In response to a routine FOIA request from the Coalition for Educational Success, the Department of Education released 1,900 pages to the Coalition, while denying over 37,000 additional pages. The FOIA request sought documents related to dealings between DOE and investors who may have "shorted" stocks of for-profit colleges and others who are employed by the not-for-profit sector as well as documents related to the creation of the now-discredited Government Accountability Office report critical of career colleges.
"Last week, in the middle of ‘Sunshine Week’, a week dedicated to the open functioning of government, the Department of Education chose to hide in the shadows rather than bring anything to light," said Penny Lee, managing director for the Coalition for Educational Success. "This denial of tens of thousands of pages only exacerbates longstanding concerns that the Department colluded with short-sellers during the formulation of the gainful employment regulation."
A small percentage of the requested documents that were released by the Department, revealed further collaboration between senior Department officials and known short-sellers:
The Coalition’s FOIA request, originally filed on October 15, 2010, sought documents that would illuminate the influence investors – who “shorted” stocks of for-profit colleges and were known critics of the for-profit college industry — may have had on the creation of the Department’s gainful employment regulation. The FOIA request also sought documents related to the development of a GAO report about the for-profit college sector, a report that has since been substantially discredited.
Again and again, the Department repeatedly failed to comply with the law and produce the documents requested in the Coalition’s FOIA requests. Under the law, the Department has 20 days to respond to a FOIA request. Documents responding to the October 15, 2010, request didn’t start arriving until January 24, 2011, and now, nearly 6 months after the original request, the Department has released only a small fraction of the requested documents.
“Instead of shielding Department officials and Wall Street short-sellers, the Department needs to shine a light on how the Department’s policy making process was heavily influenced by those who ‘bet short’ on career college stocks, brought little to the table, but stood to gain billions of dollars financially from greater regulation of career colleges,” Lee added.
Previous documents released to the Coalition expose multiple contradictions between the Department’s actions and public statements. The documents reveal that high-ranking Department officials involved these short-sellers and critics in crucial discussions prior to the release of the NPRM and point to a compromised rulemaking process due in part to the process being orchestrated and driven by short-sellers who stood to gain billions of dollars financially from greater regulation of career colleges. These documents also wholly contradict statements made on February 10, 2011, by Deputy Assistant Secretary of Education David Bergeron, who said that the agency wasn’t aware of the dubious financial interests of short-seller Antal Desai.
These troubling contradictions only underscore the importance that the Department operate in a fully transparent and open manner. “It’s clear there’s more information being withheld by the Department. The Department of Education needs to adjusts its approach to meet the President’s commitment to transparent government rather than persist in its current course of delay, stonewalling and obfuscation,” said Penny Lee.
About the Coalition for Educational Success
The Coalition for Educational Success includes many of the nation’s leading career colleges, serving more than 350,000 students at 478 campuses in 41 states. Career colleges provide training for students in 17 of the 20 fastest growing fields. The Coalition advocates for policies that support wider access to higher education, particularly for non-traditional students including full-time workers, workforce returners, working parents, minorities and veterans.