Category: Law

  • Students learn the basics of AI as they weigh its use in their future careers

    Students learn the basics of AI as they weigh its use in their future careers

    This story was originally published by Chalkbeat. Sign up for their newsletters at ckbe.at/newsletters.

    On a recent Thursday morning, Michael Taubman asked his class of seniors at North Star Academy’s Washington Park High School: “What do you think AI’s role should be in your future career?”

    “In school, like how we use AI as a tool and we don’t use it to cheat on our work … that’s how it should be, like an assistant,” said Amirah Falana, a 17-year-old interested in a career in real estate law.

    Fernando Infante, an aspiring software developer, agreed that AI should be a tool to “provide suggestions” and inform the work.

    “It’s like having AI as a partner rather than it doing the work,” said Infante during class.

    Falana and Infante are students in Taubman’s class called The Summit, a yearlong program offered to 93 seniors this year and expanding to juniors next year that also includes a 10-week AI course developed by Taubman and Stanford University.

    As part of the course, students use artificial intelligence tools – often viewed in a negative light due to privacy and other technical concerns – to explore their career interests and better understand how technology could shape the workforce. The class is also timely, as 92% of companies plan to invest in more AI over the next three years, according to a report by global consulting firm McKinsey and Company.

    The lessons provide students with hands-on exercises to better understand how AI works and how they can use it in their daily lives. They are also designed so teachers across subject areas can include them as part of their courses and help high school students earn a Google Career Certificate for AI Essentials, which introduces AI and teaches the basics of using AI tools.

    Students like Infante have used the AI and coding skills they learned in class to create their own apps while others have used them to create school surveys and spark new thoughts about their future careers. Taubman says the goal is to also give students agency over AI so they can embrace technological changes and remain competitive in the workfield.

    “One of the key things for young people right now is to make sure they understand that this technology is not inevitable,” Taubman told Chalkbeat last month. “People made this, people are making decisions about it, and there are pros and cons like with everything people make and we should be talking about this.”

    Students need to know the basics of AI, experts say

    As Generation Z, those born between 1997 and 2012, graduate high school and enter a workforce where AI is new, many are wondering how the technology will be used and to what extent.

    Nearly half of Gen Z students polled by The Walton Family Foundation and Gallup said they use AI weekly, according to the newly released survey exploring how youth view AI. (The Walton Family Foundation is a supporter of Chalkbeat. See our funders list here.) The same poll found that over 4 in 10 Gen Z students believe they will need to know AI in their future careers, and over half believe schools should be required to teach them how to use it.

    This school year, Newark Public Schools students began using Khan Academy’s AI chatbot tutor called Khanmigo, which the district launched as a pilot program last year. Some Newark teachers reported that the tutoring tool was helpful in the classroom, but the district has not released data on whether it helped raise student performance and test scores. The district in 2024 also launched its multimillion project to install AI cameras across school buildings in an attempt to keep students safe.

    But more than just using AI in school, students want to feel prepared to use it after graduating high school. Nearly 3 in 4 college students said their colleges or universities should be preparing them for AI in the workplace, according to a survey from Inside Higher Ed and College Pulse’s Student Voice series.

    Many of the challenges of using AI in education center on the type of learning approach used, accuracy, and building trust with the technology, said Nhon Ma, CEO of Numerade – an online learning assistant that uses AI and educators to help students learn STEM concepts. But that’s why it’s important to immerse students in AI to help them understand the ways it could be used and when to spot issues, Ma added.

    “We want to prepare our youth for this competitive world stage, especially on the technological front so they can build their own competence and confidence in their future paths. That could potentially lead towards higher earnings for them too,” Ma said.

    For Infante, the senior in Taubman’s class, AI has helped spark a love for computer science and deepened his understanding of coding. He used it to create an app that tracks personal milestones and goals and awards users with badges once they reach them. As an aspiring software developer, he feels he has an advantage over other students because he’s learning about AI in high school.

    Taubman also says it’s especially important for students to understand how quickly the technology is advancing, especially for students like Infante looking towards a career in technology.

    “I think it’s really important to help young people grapple with how this is new, but unlike other big new things, the pace is very fast, and the implications for career are almost immediate in a lot of cases,” Taubman added.

