Vinod Khosla’s Wikipedia page still says he’s a trustee of a very high-profile outfit committed to fighting global poverty; but in fact his name disappeared from this page not long ago; and UD‘s thinking it’s maybe cuz a filthy rich stinker who goes all the way to the Supreme Court to keep people off a public beach is … not a good look for the Blum Center…
I’m seeing public presentations to the globally poor in which representatives from the Blum Center say Our trustees include a billionaire who has never spent a night at his colossal coastal property in California and in fact doesn’t like the beach but decided he wanted to spend hundreds of millions of dollars clearing out the place, posting armed guards, and pressing his case to keep doing that up to the Supreme Court. We feel your pain.
And how tragic for America. The federal Consumer Financial Protection Bureau, in filing suit today against one of the country’s many tax syphons (put the phrase tax syphons in my search function for previous posts), calls the exploitation of America’s poor by for-profit colleges like ITT “truly an American tragedy.”
The federal Consumer Financial Protection Bureau this morning filed a civil lawsuit against for-profit college company ITT Educational Services, seeking restitution to students allegedly harmed by ITT’s private loan programs, a civil fine, and an injunction against the company.
Senator Feinstein’s husband, Richard Blum, has been a big investor in ITT. Which is… Okay, that’s her business, you might say, though UD would say that it represents at least an embarrassment … But the real scandal here comes from the fact that Blum is a University of California regent who presumably had something to do with that university itself investing in ITT. From a 2010 article in the Berkeley Daily Planet:
… Blum’s firm, Blum Capital Partners, has been the dominant shareholder in two of the nation’s largest for-profit universities, Career Education Corporation and ITT Educational Services, Inc. The San Francisco-based firm’s combined holdings in the two chain schools is currently $923 million — nearly a billion dollars. As Blum’s ownership stake enlarged, UC investment managers shadowed him, ultimately investing $53 million of public funds into the two educational corporations.
The regents’ conflict-of-interest policy requires them to “avoid the potential for and the appearance of conflicts of interest with respect to the selection of individual investments … public officials shall not make, participate in making, or influence a governmental decision in which the official has a conflict of interest.” And the California Political Reform Act of 1974 provides civil and criminal penalties for officials who ignore conflicts of interest — as UC makes clear in ethics training presentations specifically created for university officials. The Board of Regents, however, is self-policing and it tolerates situations that cause others concern.
John M. Simpson of Consumer Watchdog, a nonprofit education and advocacy organization in Santa Monica, California, comments: “It is hugely inappropriate for the University of California to invest in for-profit colleges when it should be promoting public education. And something stinks when university investments end up in companies largely controlled by a regent. To the average fellow on the street, this would seem to be a conflict of interest. It is up to Mr. Blum and the UC treasurer to explain how it could not be a conflict of interest.”
Shades of Yeshiva University under the management of Bernie Madoff and Ezra Merkin! … Well, that university investment strategy ended badly, and I think Berkeley’s is about to come to grief too… But … look. You don’t need to be Thomas Frank to be sickened by the cynicism of America’s greatest public university getting rich off the backs of America’s most vulnerable student population…
Especially since it’s not only Berkeley. There’s Columbia University, already famous for its business dean’s starring performance in Inside Job. Columbia’s president, Lee Bollinger, sits on the board of the company that owns Kaplan. Students there were so disgusted by this that they started a petition calling for him to leave the board. The language of their petition pithily summarized the American for-profit ed business model:
Kaplan exploits the poor, the vulnerable, and the taxpayer to enrich itself.
In announcing the suit, the CFPB said this was just the beginning of a much wider action against the whole scummy industry. UD is skeptical. It has been scummy — reeking to high heaven, in fact – for a couple of decades, and no one with any power to really kill it off seems to have cared. That’s the American tragedy.
From its symbiotic relationship with shady online for-profit colleges [Background on the for-profit scandal here.] to its plan to make itself an online school, the University of California at Berkeley is moving smartly along the path to self-prostitution.
Step One:
University Regent Richard Blum has an investment firm.
… Blum Capital Partners has been the dominant shareholder in two of the nation’s largest for-profit universities, Career Education Corporation and ITT Educational Services, Inc. The San Francisco-based firm’s combined holdings in the two chain schools is currently $923 million—nearly a billion dollars. As Blum’s ownership stake enlarged, UC investment managers shadowed him, ultimately investing $53 million of public funds into the two educational corporations.
