Dive Brief: 

• California Community Colleges Chancellor Eloy Ortiz Oakley announced Monday that the 116-college system has canceled a transfer agreement with a for-profit group after the deal drew criticism from state lawmakers and advocacy organizations. 
• Oakley ended a memorandum of understanding announced in October between California Community Colleges and American Public University System, a West Virginia-based for-profit group that runs American Public University and American Military University. The agreement enabled graduates of the community college system's transfer degree program to enroll as juniors, without losing credits, in the for-profits' bachelor's programs. 
• Lawmakers and policy organizations urged the system to terminate the deal because the for-profit group isn't subject to California law governing private colleges and also has been previously accused of misleading students. 

Dive Insight: 

Oakley nixed the deal at a time when for-profit institutions have been increasingly under the microscope. The Biden administration has pledged to crack down on the sector. And the U.S. Department of Education is crafting several regulations that could heavily impact for-profit colleges, including how they recruit students and which of their programs are eligible for federal funding.  

American Public University System confirmed the transfer agreement had ended. 

"While APUS was in full compliance with the MOU, we respect the Chancellor’s decision. Though disappointing, cancellation of the MOU will not affect CCC students who have transferred to APUS, and we will continue to serve them and all of our students," it said in a statement. 

Between 300 and 400 California Community College students transfer each year to American Public University System, said community college system spokesperson Paul Feist. It was the only for-profit college that had a memorandum of understanding with the community college system, though individual colleges may have local agreements with for-profits, Feist said. 

The deal caused angst among lawmakers and advocacy groups. Nine Democratic California state legislators wrote the community college system's governing board in January, urging it to terminate its agreement with the for-profit group. 

They pointed out that American Public University System has not been approved by California's Bureau for Private Postsecondary Education, a state agency that monitors and regulates private colleges. 

As a result, the lawmakers said, American Public University System is not required to follow many of California's laws governing private colleges in the state. "These laws establish safeguards around school closures and protect California residents from false advertising and inappropriate recruiting practices, among other things," they wrote. 

American Public University System has a history of poor student outcomes. Of some 53,000 students who transferred into the online-only college, only 22% graduated after eight years, according to federal data. Thirty-five percent withdrew, and an equal share transferred. The remaining 8 percent were still enrolled.

Other groups pointed to past allegations that American Public University System misled students. In 2018, Massachusetts' attorney general reached a settlement with the for-profit group over allegations that it violated state law by not disclosing its job placement, loan repayment and graduation rates to prospective students before they enrolled. 

The attorney general also alleged the system had used high-pressure enrollment tactics, such as excessively calling potential admits, and that American Military University used branding suggesting it is affiliated with the U.S. military even though it is not. 

Thirteen policy, veterans' and consumer groups cited that settlement in a January letter to Oakley urging him to terminate the transfer agreement. 

"We are pleased the Chancellor was responsive to our letter," Carrie Wofford, president of Veterans Education Success, said in a statement Monday. "We wish that more public universities would examine their relationships with for-profit colleges that defraud student veterans."

California Community Colleges is considering changes to how it approaches transfer agreements. A proposed amendment would require the system's chancellor to consider several metrics before entering transfer agreements, including an institution's tax status, complaints and sanctions, and student outcomes. It would also require board approval for transfer agreements with for-profit institutions and limit those deals to three years. 

Feist said the board will consider the proposal at its next meeting in March.