    Students learn that human emotions are important as AI grows

    It’s also important to remember the limitations of AI, Taubman said, noting that students need the basic understanding of how AI works in order to question it, identify any mistakes, and use it accordingly in their careers.

    “I don’t want students to lose out on an internship or job because someone else knows how to use AI better than they do, but what I really want is for students to get the internship or the job because they’re skillful with AI,” Taubman said.

    Through Taubman’s class, students are also identifying how AI increases the demand for skills that require human emotion, such as empathy and ethics.

    Daniel Akinyele, a 17-year-old senior, said he was interested in a career in industrial and organizational psychology, which focuses on human behavior in the workplace.

    During Taubman’s class, he used a custom AI tool on his laptop to explore different scenarios where he could use AI in his career. Many involved talking to someone about their feelings or listening to vocal cues that might indicate a person is sad or angry. Ultimately, psychology is a career about human connection and “that’s where I come into play,” Akinyele said.

    “I’m human, so I would understand how people are feeling, like the emotion that AI doesn’t see in people’s faces, I would see it and understand it,” Akinyele added.

    Falana, the aspiring real estate attorney, also used the custom AI tool to consider how much she should rely on AI when writing legal documents. Similar to writing essays in schools, Falana said professionals should use their original writing in their work but AI could serve as a launching pad.

    “I feel like the legal field should definitely put regulations on AI use, like we shouldn’t be able to, draw up our entire case using AI,” Falana said.

    During Taubman’s class, students also discussed fake images and videos created by AI. Infante, who wants to be a software developer, added that he plans to use AI regularly on the job but believes it should also be regulated to limit disinformation online.

    Taubman says it’s important for students to have a healthy level of skepticism when it comes to new technologies. He encourages students to think about how AI generates images, the larger questions around copyright infringement, and their training processes.

    “We really want them to feel like they have agency in this world, both their capacity to use these systems,” Taubman said, “but also to ask these broader questions about how they were designed.”

    Chalkbeat is a nonprofit news site covering educational change in public schools.

    For more on AI in education, visit eSN’s Digital Learning hub.

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  • What will happen when a university fails to prevent fraud?

    What will happen when a university fails to prevent fraud?

    The first day of September 2025 sees an important chunk of the Economic Crime and Corporate Transparency Act come into force.

    And if you are involved in academic partnerships or the use of agents, you might want to pay heed.

    Receiving Royal Assent in 2023, the Act was initially promoted as tidying up some of the very curious practices around submitting information to Companies House.

    Measures are very much focused on understanding and regulating who gets to become a company director, and ensuring the way a company is run is transparent and properly documented. If you are a fan of the Office for Students new condition of registration E7 you may find some of the new requirements there hauntingly familiar.

    The Act also introduces a range of new offences that can lead to fines, disqualification, and even imprisonment – and higher education providers are among those carefully considering the September start date for offence of “failure to prevent fraud”. And, almost inevitably – the issue comes down to franchising and academic partnership.

    Quick definitions

    Simply put, fraud is the act of gaining a dishonest advantage over another person. In most cases this is a financial advantage.

    To give some sector focused examples – we’ve recently seen cases where student maintenance loans and student fee loans have been paid out to students who have no intention of actually studying. We’ve seen evidence that some providers (and some higher education agents) may have been knowingly registering students for financial rather than educational benefit, and that franchise and partnership agreements – where incentives may be set around income maximisation rather than educational benefit – might have played a role in some of these instances.

    Fraud, obviously, is a criminal offence. Those who commit fraud face consequences, but before the Act it has been harder to ensure that the companies involved do.

    The “failure to prevent fraud” offence, in the words of the government’s guidance, means that:

    an organisation may be criminally liable where an employee, agent, subsidiary, or other “associated person”, commits a fraud intending to benefit the organisation and the organisation did not have reasonable fraud prevention procedures in place. In certain circumstances, the offence will also apply where the fraud offence is committed with the intention of benefitting a client of the organisation. It does not need to be demonstrated that directors or senior managers ordered or knew about the fraud.

    This applies specifically to “large incorporated organisations” (one of: more than 250 employees, more than £36m turnover, more than £18m in total assets). This can apply to an entire organisation, or “a subsidiary or franchise” of an organisation.

