November 20, 2020

Who Will Lobby Biden To Shield Predatory For-Profit Colleges?


Who Will Lobby Biden To Shield Predatory For-Profit Colleges?

Joe Biden and Kamala Harris have pledged to hold for-profit colleges accountable for ripping off taxpayers and ruining students’ lives, and their task is urgent, as many for-profit schools have expanded their deceptive and predatory practices to increase enrollment in the pandemic era. But the for-profit college industry is retooling its strategy, moving well-connected Democrats into key lobbying roles on their payroll. Now there are risks that industry-tied people will get inside the Biden administration. 

For-profit colleges are back to hiring Democratic lobbyists

The main for-profit college lobby group, CECU, which has consistently fought against even minimal accountability rules for career colleges, while harboring some of the worst offenders, announced this week, in the wake of Biden’s victory, that it had hired as its new CEO Jason Altmire, a Democratic former House of Representatives member from Pennsylvania, to replace retiring Steve Gunderson, a Republican former House member from Wisconsin. While in Congress, Altmire sided with the for-profit colleges in key debates and took campaign money from the industry.

Even before the election, but reading the tea leaves, CECU had revamped, hiring what Gunderson called, in an email to his mostly Republican members, a “Democrat lobby firm,” namely Fulcrum Public Affairs, to reach out to Black and Hispanic House members. And prior to election day, CECU already had stocked its annual CEO summit, held this week, with Democratic speakers. 

In the first Obama term, which started with Democrats in control of Congress, CECU (then called APSCU) employed as its top lobbyist Brian Moran, who was simultaneously the chair of the Virginia Democratic Party. As congressional and media investigations revealed egregious misconduct at numerous for-profit colleges, and as the Obama administration moved to increase protections against abuses, the industry hired a range of prominent Democrats to do its bidding, as lobbyists, strategists, and validators. They included Lanny Davis, Ed Rendell, Dick Gephart, Marc Morial, John Breaux, and Heather Podesta. 

Ramping up the hiring of lobbyists associated with the party in power, is, of course, what special interests do, and we can expect more to come.

In addition, some of the industry’s most persistent advocates are also actively seeking new Washington meetings in the wake of the election; they include Monroe College president Marc Jerome and the industry-tied Veterans Education Project, which differs from the many mainstream veterans groups that have demanded accountability for schools that abuse vets and service members. 

Key people on the Biden team have had ties to for-profit colleges

But an even bigger concern than this ramped-up industry advocacy work would be if the lobbying for for-profit colleges starts coming from inside the house.

Some of the people close to Biden evoke concerns on this score. Key Biden 2020 and Obama 2008 and 2012 campaign strategist Anita Dunn worked for years, through her public relations firm SKDK, helping Donald Graham’s predatory Kaplan Higher Education to gut the Obama rules aimed at holding predatory colleges accountable.

Graham took advantage of the lax regulatory environment under Donald Trump and his education secretary, Betsy DeVos, to fold his predatory school into Indiana’s public Purdue University, in a troubling deal that allows Kaplan to keep making big money, and no doubt Kaplan will want to fend off new efforts under Biden to probe such questionable converted for-profits. 

Biden transition leader Jeffrey Zients, a senior Obama White House official, is a long-time associate of Graham’s and at least twice granted Graham special White House access to argue against Obama regulations on the industry. Zients himself in 2009 pursued negotiations to buy a for-profit career school, Oklahoma-based Platt College, and visited the campus, although the deal was never concluded. But Zients did seem to listen when we met with him on those issues at the White House, and the Obama administration issued fairly strong college accountability rules on his watch. 

Tim Shriver has been floated as a possible Secretary of Education

But now both Politico and the Huffington Post are reporting that Tim Shriver, a long-time education advocate, is under consideration for, and apparently interested in, a top education job in the Biden administration, perhaps as Secretary of Education or Deputy Secretary. Shriver, a former public school teacher, is a nephew of Biden’s long time Senate colleague Edward Kennedy and, of course, of President John F. Kennedy. 

Shriver is tied to Leeds Equity Partners, which has owned and defended predatory colleges

Shriver may be a fine person, but he’s also the chair of the board of advisors of Leeds Equity Partners, a long-time bad actor in the for-profit college industry.

