Tag: HighStakes

  • High-Stakes Policy Talks Shed Light on ED’s Playbook

    High-Stakes Policy Talks Shed Light on ED’s Playbook

    The Department of Education has had a successful few months when it comes to advancing policies that could dramatically reshape federal student aid. But officials’ tactics for doing so have raised concern among many of higher ed’s top leaders and policy analysts.

    Over the course of the last four months, Under Secretary Nicholas Kent and his staff secured unanimous support from a variety of college leaders, state officials and student advocates on plans that cap graduate student loans, expand the Pell Grant to short-term job training programs and establish a new accountability measure for all colleges and universities—an outcome that defied initial expectations and one Kent touted.

    “Here’s the reality: When you come to the table prepared with smart and dedicated people that are focused on a clear goal, you can move quickly and intentionally without sacrificing the thoroughness and the careful deliberation that this process deserves,” he said in December. “We have proven that speed and quality are not mutually exclusive.”

    Kent went on to tell Inside Higher Ed this month that in order to implement the policies under a tight July 1 deadline set by Congress, he needed to finalize his proposals and do it fast. The key to doing so, he said, was using open dialogue and compromise to reach consensus—even as the department held fast to its core principles. He also believed that unanimous agreement could put an end to years of back-and-forth over higher ed policy and provide clarity for the institutions and students it would affect.

    Nicholas Kent

    But some involved in the negotiations as well as outside policy analysts say the department “strong-armed” committee members into agreement by threatening them with what could happen if they voted no—if the committee didn’t reach consensus, department officials could scrap any compromises made and rewrite the proposal as they saw fit.

    Antoinette Flores, a higher ed policy expert who led similar negotiation sessions under the Biden administration and now works at a left-leaning think tank, said the committee members were repeatedly called into private meetings with Kent and department staff in which there was “heavy political pressure” to agree to the department’s proposal.

    “They were leveraging the power of consensus with a little bit of fear,” she said.

    Other observers, however, viewed the department’s tactics as nothing more than part of good dealmaking—a typical aspect of the rule-making process.

    Either way, the talks shed light on how determined department negotiators can control the direction and outcome of the discussion, in part by coming to the table with explicit priorities and refusing to give much ground, according to more than half a dozen committee members and outside experts.

    We were very honest throughout the process that this was a give-and-take. And we reminded people what was at stake and what the regulatory community could gain and lose.”

    —Under Secretary Nicholas Kent.

    Those interviewed cautioned that these talks aren’t necessarily a blueprint for future negotiations because they were largely driven by the One Big Beautiful Bill Act, which gave the department little wiggle room. Still, the rounds of negotiations revealed more about Kent’s playbook and how this Trump administration is more prepared to leverage the complicated policymaking process and advance the president’s priorities.

    And the department’s policy agenda for 2026 suggests that there are still many negotiations to come as officials plan to rework the rules for accreditation, civil rights investigations and foreign gifts.

    “Everybody should buckle up,” Kent said. “We’ve got a lot of work to do here.”

    Setting the Tone

    Before department staff reached the negotiating table, they knew what a tight timeline they’d be operating under. So with their eyes set on consensus, they worked to be “more prepared than [they] ever had been,” said Kent, who was hands-on during the talks and at one point made the unprecedented move to join the negotiating table.

    The department conducted listening sessions with multiple constituency groups to get a sense of the challenges and opportunities they may face, and officials then released drafts of their proposals ahead of the meetings, coming armed with data presentations to back up their policy changes.

    In two of the three rule-making sessions, Kent opted to condense negotiations that usually took place over the course of months down to one week. Public comment for all three was limited to one session held before any of the discussions began.

    The threats were not thinly veiled. They were very bold.”

    —Former Biden official

    Noting that the department dealt with some of the topics for many years, Kent said, “There’s no reason that we needed to come and ask people very philosophical questions at the beginning.”

    But coming in with detailed plans to kick off the talks also gave the department an upper hand. It narrowed the scope of debate and placed the burden on committee members to argue why and how any changes should be made, policy experts explained.

