For-Profit Colleges, Allies Spend $4.5 Million Lobbying Against Gainful Employment

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For-profit colleges and their allies in the battle against greater regulation by the U.S. Department of Education spent more than $4.5 million on lobbying during the first three months of this year, putting the industry on pace to spend more than two times what it did in 2010.

Most of the money was spent to lobby in favor of a budget amendment that would have blocked the department’s imposition of so-called gainful employment rules.

That budget amendment to H.R. 1 – House Republicans’ first round of budget-cutting in a continuing resolution – was not included in the final budget compromise reached earlier this month and signed into law by President Barack Obama on April 15. Any lobbying expenditures during the final days of budget negotiations are not reflected in the most recent reports, which cover Jan. 1 through March 31.

The total amount of lobbying expenditures on matters pertaining to federal student financial aid programs is more than half of the amount spent by the for-profits and their allies during all of 2010, reported by the Huffington Post to have totaled $8.1 million for all of 2010.

Other first-quarter forms were much blunter about the purpose of the lobbying: Career Education Corp. – which operates American InterContinental University, Sanford Brown Colleges and Institutes and Colorado Technical University – reported paying the Washington firm, the Podesta Group, $210,000 to lobby in favor of the H.R. 1 amendment that would have blocked the gainful employment rules.

Those rules, which have not yet been issued in final form, seek to tie the cost of higher education programs to the amount of money a graduate can expect to earn as a way to reduce the number of higher education loans that are going into default.

Rules were to have been issued early last summer, were delayed until late July and have been under review since then because of the avalanche of more than 90,000 comments that the department received about them.

As announced last year, the rules would limit schools’ full participation in federal loan programs if repayment rates fell below a certain level – currently proposed at about 45 percent – and would terminate loan program participation if repayment rates were under 35 percent.  The programs would be assessed individually, according to each campus, and the Education Department has estimated that about 5 percent of programs might be cut from the federal financial aid programs.

The gainful employment rule is part of a package of Program Integrity regulations that include a prohibition on paying recruiters based on the number of students they sign up and a renewed requirement that online schools operating in multiple states must be approved to operate in each state where students reside.  Although the latter rule takes effect in July, the department had said schools in the process of obtaining authorization have until 2014 to be in compliance.

After the anti-gainful employment language was not included in the final budget document, the Coalition for Educational Success – representing a group of for-profit education companies – said it would continue to work with members of Congress who have opposed the gainful employment rule, including Rep. John Kline (R-Minn.) chairman of the House Education and the Workforce Committee, who has argued against the new rules.

Asked for comment on the lobbying amounts and what action they might take next, a spokesman for the coalition did not respond.

There has been repeated speculation as to when the final gainful employments rules might be issued. On April 20, the department provided schools additional information about what colleges and programs would be covered by gainful employment standards and said that the full regulations were being “finalized.”

The big spenders

 In addition to its payment to Podesta, Career Education Corp. reported spending $410,000 on its own for lobbying, also largely in support of the anti-gainful employment amendment to H.R. 1.And American InterContinental University reported spending $60,000 with yet another lobbying group. That makes the total for the company $680,000 for lobbying in just the first quarter of this year.

Among the other big spenders:

  • The Coalition for Educational Success – a new group of for-profit education companies that was formed to represent some of the new players in the aggressive for-profit education field.  The coalition paid a total of $310,000 for lobbying in the quarter to five different lobbying firms.
  • The Association of Private Sector Colleges and Universities (still legally the Career College Association) spent $247,000 lobbying on its own and paid the Podesta Group $150,000 for lobbying during the quarter.
  • The Washington Post and its subsidiary Kaplan Inc. spent a total of $490,000 on lobbying, including paying five different lobbying firms.
  • The Apollo Group, which operates the University of Phoenix, the largest for-profit school, spent $235,000 for five different lobbying groups.
  • Bridgepoint Education - which was the subject of a separate hearing by the Senate Health, Education, Labor and Pension Committee on how the company turned a 300 plus student school into a 78,000-student online college in a year - spent $250,000 with four different lobbying groups.
  • Education Management Corp., a third of which is owned by the investment group Goldman Sachs, spent $235,000 on five lobbying groups.
  • Corinthian Colleges, a firm that is under investigations by several federal and state agencies, spent $220,000 on lobbying.
  • DeVry Inc., a large private engineering college, spent $160,000 on lobbying.
  • Universal Technical Institute, whose schools teach information technology, spent a total of $250,000 on lobbying.
  • Keiser University of Florida, which has declared itself a nonprofit though many of the school’s main assets are still in private hands, spent $120,000 on lobbying.  Even as a nonprofit, because it provides career education, Keiser will have to comply with the new Program Integrity rules.

Finally, another interesting player in the for-profit rules lobbying effort was the U.S. Chamber of Commerce, which reported paying a lobbying group, the Penn Hill Group, $30,000 to lobby on three education issues, first of which was the gainful employment rule.