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Former Lobbyist With For-Profit Colleges Quits Department Of Education

Former Lobbyist With For-Profit Colleges Quits Department Of Education

Reprinted with permission from ProPublica.

A former lobbyist for an association of for-profit colleges resigned last Friday from the Department of Education, where he had worked for about a month.

As ProPublicareported last week, the Trump administration had hired Taylor Hansen to join the department’s “beachhead” team, a group of temporary hires who do not require approval from the U.S. Senate for their appointments.

 On the day Hansen resigned, Sen. Elizabeth Warren (D-MA)., sent a letter to Secretary of Education Betsy DeVos, citing ProPublica’s reporting and requesting more information on Hansen’s role.

“Mr. Hansen’s recent employment history clearly calls into question his impartiality in dealing with higher education issues at the Department of Education, and raises alarming conflict of interest concerns,” she wrote.

Jim Bradshaw, an education department spokesman, told ProPublica in an email that the department was “grateful for [Hansen’s] contributions.”

“He served ably and without conflict and decided his service had run its course,” said Bradshaw. Hansen did not immediately respond to ProPublica’s request for comment. Bloomberg first reported Hansen’s departure.

Hansen isn’t the only hire from the for-profit college industry to join the Department of Education via the beachhead team. The New York Timesreported that Robert S. Eitel, a former compliance officer at for-profit college operator Bridgepoint Education Inc., is working at the department. Eitel, a former deputy general counsel at the Education Department from 2006 to 2009, has been a critic of federal regulations on for-profit colleges.

Warren also criticized Eitel’s hiring in her letter to DeVos. She noted that the Consumer Financial Protection Bureau last September ordered Bridgepoint, Eitel’s former employer, to refund $23.5 million to students whom it had deceived into taking out loans that cost more than advertised. Bridgepoint is currently under investigation by the Department of Justice, the Securities and Exchange Commission, and the attorneys general of New York, North Carolina, California and Massachusetts, Warren wrote.

Until July 2016, Hansen worked as a registered lobbyist for the nation’s largest trade group of for-profit colleges, Career Education Colleges and Universities, or CECU. He lobbied to weaken a regulation known as “gainful employment,” which permits the education department to rescind federal funding from schools whose students fail to earn enough to repay their debts.

Just weeks after Hansen was hired by the Education Department, it began scaling back the regulations by delaying the deadline of certain provisions of the gainful employment rule. The move gives colleges three extra months to submit appeals and publish disclosures about the high debt loads of their graduates, while the department reviews the implementation of the rule.

Hansen told ProPublica that he wasn’t working on the gainful employment regulations at the department, but he would not specify his responsibilities. He declined to comment on whether his role raised a potential conflict of interest.

Hansen worked as CECU’s director of legislative and regulatory affairs from December 2013 to July 2016 and was a registered lobbyist for the group for the first half of 2016. Over the past five years, CECU has spent about $3.5 million lobbying on behalf of its more than 600 member institutions, the majority of which are for-profit colleges.

Shortly after his inauguration, Trump relaxed the Obama administration’s restrictions on hiring lobbyists. He issued an ethics order that allowed former lobbyists, such as Hansen, to work for agencies that they recently sought to influence. The policy does preclude former lobbyists from working on any “particular matter” on which they lobbied.

Hansen would have been ineligible to work at the Education Department under the Obama administration’s policies.

Hansen’s father, William Hansen, served in the early 2000s as deputy secretary of the Education Department, where he helped to roll back regulations on for-profit colleges. After leaving the department, William Hansen worked for several years as a lobbyist for Apollo Group Inc., the parent company of for-profit college chain the University of Phoenix.

Ben Miller, the senior director of postsecondary education at the Center for American Progress, said that the lack of transparency around Hansen’s hiring raises concerns about temporary hires at the Education Department.

“His entire tenure shows we need much more information on how the beachhead teams work,” Miller said.

IMAGE: Betsy DeVos testifies before the Senate Health, Education and Labor Committee confirmation hearing to become Secretary of Education on Capitol Hill, January 17, 2017. REUTERS/Yuri Gripas

Capitalism And Education Are Incompatible Partners

Capitalism And Education Are Incompatible Partners

The news left tens of thousands of students stunned: Just as the fall semester was starting, ITT Technical Institute, one of the nation’s largest chains of for-profit colleges, shut down all its campuses, stranding some would-be graduates a few months shy of a diploma.

As wrenching as the closure is, though, it should have happened sooner. Like Corinthian Colleges, a for-profit chain that collapsed last year, ITT Tech was forced to the brink because the Obama administration has cracked down on an industry that thrived on shady practices. Those colleges have made their money by recruiting desperate and vulnerable students of modest means and charging overly high tuition rates.

