very significant way, immunize them against, you know, the worst kinds of attacks.

[01:04:10] Drumm: Well, we certainly hope so. Mike, this has been fascinating, as always. I always enjoy our conversations. Three takeaways for presidents and boards.

[01:04:22] Mike Goldstein: Uh, number one, if your school can benefit from either merging with or being acquired by or acquiring another institution, in terms of its educational mission, in terms of its service to broader communities, in terms of its finances, there is absolutely no reason whatsoever not to proceed.

[01:04:48] Number two is proceed with caution. Choose your partners very carefully, make sure that they are additive to each other. Two failing institutions that merge simply creates one larger failing institution, but two institutions that can benefit from scale, that can benefit from management, that can benefit from a mix of programs, adding graduate programs to an undergraduate institution, for example, that should certainly be,considered and promoted.

[01:05:25] And finally. Do it right. Do it carefully. Have the right professional guidance. It is not a game for amateurs. There are very sophisticated legal issues. There are very sophisticated financing issues. There are very sophisticated academic issues that need to be taken into account to surmount all of the hurdles that are out there. All that together, one can look at the higher education landscape and see dozens, perhaps hundreds over the years of successful institutional mergers. And I think the good models need to be the models for how we go forward.

[01:06:15] Drumm: Absolutely. What’s next, Mike? What’s next for you? What’s next for Titan? What’s next for us? Because we’ve got a very nice relationship and we work together.

[01:06:24] Mike Goldstein: Well, the, the what next is what happens on January 20th, because everything we’re talking about right now, could be turned on its head or continued. I think we have to look at what the Congress does with regard to changes in Federal student aid policy as opposed to regulation.

[01:06:48] One thing that I do want to touch on, which is one of the really, really important things is a bipartisan bill, that is now going through the House for short term Pell.

[01:07:01] Drumm: Yes.

[01:07:02] Mike Goldstein: 8 to 15 week programs eligible for full Pell at any kind of accredited institution, for profit, non profit, or public. That is potentially one of the greatest changes in workforce development, in improving the ability of Americans to gain the education and training that they need, that we have seen since, perhaps the commencement of Title IV, because not only is that going to allow individuals to get short training, to learn skills, and to upgrade their skills, but it also will be a feeder into longer programs, ultimately into degree programs. So that’s a huge breakthrough if that in fact is both authorized and then if funds are appropriated for it.

[01:07:55] Drumm: Let’s keep our fingers crossed on that one. That one’s really important.

[01:07:59] Mike Goldstein: Indeed.

[01:08:00] Drumm: Mike, again, thank you for being on the program. Always a pleasure to have a conversation with you. I look forward to the next time.

[01:08:07] Mike Goldstein: Drumm, a real pleasure. See you soon.

[01:08:12] Drumm: Thanks for listening today and a special thank you to Mike Goldstein of Titan Partners and for his sharing his views on the new regulations from the Department on Mergers in Higher Education and the upcoming NEG-REG process and its impact on accreditors and state authorization. Thanks, Mike. Always a pleasure to have you on the show.

[01:08:31] Tune in next week when we welcome Justin Grimes, founder and CEO of Apply2GraduateSchool, who will be joining us to talk about how to turn around enrollment for graduate schools through using strategic enrollment management and keeping it simple and real.

[01:08:47] Thanks for listening. See you next week.


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