work-related post-secondary education. The foundation embraced non-traditional education as a significant element of its new mission statement, which it calls Goal 2025. The aim is to increase the percentage of Americans holding post-high school education credits to 60 percent—-whether that’s demonstrated by a college degree or a credential from another kind of provider.
Merisotis says only 45 percent of Americans now hold post-secondary credentials. “We’re 10th or 11th in the world,” he says.
Lumina is no longer awarding grants to academic institutions or specific workplace training programs. Instead, the foundation is trying to spur systemic change within the US network of learning opportunities that equip students to participate in the modern workforce.
The growing array of new education providers will help realize Lumina’s goals, Merisotis says. “Our role is to be a catalyst for large-scale change to serve people better,” he says.
Lumina is now deploying more of its money within the private sector. “We increasingly are getting into impact investing,” Merisotis says.
The foundation has allocated 2 percent of its endowment to investments that advance its core mission. That includes its stakes in venture firms, which include White Plains, NY-based Rethink Education. Rethink was an investor in Smarterer, (now part of edtech company Pluralsight) which offers online tests to gauge an individual’s mastery of certain subjects or digital skills, such as the use of particular computer applications—no matter where they were learned.
Under regulations governing non-profit foundations, Lumina is allowed to invest in for-profit ventures when the main goal is not to make money, but to accomplish the goals of its program, Merisotis says. If the foundation reaps a return of capital, the money could be redeployed into further program-related investments in for-profit or non-profit entities, he says.
Lumina has supported government policy changes that would, among other things, have the effect of nurturing the growth of edtech companies. In his testimony before a U.S. Senate committee about the reauthorization of the Higher Education Act, Merisotis urged legislators to allow students in non-traditional learning programs to tap into federal financial aid.
Merisotis insists, however, that Lumina’s aim is not to help private edtech companies compete with colleges and universities for students or financial resources. The goal is to expand capacity, building on the learning opportunities that established schools already provide, he says.
“I believe strongly in the non-profit model,” Merisotis says. “We’re certainly not trying to promote for-profits at the expense of non-profit institutions.”
Merisotis says he has had to address suspicions that the foundation has a business-oriented agenda. These concerns arise because of the way its big endowment was created, he says. Lumina was formed in 2000 as a consequence of an asset sale by USA Group, a non-profit private guarantor and administrator of education loans, to Sallie Mae (the Student Loan Marketing Association) (NASDAQ: SLM), a major provider of private education loans.
In such cases, government rules bar the for-profit business from unfairly gaining excess assets by acquiring a non-profit that had never paid taxes, Merisotis says. Regulations required the merger partners to carve out a substantial portion of the assets and vest them in a non-profit organization called a “conversion foundation,” which became Lumina.
Traces of that history still remain in Lumina’s leadership. James Lintzenich, the chair of Lumina’s board, was the CEO of USA Group until it was absorbed in 2000, when he served as chief operating officer of Sallie Mae until 2001. But Merisotis says Lintzenich left those corporate posts 15 years ago, and Lumina’s current 12-person board includes only two of the original board members.
“We literally have no relationship to the student loan industry,” Merisotis says.
While Lumina has no intent to disrupt traditional higher education, Merisotis says, existing colleges and universities need to be supplemented by new providers. College is out of reach for many Americans, including minority and low-income students, he says. “It’s increasingly unaffordable to most people,” Merisotis says. It’s also not clear, he says, that investing in the established academic model will achieve a broad expansion of access to post-high school education.
Lumina and Purdue University are supporting an ongoing series of Gallup polls to gauge whether, and why, college graduates believe their education was worth the cost. The second poll in the series, released in September, found
