April 8, 2019

On For-Profit College Shutdowns, Lobbyist Gunderson Has No Shame

Regarding the recent epidemic of for-profit college closures, Steve Gunderson, the chief lobbyist for that industry, has taken his shamelessness to new heights — brazenly suggesting that the shuttered schools have no connection to his lobby group, CECU, when he knows full well that they used to be members, and mischaracterizing industry critics’ views on the closings.

In his seven years at the helm of CECU, former congressman (R-WI) Gunderson has tried to defend the indefensible record of his sector through a combination of bombastic pronouncements — e.g. that critics are opposed to “the very existence” of his industry — and complete distortions. His rhetorical approach, coupled with an industry stance of massive resistance to Obama administration measures to hold bad colleges accountable, completely backfired, as media and government probes highlighted blatant fraud and abuse, new regulations were issued, and enforcement increased.

The election of the former head of predatory for-profit Trump University as President of the United States, and resulting installation of privatizing Betsy DeVos at the Department of Education, seemed to offer a reprieve from oversight, but DeVos and her lieutenants have fumbled the assignment, and the industry remains in free fall.

Now, with a Democratic-controlled House of Representatives stepping up to hold accountable the predatory colleges that DeVos has sought to protect, Gunderson has again ratcheted up his falsehoods and distortions.

Gunderson’s most recent focus is the widely-publicized closings of most schools in three career college chains, those operated by Education Corporation of America (ECA), Vatterott Educational Centers, and, most recently, Dream Center Education Holdings, which acquired its schools last year from Education Management Corporation (EDMC). In all three cases, closures were sudden, came after the schools had run into trouble because of predatory behavior, and left many students with only bad options for continuing their career training.

On March 11, Gunderson issued a press release regarding the closures. “Once again,” Gunderson said, “schools that are not members of CECU are abruptly closing causing untold, and unacceptable damage to their students. In doing so, these schools just disappear. But all the multi-generation family-owned schools in our sector are left with a bad reputation created by somebody else.”

Gunderson’s statement was remarkably deceptive — and simply appalling. In fact, all three chains — ECA, Vatterott, and EDMC — had been members of CECU (formerly called APSCU) during Gunderson’s tenure there. So were Corinthian Colleges and ITT Tech, two other large, awful predatory chains that abruptly shuttered near the end of the Obama administration, as well as ATI, FastTrain, and Alta/Westwood, three smaller chains that closed after being exposed for flagrant fraud.

Other past CECU/APSCU members include the still-operating giant predatory chain operations Career Education Corporation, DeVry, Bridgepoint, and Kaplan (now Purdue Global).

The CECU members that remain include the Center for Excellence in Higher Education (CEHE), operators of CollegeAmerica, Independence University, and other schools, a company with a disgraceful record of predatory abuses against students and resulting law enforcement actions. Other current CECU members that have been the subject of law enforcement actions for abuses against students include Education Affiliates, Daymar College, and Lincoln Educational Services.

As far as I can find, Gunderson and CECU have never once publicly criticized any of these chains while they were operating, and certainly not while they were members of his organization. Yet now that some of these operations have disgraced themselves completely and shut down, Gunderson wants us to believe he’s never had anything to do with them.

Moreover, none of the current or past CECU members I’ve listed could fairly be described, as Gunderson suggests, as “multi-generation family-owned.” They’re publicly-traded corporations, or private equity-owned, or large companies passed from one owner to another, or, at least technically, are now non-profit organizations.

Family-owned schools, by the way, also have engaged in serious abuses — take Globe University, another former CECU member, owned by Gunderson friends the Myhre family.

In short, Gunderson’s ongoing effort to suggest that CECU is and has been made up entirely of ethical mom-and-pop operations is a lie and a disgrace.

As for the genuinely honest, effective career education schools out there, Gunderson has done them an extraordinary disservice over seven years by fighting rules that penalize bad actors — rules that would give a competitive advantage to the good schools.

