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For-Profit Colleges Spend Big on Lobbyists to Fight Obama Regulation

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With the May 27 deadline approaching to submit comments to the U.S. Department of Education, big for-profit colleges are pulling out all the stops to gut the Obama Administration's proposed "gainful employment" rule, which is aimed at curbing predatory career training programs.  Taking some of the $33 billion a year they've been getting from taxpayers, the industry is spending big on lobbyists, with a continued heavy emphasis on hiring former Members of Congress and ex-Capitol Hill staffers. Buttressed by a steady flow of campaign contributions from the for-profit college industry to legislators, these lobbyists lean on their former Capitol Hill colleagues to lean on the White House to water down the rule, as happened in 2011 with a prior version of the regulation (which the industry then managed to get thrown out entirely by a federal judge).

Many of the best-known lobbyists from the 2011 fight are still in the game, drawing big fees to meet with Administration officials, Senators, and Representatives and claim that the Obama regulations will eliminate good educational opportunities for students, when in fact the rule is structured to take away federal aid only from those programs that consistently leave students worse off than when they started, buried in debt. They also are arguing that the rule represents another Obamacare-style government interference with the free market, when in fact many big for-profit colleges get 80 to 90 of their revenue from federal taxpayer dollars.

A review of White House meeting logs, as well as the latest lobbying disclosure forms, covering federal lobbying activity from January to March 2014, not just on gainful employment but on a range of issues, shows:
  • Former Senators Trent Lott (R-MS) and John Breaux (D-LA) continue to lobby for the for-profit colleges' trade association, APSCU, and got paid $90,000 in 2014's first quarter. APSCU CEO Steve Gunderson, a former House member (R-WI), and APSCU Executive Vice President Sally Stroup, who was Assistant Secretary of Education under George W. Bush, also went to the White House in February to lobby on gainful employment. APSCU's members have included for-profit colleges that were recently shut down for systematic fraud, and the organization represents many more schools currently under investigation by federal and state authorities.
  • Apollo Group, which runs the biggest for-profit college, the University of Phoenix, spent $490,000 in the first quarter of 2014 lobbying in Washington, with $320,000 of that spent on in-house lobbying and the rest divided among lobbying firms stocked with former government staffers who have passed through the revolving door: (1) Brownstein Hyatt Farber Schreck, with a team led by lobbyist Alfred Mottur, once an aide to then-Senator Ernest F. Hollings (D-SC); (2) Elmendorf Ryan, with lobbyists including Steve Elmendorf, a deputy campaign manager for 2004 Democratic nominee John Kerry and once chief of staff to then-Representative Richard Gephardt (D-MO); and (3) the Penn Hill Group, featuring Victor Klatt, a former aide at the U.S. Department of Education under then-Secretary Lamar Alexander, now a Senator (R-TN), and Alex Nock, who worked for Rep. George Miller (D-CA), the lead Democrat on the House education and labor committee as deputy staff director from 2007-10. If that wasn't a large enough contingent of former Hill staffers on the Phoenix team, Apollo recently also hired a team of revolving door lobbyists from Crossroads Strategies LLC, including former aides to Lott and Senators Richard Shelby (R-AL) and Thad Cochran (R-MS).  Apollo is under investigation by the attorneys general of Florida, Delaware, and Massachusetts, and recently received a broad subpoena from the Department of Education's Inspector General regarding its business practices.
  • Education Management Corp. (EDMC) spent: $60,000 on Barnes & Thornburgh, including Edward Ayoob, former legislative counsel to Senate Majority Leader Harry Reid (D-NV), and Richard Boykin, former chief of staff to Representative Danny K. Davis (D-IL); and $70,000 on Prime Policy Group, with a lobbying team headed by Charlie Black, long-time GOP lobbyist and an advisor to Reagan, Bush, Bush, McCain, etc.  EDMC's CEO Edward West also met personally with White House staff to discuss gainful employment. EDMC -- whose students have for years complained about deceptive recruiting, deceptively high prices, and poor placement efforts -- is now under investigation by a bipartisan group of twelve state attorneys general who in January issued investigative demands on the company, seeking information, according to EDMC, on recruiting, placement, lending, and other issues. This followed the announcement in December that EDMC agreed to pay $3.3 million to settle charges with the Colorado attorney general that its Argosy University engaged in deceptive marketing practices. In yet another case, half a dozen states, along with the U.S. Justice Department, have sued EDMC for fraud, alleging the company paid its recruiters based on the number of students signed up, in violation of federal rules.