    Behind the sofa

    It’s not difficult to imagine that a cash-strapped provider of higher education may not always be motivated to check up on the activities carried out in its name by agents and partners. When dubious recruitment practices are revealed in the press, the usual response by “lead providers” is alarm followed by a decision to withdraw from the partnership. Neither the OfS, Department for Education, or Student Loans Company really has the regulatory tools to deal with stuff on anything other than a whack-a-mole basis – and every time the music stops it turns out nobody realised how bad things really are. Withdraw, regroup – and very often enter into a similar partnership with another organisation.

    The new “failure to prevent fraud” offence means that the onus will be on universities and other providers to prove that they had “reasonable prevention procedures” – and whether they did is a matter for the courts rather than a checklist.

    Things in scope include the public law offence of cheating the public revenue alongside expected parts of the Fraud Act and Theft Act in England and Wales. The law is slightly different in Scotland and Northern Ireland.

    As well as the person who committed the “base fraud” facing consequences, this new rule means that if they are a “person associated” with a relevant body – and are acting in the capacity of that body or providing services on behalf of that body as they commit the fraud – the body itself (the lead partner in our example) will also be on the hook. It is worth remembering that a small organisation can be an “associated person” for these purposes, and although there may be a formal contractual relationship there doesn’t need to be a contract in place.

    Higher education, specifically

    If you scroll through the guidance, you might start breathing normally when you spot that there is an exemption for some “franchisees” – these are seen as connected to the main company by contract only, rather than undertaking business for the parent company. If you think about models of franchising in other sectors, this makes sense – a franchisee basically pays for the rights to use a name and a set of products.

    However, this is not the meaning of the word “franchising” in higher education – and there are specifics in the guidance dealing with the sector.

    Academic franchises may be associated persons for the purposes of the offence depending on the details of the contract. Universities or other degree awarding bodies should take legal advice.

    There’s a line drawn between “validation” franchises (university accredits awards) and “delivery” franchises (university subcontracts delivery of a programme), but there’s no easy line to draw as to whether either is an “associated person” or not. It all comes down to the nature of the individual relationship and what is in the contact or agreement.

    Doing time

    If you are involved in academic partnerships, relationships with agents, or anything similar it feels very much like now should be the moment to get on top of what is in each agreement and what “reasonable preventative measures” might be. How are you monitoring what people are doing on your behalf? How much control do you genuinely have?

    In the main, franchising is done well by higher education institutions. But if corners are being cut, or inconvenient questions not being asked, for the less rigorous few the stakes just got even higher.

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  • OfS insight on institutional closure lacks a firm statutory foundation

    OfS insight on institutional closure lacks a firm statutory foundation

    The Office for Students’ (OfS) insight briefing “Protecting the interests of students when universities and colleges close” is as much a timely reminder of where the law falls short when providers are at risk of closure as it is a briefing on how to protect the student interest under the current policy framework.

    As we set out in our Connect more report which explored, among other things, the legal framework for institutional insolvency, market exit and/or merger, the role of OfS in any institution at risk situation is already unhelpfully ambiguous. Its concern may be the student interest, but it is not empowered to prevent institutional closure (even if, as is often likely to be the case, the student interest would be best served by completing the course they registered for at the institution they enrolled in) – or even to impose order on a disorderly market exit.

    In the absence of express powers or an insolvency or special administration regime for higher education, OfS’ role becomes one of a point person, facilitating conversations with other agencies and stakeholders, but with no powers itself to prevent a disorderly closure. The tone of the briefing is collaborative and collegiate but, in a world where students are no better protected than any other unsecured creditor if a provider becomes insolvent, it’s doubtful that, under the law as it currently stands, the interests of students will be protected to the degree to which OfS desires.

    While OfS may be primarily concerned with protecting students’ interests, the trustees of those providers that are constituted as charities have a statutory duty to act in the best interests of the charity and to pursue their charity’s purposes. This duty will, of course, encompass the needs of present students but will also encompass past students, future students, research activities and much more besides. While no one would disagree with the general sentiment that “throughout the process [of institutional closure] the interests of students, and their options for continued study, must be kept in mind” – and the briefing does offer lots of useful ideas for how to ensure sufficient attention is given to the many types of students who will be affected – the elevation of student interest to a pre-eminent concern is not what the law generally, nor what OfS’ statutory duties currently require.