… John M. Simpson of Consumer Watchdog, a nonprofit education and advocacy organization in Santa Monica, Calif., comments: “It is hugely inappropriate for the University of California to invest in for-profit colleges when it should be promoting public education. And something stinks when university investments end up in companies largely controlled by a regent. To the average fellow on the street, this would seem to be a conflict of interest. It is up to Mr. Blum and the UC treasurer to explain how it could not be a conflict of interest.”…
Blum’s not talking. He’s not talking to this guy, from Sacramento News and Review, and he’s sure as hell not talking to this guy, from the Los Angeles Times.
Should an important official of what is arguably the most prestigious system of public higher education in the world also be a leading financial backer of an industry that has been coming under intense regulatory scrutiny because of persistent allegations of fraud?
Or put another way: If the chairman of the World Wildlife Fund held significant investments in, say, BP, wouldn’t people wonder exactly what he thought about how to balance environmental protection and oil industry regulation?
Step Two:
Berkeley’s not only investing public money in the for-profits; it’s modeling itself after them. Put everything online; hire whoever to teach the stuff; advertise the Berkeley brand all over town.
Its professors are rightly worried. Some of them have written a worried opinion piece for the San Francisco Chronicle.
The UC Board of Regents will discuss this week a proposal by the University of California president’s office for an ambitious plan to market UC online. The proposal entertains the vision of an eventual online bachelor’s degree that could tap new students throughout the world, from “Sheboygan to Shanghai.”
In fact, the track record for online higher education is very uneven.
Uneven? UD, as readers know, is less diplomatic. She has long called online classes the poor white trash of education. If you want to know why, click on my poor white trash category.
The Berkeley professors can see what’s coming.
[T]he university runs the risk of destroying its reputation and excellence in the name of marketing a brand.
But hey. When a major big time regent has been kissing up to the for-profits for years — when, in a way, your university has become financially dependent on the kindness of the for-profits — you shouldn’t be surprised when administrators start suggesting that Berkeley should make them its model.
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UD thanks her friend – once her student – James Elias for the initial link about Berkeley’s online venture.
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Update: “[W]hat do these investments say about Blum’s vision for higher education?” asks Michael Hiltzik, author of a long article in the Los Angeles Times about University of California Regent and zealous investor in for-profit education Richard Blum.
Let’s think about that one.
Blum represents just about the most selective undergraduate institution in the world, Berkeley. Berkeley is simply the pinnacle of higher education — and it’s public. It’s one thing for small, insanely rich Princeton to offer a great education. I mean, Princeton does, it does offer this, and it deserves all the praise it gets. But Berkeley, to the enormous credit of California taxpayers, offers something similar. And it doesn’t have the legacy profile of the Ivies. It doesn’t make lots of special room for the children of the rich and well-connected. It doesn’t create the sort of culture Walter Kirn describes here.
Berkeley is, if you ask UD, inspirational. It’s probably the closest thing we have in this country to an admissions meritocracy.
What is the investment philosophy of Berkeley’s highest-profile regent? What does that philosophy tell us about what the LA Times reporter calls his vision for higher education?
Well, I’d say it’s a vision profoundly at odds with what Berkeley has long stood for. It’s elitist and cynical. Blum’s investment strategy says the following to UD:
I’m going to generate lots of money for a few of the most highly selected students in the country on the backs of millions of ordinary citizens being ripped off by substandard institutions. It’s a winner-take-all-the-education world. Let the losers pay the price.
For those of us impatiently awaiting Tom “Kristallnacht” Perkins’ successor, Vinod Khosla has arrived not a moment too soon. It’s his beach, and he’ll sue all the way to the Supreme Court if he has to.
There’s even a wonderful mine, mine, all mine cosmic convergence here: For years, Khosla worked for Tom Perkins’ venture firm.
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Khosla has progressive academia’s endorsement as a trustee of Berkeley’s Blum Center (and Mr. Blum... eh. Nuff said.)
Maybe Robert Reich, who has been eloquent on the corrosive social and moral effects of income inequality, can take Khosla aside for a chat. Reich too is on the Blum board.
Lalala … to be sure…
Huh? … Fuck off…
So far this is what Columbia University, and its president, have managed by way of response to the scandal of Lee Bollinger remaining on the board of the company that owns one of the most notorious for-profit universities, Kaplan. It’s the same high-handed indifference Bollinger (and, equally notoriously, Berkeley’s Richard Blum) has shown toward the hundreds of thousands of ordinary American grunts being dragged into and ripped off by the schools.
All praise, then, to the students at Columbia for raising a stink about this. They’re eloquent on the subject of Bollinger’s hypocrisy, and they’re trying hard to get him to resign from the board.
The CU Democrats’ petition says that “Kaplan exploits the poor, the vulnerable, and the taxpayer to enrich itself.” As of Monday night, the petition had over 580 signers, some of whom are alumni.