  • Kaplan, under investigation by five state attorneys general, reported spending $100,000, all by in-house lobbyists including Rebecca Campoverde, who was Assistant Secretary for Legislation and Congressional Affairs at the Department of Education under George W. Bush and before that served as Deputy Staff Director of the House Education and Workforce Committee. Kaplan's disclosure form does not mention Donald Graham, CEO of Kaplan parent company Graham Holdings, formerly known as the Washington Post Company.  Although there is no reason to believe the company was legally required to register Graham as a lobbyist, he was perhaps the most influential advocate for predatory colleges in the previous gainful employment debate, and he personally lobbied the White House again this year. In this morning's Washington Post, the paper, unfortunately, goes against the views of leading newspapers around the country and editorializes against the gainful employment rule, essentially repeating Graham's arguments, and those of APSCU, that the rule will hurt low-income students. Although Graham sold the newspaper to Jeff Bezos last year, his niece Katharine Weymouth remains the newspaper's publisher.
  • Corinthian Colleges, now under investigation by at least 15 state attorneys general, the U.S. Justice Department, Consumer Financial Protection Bureau, the Securities and Exchange Commission, and the Department of Education, spent $60,000 for a lobbying team from the law firm Akin Gump that includes former congressman Vic Fazio (D-CA), who once told for-profit college executives that Senator Tom Harkin (D-IA) was waging "jihad" against them.  Corinthian also reported $250,000 in in-house lobbying spending.
  • Career Education Corp., under investigation by at least a dozen state AGs and the SEC, spent $10,000 on an outside lobbyist and also sent on a White House lobby visit its Vice President of External and Regulatory Affairs, Diane Auer Jones. Jones, like APSCU lobbyist Sally Stroup, served for a period as Assistant Secretary for Post-Secondary education in the George W. Bush Education Department.  (Tony Podesta's mega-lobbying group, which had been reporting a steady $90,000 each quarter in past years from CEC, apparently is no longer lobbying for the company.)
  • Bridgepoint Education, which Senator Tom Harkin in 2011 called "an absolute scam" for its unbelievably low spending on instruction versus huge expenditures on marketing, and is under investigation by at least four state AGs, spent $505,000 on federal lobbying in the first quarter of 2014, according to disclosure forms, with outside lobbyists from Holland & Knight, Crossroads Strategies, Dickstein Shapiro, Thorn Run Partners, Fierce Isakowitz & Blalock, and Clark Geduldig Cranford & Nielsen, with a lobby team that includes former Rep. Deborah Pryce (R-OH).
  • DeVry, under investigation by the Massachusetts and Illinois AGs, as well as the Federal Trade Commission, spent $100,000 on federal lobbying in the first quarter, with $50,000 going to the firm Thompson Coburn and $40,000 more to Heather Podesta's firm.
  • ITT Tech sent its CEO, Kevin Modany, to the White House to lobby on gainful employment in February, just a week before the company was  sued for deceptive and unfair loan practices by New Mexico's AG and the CFPB. The company also is under investigation by a dozen more state AGs and the SEC.
This accounting just represents some of the major players in the industry; there are many more companies engaged in lobbying on the gainful employment rule.  And none of the lobbying disclosure information covers the names and fees of strategic advisors, public relations experts, celebrity endorsers, and other non-lobbyist lobbyists paid by the industry to try to influence the outcome of the fight. So the total bill for this activity -- pressuring the government to act in a manner that will harm students and taxpayers -- is hard to calculate.  What is clear, given that many for-profit colleges get most of their money from federal dollars, is that you're paying for it.

CORRECTION:  This piece originally reported that Education Management Corporation spent $50,000 on the lobbying group Mercury, including former Representatives Vin Weber (R-MN) and Max Sandlin (D-TX).  In fact, the disclosure form I relied upon was for a different company, Educational Credit Management Corporation, which contracts with the Department of Education to act when student debtors file for bankruptcy on their federal loans. I regret the error. My piece did report correctly that the same Mercury team, with Weber and Sandlin, received $60,000, in the last quarter of 2013, to lobby for for-profit college company Capella Education.

This article also appears on Republic Report.