Puerto Rico, the poorest and most economically unequal jurisdiction in the United States, is in the midst of a fifteen-year economic depression—one that has only been deepened by the austerity measures imposed as part of the island’s bankruptcy process, and exacerbated by a string of disasters, including hurricanes, earthquake swarms, and a pandemic. As the island continues to grapple with these challenges and attempts to mount a recovery, one of its central institutions—the University of Puerto Rico (UPR)—has been financially hobbled, not only limiting its ability to help drive a rebound, but also threatening to limit students’ educational choices to lower-quality, for-profit schools.

The University of Puerto Rico—the island’s eleven-campus public university system—has been, for over a century, a major contributor to the island’s economy and wellbeing, and as such, according to many economists, can and should play a major role in its recovery. But instead, the UPR has been the target of some of the earliest and most painful budget cuts. Since the U.S. Congress put an unelected Financial Oversight and Management Board (FOMB) in charge of Puerto Rico’s bankruptcy process and budgetary decisions in 2016, the UPR budget has been reduced nearly by half, and undergraduate tuition has increased threefold. Our analysis of data from the National Center on Education Statistics (NCES) reveals that enrollment across UPR campuses has dropped by 14 percent between 2017 and 2020.1

The University of Puerto Rico is an anchor institution that, in addition to offering two- and four-year degrees, also offers graduate degrees in areas critical to Puerto Rico’s recovery, such as planning, engineering, and environmental and computer sciences as well as law, medicine and other professional degrees. Not only has the UPR made a historical contribution to the territory’s economy and the upward mobility of its students, it is also a Land Grant and Sea Grant institution that operates hospitals, museums, botanical gardens, and research centers such as the Seismic Network that served us so well during the 2020 earthquake swarm. Multiple economists from Puerto Rico and elsewhere have denounced the cuts to the UPR’s funding as draconian, excessive, and ultimately counterproductive for the island’s much-needed economic recovery. 

As a Public Institution Is Weakened, Private Equity Sees an Opportunity

One sector does stand to benefit directly from the shrinking and deterioration of Puerto Rico’s eleven-campus public university system: for-profit colleges and universities. In spite of demographic trends in Puerto Rico (decreased natality and increased migration) that lowered the number of residents enrolling in college by 20 percent between 2013 and 2020, for-profit institutions were the least affected, with a reduction in enrollment of only 7 percent. In contrast, during the same period, enrollment in private nonprofits decreased by 27 percent, and in public universities by 15 percent. And while for-profit universities accounted for only 4 percent of all graduate enrollment in Puerto Rico in 2013, this figure had more than doubled, to 10 percent, by 2020.

A particularly visible player in Puerto Rico’s for-profit sector is NUC University, which recently changed its name from National University College to highlight its “university” status—despite having largely conferred only two-year associates degrees and vocational certificates for most of its existence. NUC has gone on an advertising binge, with frequent television and newspaper ads, and numerous billboards of all sizes in the main streets of towns such as Mayagüez, including two large, impossible to ignore banners right next to and across the street from the UPR campus’s main entrance. NUC University has absorbed some other, older for-profit institutions on the island, including specialized colleges that offer one or two-year degrees in health or technical fields, such as Ponce Paramedical College (POPAC), and Instituto de Banca (IB). The resulting bundle was acquired in 2007 by the private equity firm Leeds Equity. Together, the institutions owned and managed by Leeds have at least nineteen campuses in Puerto Rico, and additional campuses in Florida (Florida Technical College and DAVE–Digital Animation and Visual Effects) and online (NUCO–National University College Online.) 

A for-profit university placed a billboard across the street from the Mayaguez campus of the University of Puerto Rico. Source: Ricardo Fuentes-Ramirez

If the name of this private equity firm seems familiar to readers, it might be because, together with Providence Equity and Goldman Sachs, Leeds was behind the now infamous publicly traded company, Education Management Corporation, which had a portfolio of many (now-defunct) for-profit institutions such as Argosy University. The company eventually filed for bankruptcy in 2018 after being at the center of lawsuits and scandals related to its predatory recruitment practices, high loan default rates, and poor student outcomes. 

Federal data suggests that the Leeds-owned for-profit colleges and universities in Puerto Rico face some of the same issues as their for-profit counterparts stateside, including lower retention and graduation rates and higher loan default rates. NUC, for example, invests in instruction only 29 cents for every dollar it collects in tuition and had a cohort default rate of 19.4 percent in 2018,2 more than triple the University of Puerto Rico’s average cohort default rate across its campuses for the same year (6 percent), and far above the national rate for all states and territories in the United States (7.3 percent). 

Leeds may be the main stateside firm investing in for-profit educational institutions in Puerto Rico (and the second most-prolific in the United States, according to some reports), but it is certainly not the only one. For example, in 2012, Renovus Capital Partners acquired EDIC College, a privately owned for-profit college—the sixth largest private equity acquisition in postsecondary education between 2007 and 2019. In spite of Puerto Rico’s 2016 bankruptcy (or perhaps because of it), Renovus doubled down and increased the size of its for-profit education portfolio in 2020, merging EDIC with Columbia Central College, a previously privately owned for-profit specializing in health sciences. 