    University executive teams and boards may wish, therefore, to read OfS guidance in light of these realities, and be aware of the limits of what is realistically possible or likely to occur in giving consideration to the sort of scenario planning and preparation OfS advocates in the briefing.

    A herd of elephants

    OfS’ recommendations about the need to have suitably durable and maintained student records and to have entered into binding contracts with validating and subcontracting partners that contain clauses that deal realistically with the end of the relationship and contain adequate data sharing agreements clauses are all well made.

    But once things actually start to get tricky in real life there is a level of reliance on transparency, for example, in sharing information both with OfS but also with other organisations such as funding or regulatory bodies, or government departments, or even other institutions who might be prevailed upon to welcome displaced students. In the absence of a systematised notification process, any ambiguity about whose role it is to liaise with the various potentially affected stakeholders or the timing of any such communication has high potential to create problems. There are obvious issues raised by disclosing or revealing another institution’s “at risk” status, some of which may have the effect of accelerating the very process everyone is seeking to avoid.

    If OfS considers a registered institution is at risk of closure, it can impose a student protection direction under condition C4 of the conditions of registration. The briefing provides a helpful reminder of what a student protection direction might include and encourages regular thought about these issues to avoid the need for a provider to “improvise at speed and under stress if an institutional closure becomes possible.” That sounds very laudable at first glance, but it confuses the regulatory obligation with the real-world outcome. A provider at risk of closure may well come under pressure from OfS to produce a market exit plan and to map courses at a time when university teams have the least bandwidth to undertake such tasks. In any case, it is highly doubtful whether an insolvency practitioner would be bound by such planning in the event that a provider goes into an insolvency process.

    In scenario planning, OfS moots the idea that higher education providers might consider setting up “agreements in principle” with other institutions “to take on relevant students if one or the other closes” or even “possibly multiple agreements, for different courses and subjects.” It is surprising not to see competition law mentioned in this context. The higher education sector contains a broad range of institution types, with varied teaching and delivery methods, attracting students with different needs and expectations as regards learning and study.

    This means that in practice the providers that pair up to take on one another’s students in the event of institutional failure will need to be similar types of provider – precisely those that are in competition for students in the first place. As Kate Newman has argued in an article on the impact of competition law on higher education collaboration, it would be helpful if OfS and the Competition and Markets Authority could jointly consider these kinds of circumstances for the sector as a whole rather than providers having to navigate this complex legal territory on an individual basis.

    We’re also concerned that any such “agreement in principle” will not be legally binding and will have been reached at a single point in time, when conditions may be quite different to the time when the institutions seek to rely on them. There is a very real risk that unless these agreements are refreshed annually (a time consuming and potentially collusive activity) they will turn out to be like the original student protection plans in being not terribly helpful.

    A sector like no other

    In issuing its briefing OfS argues that “this sort of risk and contingency planning is normal in other regulated sectors,” citing the examples of customer supply contingency plans for energy suppliers and the need for banks to have recovery and resolution plans. However, both of these sectors have highly developed insolvency regimes. Drafting recovery and resolution plans is much easier to achieve when there is a viable insolvency process in place. Both the energy and banking sectors have special administration processes in place and there has been much recent press coverage on the water sector special administration process, in light of Thames Water’s difficulties.

    OfS encourages institutions to undertake extensive course mapping. However, given the scale of the financial pressures facing the sector, it’s doubtful how valuable such course mapping is likely to be where potential recipient institutions are perhaps equally likely to be at risk of closure. To be fair to OfS, the briefing stresses that mapping is particularly relevant for those institutions that offer specialist provision.

    And here, of course, lies the essential problem. As OfS states: “We have drawn on our experience of managing two relevant cases at small and specialist higher education providers during the past year, and of instances where there was a serious risk of a closure which did not materialise.” The counterfactual – closure of a large and generalist provider which does materialise – remains the biggest elephant in the room. While OfS’ openness in sharing its insights is to be welcomed, it does nothing to diminish the need for urgent structural change.

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  • Higher education in England needs a special administration regime

    Higher education in England needs a special administration regime

    Extra government funding for the higher education sector in England means the debate about the prospect of an HE provider facing insolvency and a special administration regime has gone away, right?