The private equity firm’s head, Jeffrey Leeds, is a Manhattan socialite who engineered, with Goldman Sachs, the 2006 deal that converted Education Management Corporation (EDMC) – which operated the Art Institutes, Argosy University, Brown Mackie College, and South University — from publicly-traded to privately-held, with a stake going to Leeds. The deal accelerated the corruption of EDMC, from a company with strong career training programs into a money machine for wealthy investors that wrecked the financial futures of students across the country.

Many people, including low-income single mothers, and U.S. military veterans like Chris Pantzke and Mike DiGiacomo, fell prey to EDMC’s deceptive and coercive recruiting and financial aid practices, and they ended up dropping out, without degrees or enhanced job prospects but deep in debt. Pantzke, who suffered from brain trauma during combat and severe post-traumatic stress disorder, was recruited for a two-year art degree at the Art Institutes of Pittsburgh online division with the promise of special disability services. He was then denied assistance after enrolling, had difficulty attending the online classes because of his disability, and found that the school had used all of his $65,000 in GI Bill benefits, while he incurred another $26,000 in student debt. DiGiacomo, who attended the Boston Art Institute school, in the end owed almost $100,000 for classes that did nothing to advance his hopes of becoming a video game designer.

There was also my Comcast repair guy from last year, Ralph, who attended the Art Institute of Washington, DC, from 2007 to 2011 because he dreamed of being an audio engineer. Ralph told me he never got the classes he was promised when he enrolled, was pushed by school administrators into high-interest private loans in addition to his federal loans, and now owes over $100,000 for an associates degree that did nothing for his career. Instead of recording music artists, he’s climbing walls to nail up cable. 

There were also Ami Schneider and Danielle Adorno and others deep in debt after attending Art Institutes and other schools, who came to Washington in 2016 to testify before a Department of Education meeting. The same Department of Education that Tim Shriver reportedly now wants to run. 

EDMC, which at its peak was getting as much as $1.8 billion annually in taxpayer-funded federal student grants and loans, was sued in 2011 for $11 billion by the U.S. Justice Department, which claimed the company defrauded taxpayers of that amount between 2003 and 2011. In 2015, EDMC agreed to pay fines or forgive loans worth some $200 million to settle claims with the Justice Department and 39 state attorneys general. At the time of the settlements, U.S. Attorney General Loretta Lynch said, “Operating essentially as a recruitment mill, EDMC’s actions were not only a violation of federal law but also a violation of the trust placed in them by their students—including veterans and working parents—all at taxpayer expense.”

By then, EDMC’s enrollments and stock price had plummeted, and Leeds and Goldman Sachs lost control of the collapsing company, which was taken over by its creditors, led by the firm KKR, in 2014.  In 2017, the Dream Center Foundation, a Los Angeles-based faith-oriented non-profit, bought the surviving EDMC schools, which led to further abuses of students and a major scandal when Betsy DeVos’s Department of Education schemed to prop up the schools and later deceived Congress about its decisions. 

In addition to EDMC, Leeds Equity has in the past been invested in other for-profit college operations, including EduK, which the Leeds firm described as “the largest private sector provider of postsecondary education in Puerto Rico”; Florida Technical College, which in 2018 agreed to pay the United States $600,000 to resolve False Claims Act allegations that it falsely submitted claims for students ineligible for federal aid because they were not high school graduates; and Ross University School of Medicine, operated by DeVry (now Adtalem), a company that has faced multiple law enforcement investigations and actions for past deceptive practices. Today, Leeds Equity remains invested in a range of for-profit education ventures. 

Tim Shriver has served on the Leeds Equity advisory board since it was created in 2010. He become the chair after former Secretary of State Colin Powell left the board, which he had chaired, in 2016, without public explanation but around the time Powell’s hacked emails revealed some troubling exchanges with Leeds.