A third private equity firm operating in Puerto Rico is Arist Education, which in 2014 purchased the nonprofit medical school Ponce Health Sciences University, turning it into a for-profit school managed by a firm called University Ventures. The school, now branded as a leading producer of bicultural medical and health practitioners in the United States, is opening another campus in Missouri and plans to start several graduate programs there in 2022. 

The context in which Arist made this investment in Ponce Health Sciences University is particularly intriguing. Between 2017 and 2021, University of Puerto Rico’s budget was slashed by half, and its health and medical sciences campus—where 100 percent of students from programs such as internal medicine and nursing routinely pass their board exam on the first try, and where most of the doctors in Puerto Rico have started or completed their careers—was hit particularly hard by cuts. The reduction in funding was so severe at UPR’s health and medical sciences campus that one of its programs, neurosurgery, recently lost its accreditation simply because it did not have the funds needed to pay for basic resources, such as faculty and equipment. 

With UPR’s prestigious health and medical sciences campus reeling from budget cuts and unable to maintain past programs and enrollment, Ponce Health Sciences University is poised to take advantage. And while Ponce is a for-profit medical school—a relative rarity in the sector—it seems to have retained some of its nonprofit arms, which apparently will help it acquire programs and talent shed by the collapsing UPR campus. In particular, Ponce can employ accomplished researchers in the field—some of them alumni of the same public medical UPR campus that is losing resources right now—and has managed to obtain some of the most important government COVID-19-related research grants

Private Equity’s Outsized Footprint on Higher Education in Puerto Rico Might Get Bigger

So, while the FOMB, the Puerto Rican government, and even some academic administrators cite population loss and demographic changes as one of the main reasons behind the budget cuts to the public university and the closure of hundreds of K–12 schools, private equity investors seem to have been confident in finding enough student clients to make a profit. 

Currently, more than one in five college students in Puerto Rico is enrolled at a for-profit college. Current data from NCES (as of March 6, 2022) indicates that, in total, there are 157 campuses offering some kind of post-secondary degree in Puerto Rico, and they enrolled 194,589 students in fall 2020. Of these campuses, 88 are for-profit, and together these enrolled a total of 44,200 students. By our count, 25 of the 88 for-profit campuses belong to one of the three private equity firms discussed above (Leeds, Rendezvous, and Arist), and together, these have a combined enrollment of 30,013—over two thirds of the students attending a for-profit in Puerto Rico, and one out of every seven college students there. The remaining 63 for-profit schools enroll relatively fewer students, and the majority (56) are technical/career colleges offering only certificates, and in some cases associate degrees, that traditionally have not competed with the public university, where students enroll seeking a four-year degree or higher.

The combination of the dramatic budget cuts currently imposed on the University of Puerto Rico, the tuition increases, and demographic changes in the island are widely understood to imply a significant decrease in the numbers of students UPR can enroll and serve. This is reflected in the institution’s most recent fiscal plan. From an equity perspective, this is problematic, for at least two reasons. 

First,  historically, the University of Puerto Rico has used an admissions formula that relies on two indicators—GPA and the College Board’s entrance exam—which means that, although UPR has a high proportion of low-income students (74 percent of undergraduates were awarded Pell grants), because of the relationship between income inequality and standardized testing, whenever its campuses or programs shrink in size, low-income students attending underserved public high schools are more likely to be left out. Second, the smaller UPR campuses—the ones most likely to be closed or “consolidated”—tend to be precisely the ones that serve students who are not only low-income, but also, because of a dearth of public transportation options in Puerto Rico, tend to be place-bound. 

As the result of the budget cuts imposed on the UPR by the FOMB and the government of now-deposed Ricardo Rosselló, not only will the public university in Puerto Rico have fewer resources to keep contributing to the territory’s economy and to help their undergraduate and graduate students be successful, but also it will also likely shrink in size. And the smaller it gets, and the more campuses it closes, the more vulnerable students are likely to find themselves in public higher education deserts, where their options are limited to private campuses, many of which are for-profit—or even covert for-profits—of questionable quality. 

The discussion takes a higher sense of urgency when it is once again contextualized within the island’s fifteen-year economic depression. For Puerto Rico to change its current economic and demographic trajectory, it needs a public higher education system that is capable of generating the research and graduating the professionals required to drive economic recovery. The island needs a higher education system that values and treats Puerto Rico’s students as the nation’s future, and not as mere consumers tasked with generating profits. We urge policy makers take all this into account, increase investment in public higher education, and put systems in place to keep for-profit institutions accountable. 


  1. Unless otherwise noted, school enrollment figures cited in this commentary come from authors’ calculations from the Integrated Postsecondary Education Data System (IPEDS) at the National Center for Education Statistics, https://nces.ed.gov/ipeds/use-the-data.
  2. The U.S. Department of Education defines the cohort default rate as the percentage of a school’s borrowers who enter repayment on certain Federal Family Education Loan (FFEL) Program or William D. Ford Federal Direct Loan (Direct Loan) Program loans during a particular federal fiscal year, October 1 to September 30, and default or meet other specified conditions prior to the end of the second following fiscal year.