    Unfortunately not. There is no additional government funding; in fact the additional financial support facilitated by the new Labour government so far is an increase to tuition fees for the next academic year for those students that universities can apply this to. It is estimated that the tuition cost per student is in excess of £14K per year, so the funding gap has not been closed. Add in increased National Insurance contributions and many HE providers will find themselves back where they are right now.

    It is a problem that there is no viable insolvency process for universities. But a special administration regime is not solely about “universities going bust.” In fact, such a regime, based on the existing FE special administration legislation, is much more about providing legal clarity for providers, stakeholders and students, than it is about an insolvency process for universities.

    Managing insolvency and market exit

    The vast majority of HE providers are not companies. This means that there is a lack of clarity as to whether current Companies and Insolvency legislation applies to those providers. For providers, that means that they cannot avail themselves of many insolvency processes that companies can, namely administration, company voluntary arrangements and voluntary liquidation. It is debatable whether they can propose a restructuring plan or be wound up by the court, but a fixed charge holder can appoint receivers over assets.

    Of these processes, the one most likely to assist a provider is administration, as it allows insolvency practitioners to trade an entity to maximise recoveries from creditors, usually through a business and asset sale.

    At best therefore, an HE provider might be able to be wound up by the court or have receivers appointed over its buildings. Neither of these two processes allows continued trading. Unlike administration, neither of these processes provides moratorium protection against creditor enforcement either. They are not therefore conducive to a distressed merger, teach out or transfer of students on an orderly basis.

    Whilst it is unlikely that special administration would enable survival of an institution, due to adverse PR in the market, it would provide a structure for a more orderly market exit, that does not currently exist for most providers.

    Protections for lenders

    In addition to there being no viable insolvency process for the majority of HE providers, there is also no viable enforcement route for secured lenders. That is a bad thing because if secured lenders have no route to recovering their money, then they are not going to be incentivised to lend more into the sector.

    If government funding is insufficient to plug funding gaps, providers will need alternative sources of finance. The most logical starting point is to ask their existing lenders. Yes, giving lenders more enforcement rights could lead to more enforcements, but those high street lenders in the sector are broadly supportive of the sector, and giving lenders the right to do something is empowering and does not necessarily mean that they will action this right.

    Lenders are not courting the negative press that would be generated by enforcing against a provider and most probably forcing a disorderly market exit. They are however looking for a clearer line to recovery, which, in turn, will hopefully result in a clearer line to funding for providers.

    Protections for students

    Students are obviously what HE providers are all about, but, if you are short of sleep and scour the Companies and Insolvency legislation, you will find no mention of them. If an HE provider gets into financial distress, then our advice is that the trustees should act in the best interest of all creditors. Students may well be creditors in respect of claims relating to potential termination of courses and/or having to move to another provider, potentially missing a year and waiting longer to enter the job market.

    However, the duty is to all creditors, not just some, and under the insolvency legislation, students have no better protection than any other creditor. Special administration would change that. The regime in the FE sector specifically provides for a predominant duty to act in the best interest of students and would enable the trustees to put students at the forefront of their minds in a time of financial distress.

    A special administration regime would therefore help trustees focus on the interest of students in a financially distressed situation, aligning them with the purposes of the OfS and charitable objects, where relevant.

    Protections for trustees

    Lastly, and probably most forcefully, a special administration regime would assist trustees of an HE provider in navigating a path for their institution in financial distress. As touched on above, it is not clear, for the vast majority of HE providers, whether the Companies and Insolvency legislation applies.

    It is possible that a university could be wound up by the court as an unregistered company. If it were, then the Companies and Insolvency legislation would apply. In those circumstances, the trustees could be personally liable if they fail to act in the best interest of creditors and/or do not have a reasonable belief that the HE provider could avoid an insolvency process.

    Joining a meeting of trustees to tell them that they could be personally liable, but it is not legally clear, is a very unsatisfactory experience; trust me, this is not a message they want to hear from their advisors.

    A special administration regime, applying the Companies and Insolvency legislation to all HE providers, regardless of their constitution or whether they are incorporated, would allow trustees to have a much clearer idea of the risks that they are taking and the approach that they should follow to protect stakeholders.

    In the event a special administration was to be brought in, we would hope it would not need to be applied to a market exit situation. Its real value, however, is in bringing greater legal clarity for lenders and trustees and more protection for students, in the current financial circumstances that HE providers find themselves in.

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