The Subprime School Industry’s Lobbying ‘WAR’ To Maintain Billions In Taxpayer Subsidies

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"The Subprime School Industry’s Lobbying ‘WAR’ To Maintain Billions In Taxpayer Subsidies"

For years, much of the for-profit college industry has operated as a taxpayer-funded predatory lending operation targeting minority and low income students. As Pat Garofalo has noted, although just 11 percent of higher education students in the country attend for-profit schools, they account for 26 percent of federal student loans and 44 percent of student loan defaults. Sales representatives for for-profit schools, under the guise of being “guidance counselors,” instruct students to make use of Pell Grants, Stafford Loans, and other federal assistance — so much so that up to 90% of revenue for many of the top for-profit schools comes from the government.

Investigations by the GAO, the Los Angeles Times, and others have found that dozens of these for-profit schools systematically defraud their students by showing them fake job placement rates, providing false claims about the types of jobs they can attain, misrepresenting that their credits will transfer to state universities, and giving false promises that students do not have to pay back their loans.

To address these problems, the Obama administration is attempting to implement tougher regulations — dealing with what’s known as “gainful employment” — which would cause for-profit programs, as well as some programs at non-profit and state schools, to lose their access to public money if their graduates fail to meet a certain debt-to-income ratio or have high rates of student loan default. The regulatory drive has caused the for-profit “subprime schools” to retain a slew of lobbyists. ThinkProgress has dug into the predatory college lobbying lobbying campaign:

– Education Management Corporation (EMC), a for-profit company owned in part by Goldman Sachs that runs the Art Institute colleges and a number of other schools, has hired two infamous astroturf lobbying firms, BIPAC and the DCI Group, to fight the proposed regulation. In 2009, ThinkProgress exposed a fake organization of doctors maintained by the DCI Group to oppose health reform, and the firm is known for generating fake “citizens groups.” In one set of letters to the Department of Education generated by EMC, an 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.

– Much of the for-profit lobbying campaign is organized through an industry trade association called the Association for Private Sector Colleges and Universities (APSCU). On its website, the association posted series of revealing PowerPoints detailing the industry’s efforts to kill the proposed regulations. In one presentation given by APSCU with slides titled “WAR,” employees are instructed to “Prepare for Battle” by raising money for key lawmakers, hosting political fundraisers at schools, and organizing “students and employees” for the lobbying effort. A memo distributed by the group lays out a point by point guide for carefully orchestrating visits from lawmakers to their college campuses. Executives from subprime schools are even expected to assemble “at least four students who reflect the diversity of the campus” to be ready to meet with members of Congress.

– Top lobbyists from the subprime school industry designed a strategy to “target” key members of Congress. One presentation given by industry lobbyist Brian Moran instructs schools to ask lawmakers to write letters stating their opposition to reform. Indeed, prime recipients of industry donations, including Sen. Lamar Alexander (R-TN), former Rep. John Spratt (D-SC), and Rep. John Kline (R-MN), authored letters to the Department of Education raising concerns about proposed regulations concerning the industry. Kline, who accepted over $100,000 in subprime college cash, is now seeking to roll back existing regulations so his benefactors can obtain even more taxpayer subsidies.

As Campus Progress’ Kay Steiger has reported, for-profit schools have tapped into a network of lobbyists who specialize in generating op-ed pieces and other forms of elite praise for controversial clients. Steiger documented that Lanny Davis, a lobbyist now representing for-profit colleges, has a history of work on behalf of unsavory actors, including dictators. Most recently Davis signed up to represent, but then, after public criticism, dropped, Ivory Coast leader Laurent Gbagbo, who refused to leave office after he was defeated in his country’s presidential election. Steiger also pointed out that Al From, a Democrat defending the industry’s practices, “is a consultant to Akin, Grump, Strauss, Hauer, & Feld LLP, a law firm that has lobbied on behalf of for-profit giant Kaplan University, which is actively opposing the regulations.” From did not disclose that connection when publishing an op-ed opposing regulation of the for-profits. Similarly, former Congressman Bob Barr has published several pieces defending the for-profits, without disclosing that he is employed by one.

The American Legislative Exchange Council, a nonprofit that helps corporate lobbyists draft legislation for state lawmakers, is now working with subprime college lobbyists. Paul DeGuisti, a representative from the for-profit group Corinthian Colleges, and Melissa Garrett, of for-profit college company Bridgepoint Education, worked with ALEC to write a template resolution for state representatives and state senators across the country to introduce titled “Resolution in Support of Private Sector Colleges and Universities.”

APSCU boasts that it created a front called “Students for Academic Choice,” and that it “developed a leadership team, created by-laws, collected 32,000 signatures opposing Gainful Employment, and now building [sic] database of positive student experiences.” As the Associated Press reported, lobbyists from APSCU even set up an “election” to make the group appear to be led by students. Bruce Leftwich, a former Senate liaison for the Republican National Committee now working for APSCU, left an online trail of Facebook messages, press releases, and other announcements recruiting students to join his Students for Academic Choice front.

The proposed regulations have prompted for-profit colleges to hire a wide array of other lobbying firms, including the Raben Group, Elmendorf Strategies, Prime Policy Partners, Barnes and Thornberg, the Moffet Group, the Podesta Group, Akerman Senterfitt, Clark and Weinstock, Heather Podesta and Partners, K & L Gates, Dow Lohnes Government Strategy, former Rep. Al Wynn (D-MD), Wheat Government Strategy, and Dutko Public Affairs, just to name a few.

For more information, read our Progress Report item, “For-Profits, Not Students.”

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