For-profit colleges deliver very little of what they promise. You’ve no doubt heard some of their ads pledging lucrative careers in a growing field of endeavor — health care or technology, perhaps. The truth is that workers who attend for-profit colleges often end up earning less than they did before they pursued a degree, according to a study by the National Bureau of Economic Research.

There is a lesson here beyond the fortunes of for-profit schools. For all the worship of capitalism in the American psyche, the simple truth is that the profit motive doesn’t work everywhere. While the drive to make money can spark innovation, spur economic growth and fuel general prosperity, it can also corrupt entire enterprises. Not every sector of the economy ought to be privatized.

Higher education provides as good an example as any of the corrupting potential of capitalism. The United States already operates one of the best systems of higher education in the world; that’s why our colleges and universities attract so many foreign students. And for all the outrage, completely justified, over student debt, the nation also offers a system of affordable community colleges.

But back in the 1990s, liberals joined conservatives in their enthusiasm for privatization, which led to an explosion in the growth of for-profit schools. Investors camped out. Private equity groups swooped in. The industry had to deliver more and more profits.

But teaching — actually teaching students a skill, a craft, a vocation — is hard work that doesn’t promote easy profits since most students can’t afford to pay exorbitant rates for college. Indeed, most public colleges don’t charge enough tuition to cover their costs. State legislatures need to make up the rest.

So how did the Corinthians and ITT Techs of the world deliver the profits they promised? A few years back, now-retired Sen. Tom Harkin, an Iowa Democrat, launched an investigation into the industry. He found that associate-degree and certificate programs at for-profit colleges cost about four times as much as those at community colleges and public universities. He also found a system that was abusive and fraudulent.

For-profit schools send their recruiters into working-class neighborhoods, where they home in on desperate adults yearning for stable jobs with better wages. They inflate their job placement numbers, promising that a degree will pave the road to prosperity. The recruiters use hard-sell techniques that maximize federal grants and loans — that’s where most of their profits come from — and then encourage prospective students to take out more loans if federal aid doesn’t cover their costs. As a result, many of those students end up without degrees but head-over-heels in debt.

The strategies used by for-profit colleges may represent the profit motive run amok, but the demise of ITT Tech still serves as a reminder that capitalism is no cure-all. Some enterprises should be run like a business — appliance stores, technology companies, aircraft manufacturers — with all the risks and rewards that generally apply. But there are other undertakings that merely serve a public good. Trying to wrest a profit from those will result only in exploitation.

(The same applies, by the way, to for-profit operators of charter schools serving grades K-12. While the vast majority of charter schools are run by non-profit organizations, a few states have encouraged for-profit companies to take over schools. The result has been shabbily run classrooms that drain taxpayer dollars.)

Capitalism certainly has its place. But it doesn’t deserve to be worshipped as a god doling out good things to all. The profit motive doesn’t improve every endeavor. Instead, it simply pollutes some enterprises that it should not touch.

(Cynthia Tucker won the Pulitzer Prize for commentary in 2007. She can be reached at cynthia@cynthiatucker.com.)

Obama Administration Rules Target For-Profit Colleges

Obama Administration Rules Target For-Profit Colleges

By Chris Kirkham, Los Angeles Times (MCT)

The Obama administration on Thursday will publish new regulations intended to target for-profit career colleges that leave students with debts they cannot repay.

The U.S. Department of Education rules will sanction schools with students who carry too much debt compared with their earnings after graduation. Programs that fail to meet debt-to-income requirements for two out of three consecutive years would lose eligibility for federal student loans and grants — the primary revenue stream at for-profit colleges.

The for-profit college industry includes schools such as the University of Phoenix, ITT Technical Institute and Everest College, owned by Corinthian Colleges Inc., based in Orange County, Calif. Corinthian has been in the crosshairs of more than a dozen state and federal regulators for more than a year amid allegations that the company falsified student job placement rates and steered students into high-interest loans.

The Santa Ana, Calif.-based company announced in July that it would sell the vast majority of its campuses, after the Department of Education restricted access to federal student loans and grants.

U.S. Education Secretary Arne Duncan said the new regulations are intended to weed out programs that rely heavily on taxpayer subsidies but don’t follow through on promises of career training.

“The quality of these programs today varies tremendously,” Duncan said in a briefing with reporters Wednesday. “While some are strong, today too many of these programs fail to provide the training (students) need, while burying them in debt they cannot repay.”

Some for-profit schools receive up to 90 percent of their revenue from federal loans and grants.

Students at for-profit schools default on federal loans at a much higher rate than those at traditional public colleges — more than 19 percent after three years, compared with less than 13 percent at public institutions. For-profit schools enroll about 11 percent of all college students, but the sector is responsible for 44 percent of student loan defaults.

