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For-Profit Colleges Mount Unprecedented Battle For Influence In Washington

First Posted: 04/25/11 04:16 PM ET Updated: 06/25/11 06:12 AM ET

That letter and others sent by Republicans and Democrats fighting against regulations over the past few months have also focused on two lines of attack pushed by industry lobbyists: one against the Department of Education, and another against the Government Accountability Office.

Rather than focusing on the substance of the rules at issue, the industry has instead tended to assert that it is under attack by the federal government.

The coalition in particular has been vocal in criticizing the GAO, Congress’ independent investigative arm, over corrections made to an undercover investigation of for-profit college recruiting last year. The group has sued the GAO and publicly attacked the agency. Members of Congress have followed suit, calling into question the report’s findings.

The GAO has stuck by its conclusions in the report, which was updated to include tweaks to language and more elaborate descriptions after GAO lawyers reviewed undercover footage. Lobbyists for the industry say the changes should invalidate the entire report.

The video evidence shown, however, is compelling: Recruiters encouraged investigators posing as prospective students to falsify federal financial aid documents and refused to provide details about tuition costs until they had signed paperwork to enroll in classes.

“I don’t recall any kind of frontal assault the way they have mounted this one against the GAO,” said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars & Admissions Officers, which mostly represents nonprofit colleges. “We saw with our own eyes how they were lying to and defrauding students.”

The coalition has also sought to discredit the Department of Education by accusing department officials of conspiring to develop the regulations with Wall Street short sellers –- investors who profit when stocks tumble. The theory is based on four meetings that Department of Education officials had with short sellers who had done analysis on publicly traded for-profit schools, and a number of mostly one-way emails from four hedge fund managers to officials in the department.

Representatives of for-profit colleges, who are also invested in how stocks fare on the market, have met privately and publicly with top-level Department of Education officials and the Office of Management and Budget on nearly 50 occasions over the past year, according to public schedules posted by the department.


Some of the most vocal regulatory critics in Congress have also been the most well-compensated by the industry.

Rep. John Kline (R-Minn.), who chairs the House Education and the Workforce Committee, received more than $40,000 in campaign contributions during the last election cycle. His political action committee, the Freedom & Security PAC, received an additional $35,000.

Kline was instrumental in introducing the legislation in the House that aimed to block the gainful employment rules, and led the effort earlier this month to have the prohibition included in the budget bill.

Rep. Howard “Buck” McKeon (R-Calif.), another longtime member of the education committee, received more than $20,000 from the industry in his personal campaign and more than $65,000 to his political action committee, the 21st Century PAC.

While McKeon was serving on the committee during the Bush administration, he owned stock in one company, Corinthian Colleges Inc., at the time the restrictions on online programs were being lifted.

Staffers for McKeon and Kline did not respond to requests seeking comment.

Democrats who have opposed regulations on for-profit colleges have also been rewarded with contributions. Reps. Andrews and Carolyn McCarthy (D-N.Y.), who signed onto the letter pushing for the budget bill rider, are among the top five recipients of campaign cash: Andrews received more than $70,000, and McCarthy more than $41,000, during the last election cycle.

Andrews said he has been involved with the industry for a long time and believes that career programs can offer many benefits for students.

“I do what I do based upon what I think is right,” he said. “I’m interested in the outcome for the student and the taxpayer, not on the outcome for the school. But I also disagree with people who say that by definition for-profit education is bad. I think bad education is bad, and I think we ought to come up with a measure to figure that out.”

One notable exception is Rep. George Miller (D-Calif.), the former chairman of the education committee until this year, who took in more than $105,000 from the industry -- the most of any single candidate in Congress.

His son also works for a lobbying firm in California that lobbies for Education Management Corp., the second-largest publicly traded college corporation.

But Miller has supported the Department of Education’s proposed regulations, and has been critical of attempts to delay or water them down.

A spokeswoman for Miller said the contributions are “completely separate” from any policy work. “The fact is that Rep. Miller has a long and successful track record of holding for-profit schools accountable and reforming this industry,” said the spokeswoman, Melissa Salmanowitz.

Other top recipients of campaign money who have not supported the industry include Senate Majority Leader Harry Reid (D-Nev.), who took in more than $50,000; and Iowa Democrat Harkin, who received about $13,000 but has held a series of highly critical hearings probing the industry.

Looking at the February House vote, however, Democrats who supported the amendment to block regulations received on average nearly twice as much in political donations as Democrats who opposed the regulations.

Harris Miller, the president of the trade group representing for-profit colleges (who is not related to George Miller), downplayed the importance that political contributions play in changing policy, pointing to the donations to many who have actively opposed the industry.

“I know some people like to think there’s this simplistic correlation between writing a check and getting a vote,” he said. “I wish it were that easy.”

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