Things will be different in 2016 for the state’s public higher education system, now that a new president for the University of North Carolina system has been named and the beleaguered chair of its governing board is gone.
But what changes are coming are far from known, with plenty of uncertainty for the 17-campus system about what priorities the governing board and former U.S. Education Secretary Margaret Spellings will have when she starts in March.
Spellings, who spent much of her career working for former President George W. Bush, will become the head of the UNC system with little background in higher education itself. But, she’s also spent decades in Texas and Washington immersed in both public education policy and Republican politics.
She touched upon the intersection of those worlds in a press conference  Friday, when she was asked about how her political experiences would play into her new UNC role.
“It’s a fantastic way to make policy, in a political setting, because that’s the setting we operate in,” Spellings said.
Her selection was a rocky process with faculty upset  at being shut out of the process, lawmakers trying at the eleventh hour to change the search process  and the exposure of deep divisions among the 32 members of the UNC Board of Governors, all of whom receive appointments from the Republican-led state legislature.
Then Monday, just three days after she was hired, the chair of the UNC Board of Governors announced he was resigning from the board, following calls from his colleagues to step aside as a result of the acrimonious search process and the jumbled dismissal months earlier of Spellings’ predecessor, Tom Ross.
John Fennebresque remarked at Spellings’ hiring on Friday that he had tears in his eyes, happy that the search had turned up what he hoped to be an excellent leader for UNC. On Monday, he released a statement saying it was time for him to leave.
“[T]oday I am stepping down from the Board to make way for and encourage new leadership,” Fennebresque said in a written statement.
His permanent replacement as board chair will follow a required 30-day waiting period. His slot on the board will be filled by the state Senate, presumably when they come back into session next spring unless a special session is convened before then.
The board meets Thursday and Friday  in Chapel Hill, as part of its regularly scheduled monthly meetings.
Spellings’ future at UNC
Spellings will lead a 17-campus system often held up as one of the nation’s leading higher education systems, with more than 220,000 students enrolled and a funding model traditionally supported by taxpayers at some of the highest levels in the nation.
She will come to the UNC system as Republican leaders in the state have urged considering streamlining the scope and size of UNC’s offerings. Gov. Pat McCrory attracted attention in his first year of office for comments he made on a national radio show criticizing some liberal arts majors and saying the state  needed more educational programs concentrated on the state’s business needs so that student “butts can get jobs.”
A University of North Carolina governing board member told N.C. Policy Watch earlier this year  to expect an effort “right-sizing” the system, after several years of steady tuition increases to make up for drops in state funding.
At UNC, Spellings’ pay will be much higher than the $600,000 base salary made by her predecessor, with Spellings slated to receive a $775,000 base salary, car allowance, use of the UNC president’s house, an executive retirement package and a chance to earn even more, with a “performance-based compensation” bonus to be set by the board.
She’ll be facing faculty and staff that haven’t seen significant pay raises of their own for several years. This year brings a $750 bonus that all state employees are slated to receive.
Spellings appears comfortable in the often-tumultuous world of politics and policy, having served as Bush’s senior advisor when he was Texas’ governor and then following Bush to Washington, D.C. to first become his domestic policy advisor and then his education secretary from 2005 to 2009. She is best known for implementation of the controversial “No Child Left Behind” accountability measures for K-12 education.
In Washington, she was also recognized for being well-versed in education policy, though her primary effort in the field of higher education – the Spellings Commission  — was never fully implemented, said Robert Shireman, a senior fellow with The Century Foundation who works on student loan and debt load issues.
Spellings also faced criticism while in Bush’s Cabinet of her handling of a student loan scandal, in which student loan companies overcharged the federal government by more than $1 billion through a loophole in regulations. Though Spellings shut down the practice  in 2007 when she was education secretary, she did so while letting those that had taken advantage of the loophole avoid repayment  of more than $278 million.
“She let them off the hook when she took action,” Shireman said about the student loan problems. “She gets credit for taking some action, but she did not punish the wrongdoers.”
Spellings and the for-profit education industry
In the years between the Bush presidency and now, she’s also had connections to the for-profit education industry.
Spellings has been the advisory board chair since 2014 for Ceannate , a privately-owned company with subsidiaries that specialize in helping universities and colleges lower the percentage of its graduates who are in default on their student loans.
A call to Ceannate’s Illinois headquarters for comment was not returned.
Federal rules restrict institutions from receiving federal education money if more than 30 percent of its recent graduates have defaulted on their student loans – a problem that primarily plagues for-profit educational institutions, said Elizabeth Baylor , an expert on post-secondary education with the Center for American Progress.
Companies like those Ceannate has in its portfolio are then hired by colleges and universities to contact students in default on their loans and often steer them to declare their loans are in forbearance or need to be deferred.
That can be problematic if there’s an opportunity for students to instead begin repaying their loans, and avoid the increased fees and interest that will stack up when a loan is deferred or in forbearance, said Baylor, who was not familiar with Ceannate but has knowledge of how the industry generally operates.
“My question would be to find out what the practices of Ceannate are,” Baylor said. “Are they putting students at the center of their business, or are they working with the colleges at the expense of the students?”
Spellings also spent a year in on the board of the Apollo Group, the parent company for the University of Phoenix.
The U.S. Department of Defense recently moved to block the education company  from operating on its military bases. The Apollo Group reported in a regulatory filing that the military is considering tougher sanctions against the company and a total ban on allowing active-duty service members to use the online education company for a DOD-funded tuition program.
In a press conference Friday, Spellings said for-profit education providers had provided needed solutions for working adults where traditional higher education fell short.
“There is plenty of room and plenty of opportunity for every single higher education provider,” Spellings said. She added, “You name it, we need it.”
David Halperin, a Washington lawyer and writer who is critical of the for-profit industry, said Spellings’ close ties with the for-profit education industry “is troubling.”
Many rules surrounding recruitment in for-profit higher education were relaxed during the Bush administration, Halperin said, allowing the industry to flourish.
“She certainly was in a position to know what was happening,” he said.
Spellings also joined the board of the Apollo Group in 2012, a time when accusations about predatory practices with for-profit educators like the University of Phoenix were widely known.
“It was precisely then that the industry was in a fight for its life,” Halperin said. “They were hiring these people to validate what they were doing and Margaret Spellings allowed them to do that.”
Watch Margaret Spellings first press conference as President-elect below :