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Regulations Lead to Lobbying Surge by the For-Profit College Industry

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This week the for-profit college industry hosts its annual Hill Day, where students and industry representatives come to Washington to talk to their representatives and lobby for industry priorities. The lobbying conference comes as the industry finds itself fighting on all fronts to block a proposed rule meant to rein in what many are calling bad practices by the industry. This fight has spurred the highest lobbying spending by the industry in its nascent history.

In 2010 the for-profit college industry spent $7.57 million on lobbying, almost three times as much as it spent in 2009. The industry also doled out over $1.3 million in campaign contributions over the 2010 election cycle.

The subject of the lobbying fight is a proposed rule by the Department of Education aimed at stemming a growing student debt and default problem in the industry.

The new rules aim to mitigate a growing default and debt problem among for-profit college students. For-profit schools account for approximately 12 percent of all higher education students and they receive 25 percent of all Federal Pell Grants, while accounting for 44 percent of all student loan defaults.

Investigations by the GAO, the Los Angeles Times, and the Senate Committee on Health, Education, Labor, & Pensions (HELP) uncovered practices in the industry that indicated an emphasis on acquiring new students while ignoring the progress of those who have already been accepted to the schools. (These practices were uncovered in a 60 Minutes investigation in 2005.) This policy led to huge rates student dropouts and loan defaults. Meanwhile, the schools reaped profits from the government loans each new student received.

The rules, as proposed so far, label an institution eligible for federal funding as having "at least 45% of their former students paying down the principal on their federal loans; or their graduates will have a debt-to-earnings ratio of less than 20% of discretionary income or 8% of total income." Programs that would lose funding "will have less than 35% of their former students paying down the principal on their federal loans; and their graduates will have a debt-to-earnings ratio above 30% of discretionary income and 12% of total income." The Department of Education is set to release the final rules soon.

The Association of Private Sector Colleges and Universities (APSCU), the industry's advocacy and lobbying arm, officially states, "The Department's proposal will deny access by shuttering programs and putting millions of students out of higher education. That's a bad deal for all concerned."

Two weeks ago the fight came to a vote in Congress when, in an amendment to the Continuing Resolution to fund the government, the House of Representatives voted to deny funds for the enforcement of the Department of Education's rules on for-profit colleges on gainful employment. The vote was 289-136.

Ninety-two of those voting received contributions from the industry. The sixty-one lawmakers who received contributions and voted yes received more than twice as much ($8,263), on average, as the forty who received contributions and voted no ($4,035).

Letters of Opposition

Before the House even brought this issue to a vote, a smaller group of congressmen protested the proposed rules by sending letters to the Department of Education to state their objections. Twenty-three of the thirty-five lawmakers signing these letters received contributions from the industry, which accounted for over a quarter of all contributions made by the industry in the 2010 cycle. On average these twenty-three lawmakers received $16,756 from the industry.

Last year ProPublica examined the contributions to members signing protest letters over the education rules. This report looked only at contributions made in 2010 (not the cycle) and found that contributions from the industry skyrocketed to these members after the first letter was sent on March 22, 2010 and were often clustered around dates when the letters were sent. More than ninety percent of industry contributions to letter signatories in 2010 came on or after the date, March 22, that the first letter was sent.

A further examination shows executives and employees of for-profits clustering their contributions along with industry political action committees (PAC).

Campaign finance records show thirty-five contributions totaling $40,500 to Reps. Buck McKeon and John Kline from executives, employees, and political action committees of Corinthian Colleges, Education Management Corp., and the Keiser University system reported on May 28, 2010. The two Republican congressmen each held the position of ranking member of the Education & Labor Committee in 2010; Kline is currently the chairman of the committee.

McKeon and Kline had already signed a letter in opposition to the rule on March 22. Kline had also signed another letter on April 30. The congressmen are the top two recipients of for-profit college money among those who signed letters oppose the new rules receiving $99,750 and $71,500 respectively.

Another letter signatory who received clustered contributions is Rep. Donald Payne. On July 19 Payne cosigned a letter to the Department of Education opposing the rules. This came after having signed onto two other letters on March 22 and April 30.

From the month preceding the July 19 letter, Payne received sixteen contributions totaling $18,500 from ten different for-profit college organizations. This spurt of contributions accounted for all but $3,000 of Payne's haul from the for-profit industry. Payne would sign a fourth letter on September 8, a date on which he also reports receiving a $1,000 contribution from Bridgepoint Education.

Rep. Alcee Hastings signed his name to more letters than any other congressman. Hastings received seven contributions totaling $7,400 over the course of one week in April. This occurred in between Hastings signing a letter on March 22 and a second letter on April 30. According to Hastings' publicly available schedule the congressman met with representatives from Education Management Corporation the week after receiving these contributions. (None of the contributions to Hastings came from Education Management.)

These letters were part of a larger grassroots lobbying campaign by the for-profit college industry that included swamping the Department of Education with comments opposing the proposed rules. The rules ultimately received over 90,000 comments, many of them coming in bulk submissions from both opponents and supporters of the rules.

Grassroots Lobbying

Every time that Congress revisits the Lobbying Disclosure Act of 1995 the topic of grassroots lobbying disclosure emerges and is soundly defeated. In 1995 Sen. Carl Levin, leading the lobbying disclosure push, called for disclosure of efforts to stimulate the public to lobby the government and in 2007 Sens. Russ Feingold and Barack Obama did the same. The reason for these efforts to enhance disclosure around these activities relate not just to their effectiveness, but to the potential for fraudulent or deceptive practices.

Much of the for-profit college industry's grassroots efforts have revolved around a letter writing campaign by students and faculty to demand that the comment period for the rules remain open beyond the proposed closing date and that the proposal be rescinded. A massive deluge of letters succeeded in getting the Department of Education to extend the comment period.

A ThinkProgress* investigation revealed that some of the letters sent in opposition to the rules appeared to repeat numerous times, "[A]n Art Institute student "Alicia Laury" signed over 74 identical letters about her opposition to regulations on the for-profit college industry. Other names, with the same copy and paste letter opposing reform, appear dozens of times."

The industry also created a student organization, which is helping to organize this week's lobbying blitz, known as Students for Academic Choice, hired lobbyist Lanny Davis to create the lobbying and advocacy organization Coalition for Educational Success, and is now using a fish mascot to make their message go viral on the Internet.

The viral Internet marketing campaign proposes a mascot, the Fighting Salmon, for the for-profit industry. The Facebook fan page for this part of the campaign already has over 42,000 fans.

While the grassroots lobbying effort is in full force during this week's lobbying day, the inside Washington lobbying team assembled by the industry has been on the ground in increasing numbers over the past year.

Lobbying Team

The for-profit industry put together a large lobbying force over the year. Lobbying expenses ballooned from $1 million in the first quarter of 2010 to $3.25 million in the fourth quarter. Over the course of the year, the industry employed 158 lobbyists from thirty-seven firms and in-house operations.

Seventy-one percent of these lobbyists had previous government experience and twelve were former members of Congress. The former lawmakers included former congressmen Dick Gephardt, Bud Cramer, Al Wynn, Vic Fazio, Toby Moffett, Henry Bonilla, and former Sen. Tim Hutchison.

The lobbying firms include some of the most prestigious and well-connected in Washington including The Podesta Group, Akin Gump et al, Heather Podesta & Associates, Brownstein Hyatt et al, and Ogilvy Government Relations.

A number of these lobbyists were scheduled to speak at the Hill Day events this week including Moffett, Fazio, Hutchison, and Bonilla.

*ThinkProgress is a part of the Center for American Progress, which has run a campaign in support of the "gainful employment" rules.