A private equity firm acquired the company that administers one of the major standardized college admissions tests earlier this year. The goal of the test mission won’t change.
The public’s mistrust of private equity firms has grown as they become more deeply rooted in the American economy; this mistrust was increased earlier this year when scores of Red Lobster restaurants, owned by one such company, shuttered.
An unrelated private equity deal that could have significant consequences for high school students nationwide received less attention a month before Red Lobster filed for bankruptcy.
The nonprofit testing company ACT, which offers its namesake college admissions exams to hundreds of thousands of high school students every year, was purchased by a Los Angeles-based investment firm, Nexus Capital Management, the company announced in April. At the time, ACT officials announced that the organization would become for-profit. ACT’s CEO, Janet Godwin, stated that this decision would enable ACT to continue assisting students to succeed while expanding its offerings into other areas related to job readiness.
In an interview, Godwin declared, “We are not veering an inch from our mission.” The exam costs roughly between $70 and $100, and she added that the cost will not change. Godwin said she did her research on Nexus and is confident that the ACT’s new partner shares her company’s values. However, the acquisition comes amid a broader concern about private equity and its expanding influence over American industries.
The transition raised questions in the field of college admission regarding what, if anything, the move could mean for students. Their attitudes toward standardized testing have significantly changed since the pandemic forced colleges to adopt test-optional policies.
The decision to become a for-profit company is so out of the ordinary that it has spooked some onlookers. One of the top teacher unions is against it. Dominique Baker, an associate education professor at the University of Delaware and a former dean of admissions at the University of Virginia, was equally unnerved about it.
“I could see a world where profit motives create some problems,” she added. “I am not saying that profit in and of itself is bad. I am saying that when venture capital and private equity firms behave in this manner, they are aiming for nearly infinite profit at all costs.”