Last week, Gunderson compounded his disgrace in a letter to Representative Susan Davis (D-CA), chair of the House higher education subcommittee. Gunderson’s letter offers an array of misleading statistics and again accuses critics of “declaring war on the one sector in higher education most engaged in providing underserved students with career skills,” that is, his sector. Gunderson also writes to Davis, “For reasons I don’t understand, our sector continues to be criticized for its marketing,” but surely he understands that for-profit colleges have repeatedly been caught engaging in deceptive marketing — lying to students about job placement, starting salaries, selectivity and urgency of enrolling, costs and financial aid, and many other matters.

Gunderson then ratchets up his deceptions when he returns to the issue of closing college chains:

I cannot begin to share with you my deep frustration with our opponents who have spent years seeking to destroy our sector. Now that they have succeeded in closing many schools they raise the very issue of “too many school closures!” One cannot have it both ways.

One isn’t trying to have it both ways.

Critics didn’t cause the closures of these chains; although the public exposure of abuses in the for-profit college industry may well have influenced the choices of some prospective students to avoid enrolling in for-profits entirely, the chains that have closed fell as the result of their own particular predatory practices and financial and operational mismanagement.

More importantly, critics aren’t faulting these predatory schools for closing; many of them should not have been operating, enrolling students, and taking millions and billions in taxpayer dollars in the first place.  What these schools deserve blame for is how they closed — shutting down abruptly, sometimes mid-semester, without giving students fair notice or taking adequate steps to guide students toward quality transfer schools or loan forgiveness options. The schools, knowing they were in deep trouble with accreditors or government overseers, also continued enrolling new students and banking their federal financial checks, so they could gather in as much cash as possible — even as, in the case of Dream Center, they diverted from students the federal aid stipends, the basic living expenses, to which the students were legally entitled.

The way these institutions closed affirmed what we already knew: the owners of these schools, to put it mildly, never prioritized the interests of students.

Surely Gunderson, a former congressman and member of that same House education committee, is smart enough to understand this distinction. But in the world of lies in which he’s lived for seven years, all that matters is maintaining the pressure on government to keep the taxpayer dollars flowing to his members. The rhetoric is a sideshow, though; what really keeps CECU members in the money are their campaign contributions to politicians, mostly Republicans but also some Democrats, who then do their bidding.

After Gunderson and an army of for-profit college lobbyists failed to halt the Obama reforms, CECU’s membership and revenue dwindled. But Gunderson got extra-lucky with Trump’s surprise victory. He had long ago hired hometown girl Callista Bisek for his congressional office, where she met Speaker Gingrich and eventually become his wife. At CECU, Gunderson hired Gingrich to promote his industry, and then Gingrich became an early and ardent Trump supporter.

All the crony connections were in place for a return to government complicity in predatory abuses by for-profit colleges, and that is exactly what happened. DeVos, who has barely concealed her contempt for students and Department career staff, stocked her senior team with former for-profit college lobbyists, dumped the Obama gainful employment and borrower defense rules, revived the industry’s worst accreditor, dismantled the Department’s enforcement unit, and stuffed the debt relief claims of defrauded students in a file cabinet. Last week the Department managed to get a panel of stakeholders to achieve consensus on rules that will further enable privatization of and decreased accountability for higher education — a “success” (Ivanka Trump mistyped congratulations to her “@BestyDeVos“) achieved by stacking the deck of negotiators, and making threats that, in the absence of consensus, the Trump-DeVos operation would write even more pro-industry rules.

Fortunately, all the DeVos cancellations of accountability rules have been managed poorly, she has repeatedly lost in court when her actions have been challenged, and her regulatory abandonment will not survive in the long term. Moreover, the actions of conscientious state attorneys general and other non-federal officials, as well as media scrutiny and the efforts of student advocates, will continue to squeeze bad actors and help increase protections for students.

Some scam colleges, though. will continue to operate, ripping off taxpayers and ruining students’ lives. Steve Gunderson and his fellow for-profit college lobbyists, and the owners they serve, will own the immense harm they’ve done to countless veterans, single mothers, and others abused by predatory schools.