In one 2015 exchange, for example, Leeds assures Powell that a New York Post story noting the federal lawsuit against EDMC and Powell’s connection has “No factual basis whatsoever,” when in fact the piece was accurate. In another, from 2014, Leeds discusses his interest in purchasing Corinthian Colleges, one of the worst-behaving predatory college chains, and a plan for ending the Obama administration’s supposed “war” on the industry. In a third, Leeds seeks a Powell connection in a Central Asian dictatorship: “did you or do you know people in Kazakhstan? One of our companies (INTO) is working on a large contract with leading business people in that country to facilitate their sending students to the UK and US. Would you know senior political and business leaders? The daughter of the former head of security is involved.”

Tim Shriver was on the Leeds Equity board while it owned a big stake in EDMC, while EDMC was publicly exposed — in 2010 Senate hearings, in a 2012 Senate report, and in numerous law enforcement actions and media investigations — as a predatory operation, and while Jeffrey Leeds fought to undermine Obama regulations like the gainful employment rule, which threatened to strip billions in taxpayer-funded student aid from poor-performing, overpriced EDMC schools like the Art Institutes. (DeVos got rid of the rule last year.)

Indeed, the extremely connected Leeds — his Yale College roommate was Sheldon Whitehouse, now a Democratic senator from Rhode Island — was one of the most aggressive advocates against for-profit college accountability during the Obama years. Leeds has shown a knack for using influential people, like Powell and Democrats Bob Kerrey and Alec Ross, to enhance his deal-making and manipulate federal policy. Leeds also served for years on the CECU board of directors, and Powell, Kerrey, and Ross were each dispatched over the years to speak at APSCU/CECU conventions and lend their credibility to the discredited for-profit college industry as revelations of its misconduct piled up. 

Leeds Equity Partners was previously called Leeds Weld Equity Partners, when the operation included former Massachusetts governor William Weld. The chairman of the Leeds advisory board then — the position that Tim Shriver holds for Leeds now — was a man named Rudolph Giuliani. Weld left the firm after briefly running in 2005 a Leeds-backed Kentucky for-profit school, Decker College, which the Department of Education cut off from federal aid, citing extensive violations of federal law. Giuliani officiated at Leeds’ 2012 wedding.

Shriver (and Weld) also served on the board of controversial for-profit K-12 operation Edison. 

Most of Betsy DeVos’s senior higher education advisers worked as senior executives and advisors for predatory for-profit colleges, and they have tailored their decisions at the education department to the wants of such schools. That shouldn’t be a surprise at this point; Trump’s presidency is the most corrupt in our history. But to serve the country, and to prevent a resurgence of Trumpism, Biden must repudiate Trump’s awful record, not echo it. He must act in the public interest. 

In 2014, messaging with Colin Powell about Obama administration efforts to curb predatory college abuses, Jeffrey Leeds indicated his belief that these efforts could be stopped if only he and Powell, the chair of his advisory board, could get to the right people inside the government. “If you and I had an hour with Valerie I bet we could make some progress on ending the war,” Leeds wrote to Powell, apparently referencing Valerie Jarrett, one of President Obama’s White House closest advisors. Leeds followed up by floating a plan to leverage a possible purchase of Corinthian Colleges’ campuses to shape the behavior of then-Education Secretary Arne Duncan and Education Under Secretary Ted Mitchell. Leeds wrote to Powell, “the creative way to do this is to approach Arne or his new guy, Ted Mitchell, who is well liked and respected, and say we will help and buy this schools, but here are the conditions.” (“Well liked” is old prep school lingo for “one of us.” Fortunately, Ted Mitchell, who did come from a for-profit education business background, instead accelerated efforts to hold bad colleges accountable, getting tougher in his actions as the depth of abuses was exposed.)

Biden should not hire Tim Shriver

Imagine Jeffrey Leeds’ excitement about the prospect of having his long-time, close, and paid associate Tim Shriver, the chair of his advisory board, placed at the top of the Biden Department of Education. 

If Biden and Harris are serious about protecting students and taxpayers from predatory college abuses, it would be a travesty for them to bring into the Department of Education someone coming directly from the payroll of Jeffrey Leeds. It would be an insult to all the students ripped off by the Art Institutes and other for-profit schools, and a threat to their futures.

NOTE: I have updated this article several times to add information I did not include when I initially posted it on the morning of November 20.