March 2, 2012

Romney Has Some Great Friends Who Are For-Profit College Owners

Romney Has Some Great Friends Who Are For-Profit College Owners

It’s not just NASCAR.  Mitt Romney’s “great friends” tend to be owners of things, owners who can make large contributions to his campaign and associated Super PAC.

Large donations are troublesome because they suggest the donor will have outsized influence on the politician if elected. It’s more troublesome when these great friends own businesses that seek to avoid government accountability for harms to the American people. And a great example of that is the for-profit college industry, which has engaged in more than a decade of waste, fraud, and abuse with taxpayer and student money.

Republic Report has more information about Mitt Romney’s ties to the controversial for-profit education industry, including poor performer Vatterott Colleges.

The New York Times reported in January  that Romney praised for-profit colleges, in particular overpriced Full Sail University without telling voters that his campaign and Super PAC had received nearly $100,000 from Full Sail CEO Bill Heavener and from C. Kevin Landry, chairman of TA Associates, the private equity firm that owns Full Sail.

But TA has other connections to Romney and the for-profit college industry.

As Republic Report’s Lee Fang has reported, Romney invested $10 million in Solamere Capital, a “fund of fund” investment company that invests clients’ money in elite private equity firms.  Romney has received between $100,000 and $1 million in returns from that stake.  Romney was, in fact, the first investor in Solamere, not surprising if you know that a founder and managing partner of Solamere is Mitt’s Romney’s son Tagg; another is Spencer Zwick, the chief fundraiser for Romney’s 2008 and 2012 campaigns. And one of the private equity firms offered to Solamere clients was TA Associates.  TA owns a number of for-profit colleges, including The Rocky Mountain School of Design in Colorado and the Los Angeles Film School in California.

In 2009, TA Associates acquired for-profit Vatterott Colleges. Senator Tom Harkin’s staff has obtained internal training documents from Vatterott that seemed to instruct recruiters  to use exploitative tactics: “We deal with people that live in the moment and for the moment. Their decision to start, stay in school or quit school is based more on emotion than logic. Pain is the greater motivator in the short term.”  Another Vatterott document described the target market for recruiters: “We serve the UN-DER world, Unemployed, Underpaid, Unsatisfied, Unskilled, Unprepared, Unsupported, Unmotivated, Unhappy, Underserved!”  The percentage of Vatterott students who default on their student loans  within three years of dropping out or graduating is a very-high 26.6%.  Student bulletin boards are full of complaints about the quality of a Vatterott education.

The New York Times story on Romney’s connections to Full Sail and TA Associates included a response from TA’s head:

Mr. Landry, the chairman of TA Associates, the Boston private equity company that owns Full Sail, said in an e-mail that he “had no idea” where Mr. Romney stood on for-profit colleges when he donated the $40,000 to the super PAC supporting his candidacy and that his financial support was based on other factors.

”I think Mitt is highly intelligent and can make good judgments,” said Mr. Landry, who has known the candidate through both political and business dealings. He said that his company and Bain Capital, the private equity company that Mr. Romney used to run, did one deal together — the 2002 merger of Ameritrade and Datek — but that Bain Capital has no financial interest in Full Sail.

If Landry volunteered to the Times the highly relevant additional information (which had appeared at the end of a long Boston Globe story) that TA Associates was also in business with Tagg Romney’s company Solamere, in which Mitt Romney was the first investor, the Times didn’t report it.

Inside Higher Ed  has just reported that the political action committee of the Apollo Group, owner of the largest for-profit education business, the University of Phoenix, has contributed the maximum $5,000 to Romney’s campaign, the company’s only contribution to a 2012 presidential candidate.

Another great friend for the For-Profit Education President.


Watch Mitt Romney praise Full Sail University and University of Phoenix but then struggle to defend his support for for-profit colleges when questioned by someone who actually understands the issue: