Exposed: For-Profit
Colleges' Blueprint for
Blocking Obama
Regulations
Posted: 05/05/2014 9:47 am EDT Updated: 05/05/2014 9:59 am EDT
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Posted on the website of an accounting firm in Puerto Rico is a
revealing PowerPoint presentation dated February 20, 2014, and
credited to Steve Gunderson, the CEO of APSCU, the trade
association of for-profit colleges. It outlines APSCU's plan for
defeating the Obama administration's key regulation aimed at
holding for-profit colleges accountable for leaving students with
insurmountable debt.
Gunderson's presentation was in fact one of several apparently
delivered by for-profit college representatives and advisors at a
February APSCU meeting in Puerto Rico. Collectively, these
documents provide some valuable insights into the troubled forprofit college industry.
The Gunderson PowerPoint document lays out the industry's
strategy for blocking the Obama administration's gainful
employment rule, which would cut off federal aid to career
college programs that consistently bury their students in debt
they cannot repay. The Powerpoint specifically notes the
following points as APSCU's strategy as of December 6, 2013:
• Amend through the regulatory process
• Delay promulgation
• Defund, via legislation, enforcement
• Stop implementation through HEA [the federal Higher
Education Act]
• If necessary, litigation
• Use "change the conversation" about the role and mission of
postsecondary career education
That December 6 date is significant because the Department of
Education's negotiated rulemaking sessions on the regulation,
which included negotiators from the for-profit college industry,
were still going on, with a final negotiating session that was
scheduled for, and did occur on, December 13, 2013. Justin
Berkowitz, Vice President of Operations at Daytona College, an
APSCU member school, served as an alternate negotiator on the
panel. Nevertheless APSCU had been publicly complaining for
months that the rulemaking effort was prejudged against it; for
example, Gunderson complained in an August 2013 letter to
Secretary of Education Arne Duncan that "the composition of the
rulemaking committee is so biased and one-sided as to call into
question the department's intent to fulfill its obligations under
the Higher Education Act and the Administrative Procedure Act
to engage in a fair process and to adopt well-reasoned
regulations that are consistent with its statutory authority."
While the group complained that its members deserved a better
process, APSCU apparently already had devised a plan to block
whatever rule that came out of the session.
APSCU's strategy appears similar to the one that it and the
industry employed successfully with respect to the previous
version of the gainful employment rule, issued by the
administration in 2011. That version of the rule was heavily
watered down from previous drafts after intensive lobbying by
the industry. Then APSCU went to court and convinced a federal
judge to strike the rule down on procedural grounds,
necessitating a new round of rulemaking and prompting this new
APSCU offensive.
The Gunderson PowerPoint calls for modifications to the current
draft gainful employment rule that would make it easier for
poorly performing programs to pass and remain eligible for
federal aid. To get there, it talks about the need to "Solidify
Republican Opposition" to the rule and to "Seek Democrat
Support (targeting)." It previews the strategy we have seen the
for-profit college industry execute since Gunderson presented his
Powerpoint -- with a range of lobbying meetings, op-eds, media
outreach, and supportive statements by friendly Members of
Congress who receive industry campaign contributions and
outside groups recruited by the industry to lend their voices.
The PowerPoint also declares that a component of the APSCU
strategy will be "Constructive Improvements (Sector
survivability)" -- a formulation that might imply that the aim of
improving quality among for-profit colleges would be motivated
not by the desire to better serve students but rather to keep the
industry from collapsing, in an environment where the
government demands better performance to retain eligibility for
federal student grants and loans.
Also notable in Gunderson's PowerPoint is this enthusiastic
presentation of industry talking points against the gainful
employment rule, under the title
"Defining the Reality in Stark Terms":
• Good Intentions Gone Bad!
• Limiting College Access to the Wealthy and Elite!
• Eliminating Access, Choice and Opportunity!
• Impact on Veterans!
• Impact on Minority Students!
• Impact on Women!
• Impact on Low--‐income Students!
• Impact on Skilled Workers for America's Employers!
• Academic Redlining!
This slightly manic (!) presentation is typical of misleading forprofit college industry rhetoric. In truth, the purpose of the
gainful employment rule is not to end career training programs
generally for all of these types of students. Rather, the purpose is
to stop giving federal money to those career training programs
that, through a toxic combination of sky-high prices and low
quality, have been proven to leave such students financially
worse off than when they started. If successfully implemented,
the rule would free up more federal money to send those
students to programs that actually help them build careers.