    “Twenty years ago when you did neg reg, the department would [merely] have ideas about what it wanted to workshop with the negotiators,” said Aaron Lacey, a higher education lawyer who negotiated the policies for Workforce Pell and new accountability measures. But that’s not the case anymore. “It also puts a much greater burden on the negotiators. You’re just working around the clock, drafting, reviewing and justifying proposals. Whereas in years past, it was four o’clock and you were done until the next day started. It’s just a totally different exercise.”

    To Lacey, the department was essentially working to “orchestrat[e] a consensus vote” on their plans.

    “I don’t know how I feel about that,” he said. “But I have to acknowledge that that’s what they’re doing, and they seem to be doing it very well.”

    Drawing Hard Lines

    Another, more direct way, that the department pushed for unanimous agreement, policy analysts said, was by limiting the changes it would consider and making clear that there would be consequences if consensus wasn’t reached.

    During the first negotiation over student loan caps in early fall, the department publicly dug its heels in over what programs could qualify for higher borrowing limits. And while ED made a few small concessions, multiple sources told Inside Higher Ed that those changes were used as bait to compel them to vote yes, even as they didn’t agree with other key issues in the department’s final proposal.

    They could have just treated neg reg as a formality, failed [to reach consensus] and then written the rule that they wanted to in the first place.”

    —Preston Cooper, senior fellow at the American Enterprise Institute

    In a series of private caucuses with negotiators, department officials conveyed that if committee members didn’t vote in favor, they would not only drop their small concession on loan caps but void other changes in the loan-repayment regulations, which were also part of the negotiations.

    “The threats were not thinly veiled,” one former Biden appointee said on the condition of anonymity due to conflict with their current job. “They were very bold.”

    Then, in January, as the committee negotiated accountability measures, department officials made a similar move, telling some committee members that they would scrap a rule aimed at holding nondegree programs and for-profit colleges accountable. At the time, the department was seeking to water down the rule known as gainful employment in order to match it with a new one for all other college programs.

    Although the department’s threats once again worked, one negotiator spoke up about the tactics at the meeting.

    In her closing remarks, Tamar Hoffman, a consumer rights attorney who had represented the higher ed legal aid groups on both committees, said she wanted to vote no but was choosing to abstain from the vote—a move that didn’t block consensus.

    The students covered by gainful employment were “just too important for me to take that risk,” she said.

    Lacey, the committee member representing nonprofit institutions, later told Inside Higher Ed that the department suggested to him they could leave gainful employment and its higher standards if the institutional representatives didn’t vote yes.

    A group of Republican members of the House of Representatives, standing in front of a painting of George Washington and behind a podium that says "One Big Beautiful Bill Act."

    Congress passed a slew of higher education policy changes in the One Big Beautiful Bill Act.

    Kevin Dietsch/Getty Images

    To Kent and some negotiators, reminding committee members what was at stake was just the art of the deal.

    “We were very honest throughout the process that this was a give-and-take. And we reminded people what was at stake and what the regulatory community could gain and lose,” Kent said. “The department was very clear in the caucuses that we were not threatening, that we were not strong-arming, but that we were simply reminding people what’s at stake.”

    Preston Cooper, a senior fellow at a right-leaning think tank who represented taxpayers in the negotiation, said the department’s actions were a reasonable use of its upper hand in the rule-making process. Like Hoffman, he wanted to keep gainful employment, but he knew that ED didn’t have to try for consensus at all. In fact, he noted, that’s what previous administrations have done, so, in his eyes, Kent wasn’t twisting negotiators’ arms. Instead, he was invested in creating long-lasting solutions.

    “They could have just treated neg reg as a formality, failed [to reach consensus] and then written the rule that they wanted to in the first place,” he said.

    Will Consensus Last?

    At most, consensus on the policies will last until the department receives public comment. At that point, the department has to review and respond to those comments and can make changes to the regulations.

    “Consensus doesn’t get you that much. The department could, and has in the past, completely backtracked,” a former Biden official said. “So it will be very telling whether the administration is simply trying to stick with its consensus agreements, or whether the administration is trying to be responsive to the comments they get and set in place rules that are legally defensible, politically sustainable and that will let them implement these rules quickly.”

    Beyond the immediate rule-making process, not everyone is as convinced as Kent that these consensus votes are enough to end the game of higher ed policy ping-pong that’s played out over the last 10 years.

