September 23, 2015

For-Profit College Lobbyist Explains Decades of Fraud as Humanitarian Mission


A Politico profile of Secretary of Education Arne Duncan quotes just two commenters regarding the Obama Administration’s effort to curb abuses by for-profit colleges, and both of them have been long-time lobbyists for the industry: bulldog lawyer Lanny Davis and former congressman Steve Gunderson (R-WI), who heads the industry’s main trade group, APSCU.  Only Duncan is quoted defending Duncan, but the two lobbyists are given ample space to offer some of the most self-serving and misleading accounts imaginable about the controversy.

Gunderson, according to the piece, “admits [for-profit colleges] enrolled too many unqualified applicants who ended up defaulting on federal loans.” Then Gunderson is quoted directly:

We’re the first ones to say we should’ve been more careful. We were thinking with our hearts, not our heads…. We serve the most vulnerable students…

Yes, the record shows that was the case: A group of great humanitarians set out to help the needy.

No. That’s not what happened.  Numerous investigations by law enforcement, Congress, and the media show instead that predatory for-profit college companies have used deceptive and coercive recruiting tactics to lure people into high-priced, low-quality programs.  Often these companies have signed people up for programs even though the recruit could not benefit from the program, or the program would not provide the certification the person needed to get the career the person wanted.

The companies have done so, I believe, for one paramount reason: Because those people — low-income single parents, veterans, and others struggling to get ahead — are eligible to receive federal student aid money that the companies can immediately put in their coffers. Recruiters have been pressured to sign up as many students as possible, as fast as possible, by supervisors who have referred to students as starts, pieces of business, and even “asses in classes.”

“Thinking with our hearts?” Given the record, this statement by Gunderson is one of the most contemptible utterances imaginable. There’s a difference between taking a student’s cash and “serving” her. By now, Gunderson should know that.

In the same article, Washington wise man Lanny Davis, whom the Politico piece notes is known for defending foreign dictators, offers this pearl of reflection:

That whole mess showed me that Duncan didn’t understand Washington. This town is about the art of the deal, and he was on a jihad to root out the profit motive. It made no sense. He was demonizing Obama’s base.

By “Obama’s base,” I suppose Davis means people of color, who have attended for-profit colleges in large numbers. But seeking curbs on companies that prey on communities of color is not the same as “demonizing” those communities. Driving out bad actors frees up precious resources for schools — for-profit or non-profit — that are actually helping students to train for careers.

Just as ridiculous is Davis’s self-serving analysis of how Washington really works. In fact, it was the for-profit college lobbyists, for all their connections and experience, who miscalculated.  If the for-profit colleges had taken a page from another peddler of toxic products, the tobacco industry, they might have been able to make a deal at the start of the Obama Administration to reform to some extent while allowing some bad schools and practices to keep going.  Instead the for-profit college industry waged nuclear war on the regulation, buying, as Senator Dick Durbin put it, “every lobbyist in town,” engaging in dirty tricks against advocates for reform (disclosure: including me), and throwing campaign contributions at every politician ready to do its bidding.

The result of this hyper-aggressive strategy is plain: an industry in shambles. As the battle heated up, law enforcement and the news media increased their scrutiny, and uncovered abuse after abuse.  The information finally reached prospective students, and enrollments plummeted, along with industry share prices. One of the worst offenders, Corinthian, is finally dead, brought down by its lies and poor performance. Other predatory for-profit colleges companies — ITT Tech, Career Education Corp., EDMC — stand at the precipice of financial ruin, while those companies and others, including Kaplan and Apollo/University of Phoenix, face mounting federal and state law enforcement investigations for fraud and deception. Most of the big companies have recently fled Gunderson’s APSCU, whose strategy failed miserably.

The fight is far from over. The industry’s effort to strike down the Obama gainful employment rule — a modest measure that would weed out from federal aid eligibility just a small fraction of the programs that leave students with crushing debt — continues today in Congress and the courts. While Corinthian was declared a disaster area in need of a bailout — the company claims it is broke, and taxpayers must address mounting student demands for debt relief — the other predatory companies continue to take in billions of dollars in federal aid, as every day more students sign up for programs that will ruin their financial futures.

The outcome remains very much in doubt; predatory colleges can hang on to the hope that they can go back to their abusive ways. Donald Trump himself owned an unaccredited college that has been sued by New York’s attorney general.  And other politicians with financial ties to the industry continue to shill for it. Jeb Bush, who was paid $51,000 to speak to Gunderson’s organization last year, and tell them that the Obama rule is “a sledgehammer to the entire field of higher education,” wrote just yesterday in the Wall Street Journal, “I will … work to repeal … the Department of Education’s ‘gainful employment’ rule that punishes for-profit colleges.”

Because how can you punish people for thinking with their hearts?

UPDATE [10-14-15]: No one complained to me, but I have been thinking about this, and I want to add something. As I have said many times, there are well-meaning, ethical for-profit college operators and admissions representatives — I have spoken with quite a few — and while there is always a strong financial incentive to admit each student, sometimes these people are also focusing on giving a student an opportunity to enter the program, including students who have only a marginal chance of actually succeeding.  So some in the industry may indeed have been thinking with their hearts to a degree, even if their actions often resulted in a bad outcome for the student.  But that mindset surely has not been the main driver of APSCU members’ decisions over the past two decades to enroll thousands upon thousands of students whom their programs were not strong enough to help. The owners and executives of many of these schools behaved cynically, in pursuit of a torrent of taxpayer dollars, and Gunderson’s statement is equally cynical, unless, after almost four years at the helm of APSCU, he is completely ignorant of the realities of his sector.

This article also appears on Huffington Post.