Pushing back on that approach, the Gunderson PowerPoint
advances the thesis that "Debt--related metrics are not
appropriate determination of academic quality" -- an assertion
that might trouble the students across the country who have
enrolled in career training programs precisely so they can earn a
good living and support their families, rather than ending up
with crushing debt. This argument smacks of desperation;
Gunderson offered a similar take in an interview this year.
The Gunderson document spans 20 Powerpoint pages, but it's
dwarfed by another PowerPoint from the DC law firm
Ritzert/Leyton entitled "What Is Going On in Washington DC?"
What indeed? This document is 124 pages long and runs
through the range of regulatory challenges facing the for-profit
college industry, as well as many of the dozens of law
enforcement investigations and lawsuits these companies now
face. One of this Powerpoint's authors, attorney Peter Leyton,
served on the APSCU board for much of the last 15 years and still
advises the organization.
The Leyton PowerPoint offers a "Crystal Ball" for 2014: "What
the Obama Administration (and the federal agencies it leads)
cannot achieve in higher education policy reform through a
divided Congress, we may see attempted through Executive
Order, continued and ramped up agency enforcement of current
regulations, additional rulemaking, and collaboration with states
and non-governmental partners to advance the Administration's
policy priorities." I hope Leyton is right, and that the
administration will move ahead with tough policies, because,
indeed, "a divided Congress" will not act. Relentless for-profit
college lobbying and the industry's torrent of campaign
contributions to Capitol Hill, to both Republicans and
Democrats, ensures such a stalemate and stands as an obstacle to
Congress approving common sense laws that would hold bad
actors accountable for waste, fraud, and abuse with taxpayer
dollars.
Leyton's PowerPoint also seeks to inform executives about how
for-profit college companies are being identified for investigation
-- through "[s]tudent and disgruntled former employee
complaints to ED, VA/ DOD, CFPB, FTC, other federal agencies,
state education agencies, and state attorneys general" and
"plaintiff's attorney 'trolling.'" Leyton thus dismisses
complaining former employees as "disgruntled," but as someone
who frequently communicates with these men and women,
people like Rashidah Smallwood and Heidi Weber, I can tell you
that they are not some malingerers upset about being passed
over for a promotion; they are people with a conscience, upset
about the systematic deceptions and abuses perpetrated by their
companies against students and taxpayers.
Leyton also notes that state and federal law enforcement
agencies are increasing cooperation to investigate the industry,
and they are accessing and sharing student complaints via the
Federal Trade Commission's Consumer Sentinel Network
database. Leyton's paper expresses particular concern about the
Consumer Financial Protection Bureau's expanding probes of the
sector, as well as the FTC which, "unlike ED [the U.S.
Department of Education], specializes in the enforcement of
federal marketing and advertising laws... Recent attention on,
and resources devoted to, the for-profit college sector indicate
that the FTC may be an unusually active presence during the
current Administration in policing the sector."
Finally, there is an 85-page PowerPoint from Patricia Edelson, a
non-lawyer at the law firm DLA Piper, entitled, "Sail Through a
Program Review Be Prepared - Know What to Expect." Edelson,
according to her bio, worked for over 20 years at the Department
of Education reviewing college programs for compliance with
federal rules. Before that, her bio says, "Edelson was Financial
Aid Director and School Manager for a large publicly traded
school chain," meaning a for-profit college company.
Edelson's PowerPoint offers guidance on how a for-profit college
can handle an examination of its practices by the federal
department where she once worked. It's a mostly straighforward
account ("Make sure your entire staff knows that you require
100% compliance and accuracy in the administration of Title IV.
No shortcuts!"), but offers some insights, especially as it now
appears to Department of Education is getting a bit tougher in
reviewing for-profit college practices after decades of relative
passivity. Edelson advises companies to "Prepare your staff. Let
them know that the Reviewers may want to interview them, and
that they should be comfortable in answering questions. It's also
important that everyone understands - if they aren't sure of
something - say so - and find out who is the best person to
answer any question."
Puerto Rico, where Gunderson and the others presented their
papers, is home to a significant number of for-profit colleges,
including a campus of the University of Phoenix and at least one
school operated by EduK group, which is headquartered in San
Juan and whose board members include outspoken private
equity man Jeffrey Leeds, also a member of the APSCU board.
This article also appears on RepublicReport.
Follow David Halperin on Twitter: www.twitter.com/
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