    Committee members seated at four rectangular tables arranged in a square, covered with black tablecloths. Most have laptops in front of them.

    The Education Department held three rounds of rule-making sessions over the last four months.

    Jessica Blake/Inside Higher Ed

    Flores, another former Biden appointee who is now at New America, isn’t so sure that the department would have achieved consensus if they hadn’t used such a “fear-based approach.” As a result, she said, it makes the legitimacy of the agreement “somewhat surface level.”

    If these regulations do last, she believes it will be because they are rooted in legislation.

    “It won’t be a consensus, per se, that leads to ending the whiplash. It is that we have big legislative changes and those things are hard to change overnight,” Flores explained.

    But even then, she noted, the legislation was passed on a rushed schedule through an atypical budget bill without bipartisan support. If Democrats win back power on the Hill, there could be future legislation to tweak the reforms. In the meantime, she said, the department’s approach, which included little opportunity or consideration for public feedback, could lead to legal challenges.

    A group of bipartisan lawmakers has already introduced legislation that would adjust the programs eligible for loan caps, following significant pushback from nurses and other health-care professionals who were not deemed professional and placed in the lower bracket.

    “I’d expect a legal challenge on the professional definition as soon as the rule is finalized, which will lead these questions to kind of linger and might delay implementation down the line,” Flores said.

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  • Fahmi Quadir, Adtalem, and the High-Stakes Ethics of Short-Selling

    Fahmi Quadir, Adtalem, and the High-Stakes Ethics of Short-Selling

    In the realm of Wall Street, few figures challenge the system from within quite like Fahmi Quadir. Known in financial circles as “The Assassin,” Quadir has made a name—and a mission—for herself by exposing fraud and predatory behavior in publicly traded companies. But unlike most short-sellers chasing profits on volatility, Quadir brings a moral clarity to her work, emphasizing that short-selling can be an instrument of justice when practiced with rigor, purpose, and transparency. Her recent campaign against Adtalem Global Education, a for-profit college conglomerate, underscores the power—and danger—of this approach.

    Fahmi Quadir is the founder and Chief Investment Officer of Safkhet Capital, a short-only hedge fund she launched in 2017 at the age of 26. Safkhet is not your typical Wall Street operation. Built on deep forensic research and a mission to hold corporations accountable, the firm takes bold, high-conviction positions against companies it believes are engaged in deception, exploitation, or fraud.

    Quadir’s career trajectory is as unlikely as it is impressive. She originally planned to pursue a PhD in mathematics, but a series of encounters at New York’s National Museum of Mathematics—funded by quantitative finance giants like Renaissance Technologies—introduced her to a world where market dynamics and moral imperatives could collide. She quickly realized that capital markets held not just monetary power, but the potential to drive social change. With no formal finance background, she was identified by hedge fund insiders as a natural fit for short-selling. She dove in, eventually appearing in the 2018 Netflix documentary Dirty Money, which chronicled her pivotal role in the takedown of Valeant Pharmaceuticals.

    In February 2024, Quadir spoke at Stanford’s Graduate School of Business during an event hosted by the Corporations and Society Initiative (CASI). In a conversation moderated by JD/MBA student Thomas Newcomb, she unpacked her approach to short-selling—one defined by intellectual rigor, emotional resilience, and moral conviction.

    “Short selling means you borrow shares from your bank, sell them, and hope the price drops so you can buy them back at a lower price and pocket the difference,” Quadir explained. “But prices can go up infinitely. The potential losses on a short are also infinite.”

    That risk, she emphasized, is not theoretical—it’s lived. “You need to withstand a lot of pain,” she said. “Short-selling isn’t for everyone. It’s about doing uncomfortable work, challenging popular narratives, and being willing to look like a fool—until you’re proven right.”

    And yet, in Quadir’s view, this discomfort is necessary. “Shorting is important for the functioning of our markets. It provides liquidity and price discovery. But in a tiny corner of the market, there are those of us who are using short selling as a way to expose injustice and correct bad capital market behavior.”

    Quadir focuses on companies she believes are harming customers or committing fraud, rather than chasing momentum or hype. “We avoid situations of mass delusion,” she noted, “because mass delusion can stay delusional forever.”