The move by the Education Department is a second attempt at regulating career colleges, after a federal judge struck down an earlier version of the rules in 2012. An industry trade group successfully sued to halt the regulations, calling them “arbitrary.”

The rules apply to for-profit colleges and certificate programs at community colleges and private nonprofit schools. The regulations apply to each college’s specific programs, such as criminal justice or nursing, meaning some could be disqualified while others remain eligible.

The Education Department will judge schools by tracking their graduates’ finances, using Social Security Administration data. To pass the test, graduates must have annual loan payments that are less than 20 percent of discretionary earnings (based on a complex formula set by the federal government that compares income to certain poverty levels) or 8 percent of total earnings.

Programs with higher debt-to-income burdens for several years in a row would be disqualified. For example, programs would lose eligibility if graduates have loan payments that are more than 12 percent of total income and 30 percent of discretionary income in two out of three consecutive years.

The new regulations also require programs to prominently disclose information on graduation rates and loan debt to prospective students.

The department estimated that approximately 1,400 programs would fail the debt-to-income test out of 5,500 covered by the regulations.

Both the for-profit college industry and its critics took issue with the new regulations.

An industry trade group, the Association of Private Sector Colleges and Universities, called it a “fundamentally flawed and misguided proposal.”

“The regulation will hurt the very students it is intended to help by restricting educational access for millions of students and unfairly targeting certain institutions,” Steve Gunderson, the group’s president and chief executive, said in a statement.

Several student advocacy groups argued the rules were too weak. The administration dropped an earlier part of the rule, for example, that would have also penalized programs with too many students defaulting on loans.

“While the administration deserves praise for issuing a final rule despite relentless lobbying by the for-profit college industry, it can and must do much more to protect students and taxpayers from well-documented abuses,” said Pauline Abernathy, vice president of the Institute for College Access & Success, an Oakland, Calif., group that focuses on student debt issues.

AFP Photo

Jeb Bush Denounces Obama Rule To Hold For-Profit Colleges Accountable For Burying Students In Debt

Jeb Bush Denounces Obama Rule To Hold For-Profit Colleges Accountable For Burying Students In Debt

by David Halperin, Republic Report.

Former Florida governor Jeb Bush (R) last week denounced President Obama’s proposed “gainful employment” rule, which is aimed at holding accountable those career education programs that take taxpayer dollars but consistently leave their students with overwhelming debt. According to a post on Twitter by the trade association of for-profit colleges, APSCU, Bush on Wednesday told that organization’s annual convention in Las Vegas, “The new [gainful employment] regs are a sledgehammer to the entire field of higher education.”

Bush, a potential 2016 presidential candidate, has styled himself a champion of K-12 education policy reforms, and just two days earlier, Bush, addressing K-12 issues, had tweeted that “strong accountability policies yield rising student achievement.” But in the context of higher education, Bush seems less interested in hold poorly performing schools accountable. While APSCU’s name — which stands for Association of Private Sector Colleges and Universities — stresses the free-market image it wants to project, the biggest for-profit colleges receive about 86 percent of their revenue from taxpayer dollars.

Given their strong dependence on federal dollars, it’s not surprising that for-profit colleges are large donors to candidates for federal office, and the industry made a major investment in in the 2012 campaign of Mitt Romney, who strongly endorsed for-profit higher education on the campaign trail. Any potential 2016 presidential candidate might be attracted to the financial largesse of APSCU’s members.

Although some reputable, responsible colleges are members of APSCU, the organization is dominated by large publicly traded and private equity-backed companies, many of which — Corinthian, ITT, Education Management Corp., Kaplan, Career Education Corp. — are now under investigation by federal law enforcement agencies, state attorneys general, or both. Pending lawsuits brought by government authorities charge that big for-profit colleges have engaged in deceptive advertising; coercive boiler-room recruiting targeted at veterans, single mothers, and others; misrepresentations about program costs and job placement; student loan fraud; and other misconduct.

President Obama has said that some for-profit colleges are “trying to swindle and hoodwink” students, because they only “care about the cash.” Their students, the president has said, “can’t find a job. They default…. Their credit is ruined, and the for-profit institution is making out like a bandit.” Acting to protect the bad behavior of such companies, APSCU has led the charge to block the gainful employment rule, which would cut off federal aid to career college programs that, because of a toxic combination of high prices and low quality, leave graduates and dropouts alike with student loan debt they cannot repay.

Bush’s appearance at the APSCU convention was “presented” by USAFunds, a federal student loan guarantee company that has had a questionably cozy relationship with giant student lender Sallie Mae.

This article originally appeared on Republic Report.

This article also appears on Huffington Post.

Photo: Gage Skidmore via Flickr

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