About Education Management Corporation

Q: I’ve never heard of Education Management Corporation. What is it?

A: Education Management Corporation (EDMC) ranks as one of the largest for-profit education companies. Based in Pittsburgh, it runs 105 colleges across the country. Lots of students, lots of money.

Q: I attend The Art Institutes of Philadelphia. Does EDMC operate my school?

A: Yes — EDMC is the parent corporation of The Art Institutes, as well as these other for-profit colleges: Argosy University, Brown Mackie College, South University and Western State University College of Law.

Q: So if EDMC is a corporation, who’s in charge?

A: EDMC is controlled by a Board of Directors that includes the company’s CEO, Todd Nelson. Mr. Nelson is no stranger to the for-profit college industry – he left the Apollo Group, which owns the University of Phoenix, after the corporation settled a $9.8 million suit with the Department of Education over allegations of “widespread recruiting violations.”

The remaining directors of EDMC include representatives of Wall Street firms that have significant investment interests in EDMC. Three Wall Street giants—Goldman Sachs, Leeds Equity Partners, and Providence Equity Partners —have an 80% controlling interest in EDMC.

Q: Why should I care that my college is operated by a corporation?

A: As a corporation, EDMC’s CEO and Board of Directors are influenced by Wall Street, and their mission is to make a profit. Education may be secondary. How do they make a profit? They get federal student loans and tuition payments of students. Then they spend some on students’ education and the rest is profit. This often comes at the expense of students, who accumulate mountains of debt from student loans and can often fail to graduate with a degree. Unlike at non-profit colleges and universities, your student payments are going towards the profit of a company, rather than only towards your education.

Q: I thought Wall Street was about “the free market”—small government and all that.

A: Watch what they do, not what they say. EDMC has received $11 billion in state and federal financial aid money since 2003. And in 2010, more than 89% of their net revenues came from federal financial aid! Meanwhile, for-profit colleges spend millions to lobby the federal government on financial aid issues, such as rolling back the Obama administration’s proposal last year to cut off federal student aid to unfit programs. EDMC alone spent $1.41 million from January 2010 to October 2011 on federal lobbying.

Q: How does EDMC contribute to America’s student debt crisis?

A: Learn more about how EDMC contributes greatly to America’s student debt crisis in our Student Debt Class Notes here.

Q: What’s wrong with EDMC’s student recruitment practices?

A: For-profit colleges operated by EDMC use aggressive recruiting practices to enroll thousands of students, even some who may not be qualified or have no way to pay for classes. In a lawsuit filed this year, the U.S. Department of Justice alleged that EDMC recruiters were paid based on the number of students they get to enroll – an illegal practice in the United States.

Q: What’s the difference between for-profit and regular schools?