    Her most famous case remains the takedown of Wirecard AG, a German electronic payments firm that collapsed in 2020 amid massive accounting fraud. Safkhet’s 25% short position on Wirecard was the culmination of years of research and collaboration with whistleblowers and law enforcement. It was a textbook example of what Quadir calls “story-driven” short-selling—piecing together a company’s past to uncover the rot at its core.

    She recounted a chilling origin story involving Wirecard’s founders, Markus Braun and Jan Marsalek—who is now a confirmed Russian agent—and an Austrian billionaire with ties to adult entertainment who allegedly used intimidation tactics to force a takeover. “When that’s part of your origin story,” she said, “whatever comes after is going to be epic.”

    But Quadir’s sights have recently turned toward a different kind of fraud—one operating under the guise of education. In January 2024, Safkhet Capital released a detailed short report on Adtalem Global Education, labeling it a “toxic byproduct of an imperfect higher education system.” The report highlighted Adtalem’s dependence on federal student aid—more than 70% of its revenue—and exposed dismal outcomes at its institutions, including Walden and Chamberlain universities, both of which serve a disproportionately high number of Black and working-class women.

    The report also noted a financial responsibility score of 0.2 out of 3.0—far below the threshold used by the U.S. Department of Education to flag institutions at risk of mismanaging federal funds. In Quadir’s view, Adtalem wasn’t just financially shaky—it was “completely uninvestable.”

    The market agreed. Following Safkhet’s report, Adtalem’s stock dropped 19% in a single day, with further losses in the days that followed. The company attempted to halt trading and accused Quadir of “short and distort” tactics—a claim that fell flat. “It was very satisfying after that hold was released to see the market validate our thesis,” she said. “Their strategy backfired.”

    At Stanford, Quadir reflected on why she made the Adtalem report public: “There was an informational vacuum around this company. The shareholder base was largely passive. No one was doing the kind of research or analysis we were doing.”

    But Quadir is quick to point out that short-sellers alone cannot fix a broken system. “Nothing is going to change if there isn’t enforcement,” she said. “We need to have some high-profile cases where people go to jail. These characters continue to get away with it or settle, and what happens? Their stocks go up.”

    She remains hopeful, however, that markets—if given the right incentives—can self-correct. “I think the greatest believers in market efficiency have to be short sellers. I believe capital markets can correct bad behavior, and that benefits all of us.”

    Short-selling, when practiced ethically, is not about sabotage. It is about storytelling, investigation, and risk—a lot of risk. Quadir’s approach requires patience, emotional stamina, and intellectual courage. It is not for the faint of heart. But in a world where regulators are often captured and media attention can be fleeting, short-sellers like Quadir play an essential, if controversial, role.

    Her work against Adtalem is not just a case study in financial activism. It is a call to reexamine how markets reward failure, how federal funds prop up predatory institutions, and how silence—especially in higher education—can be bought. As Quadir puts it, “We have the power to affect change. We just have to be willing to take the hits.”

    Sources

    This article draws significantly from the February 2024 Stanford Graduate School of Business event, A Conversation with Fahmi Quadir, Wall Street’s Fearless Short Seller, hosted by the Corporations and Society Initiative (CASI). The event transcript and summary are available at https://casi.stanford.edu/news/conversation-fahmi-quadir-wall-streets-fearless-short-seller.

    Additional information was compiled from the Safkhet Capital short report on Adtalem Global Education (January 2024), publicly available statements by Adtalem Global Education, coverage of Adtalem’s stock movement by MarketWatch and Bloomberg, investigations into Wirecard by the Financial Times, and Quadir’s portrayal in the 2018 Netflix documentary Dirty Money.

    Legal responses to Safkhet’s report were also noted from Pomerantz LLP and Block & Leviton, which opened shareholder investigations into Adtalem in January 2024. Data from the U.S. Department of Education regarding Title IV funding and financial responsibility scores was used to contextualize Adtalem’s regulatory risk.

    For further background on short-selling’s role in price discovery and enforcement gaps in higher education, see related coverage in The Wall Street Journal, The Chronicle of Higher Education, and Inside Higher Ed.

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