Regulations Lead to Lobbying Surge by the For-profit College Industry

This week the for-profit college industry hosts its annual Hill Day, where students and industry representatives come to Washington to talk to their representatives and lobby for industry priorities. The lobbying conference comes as the industry finds itself fighting on all fronts to block a proposed rule meant to rein in what many are calling bad practices by the industry.

This fight has spurred the highest lobbying spending by the industry in its nascent history.
In 2010 the for-profit college industry spent $7.57 million on lobbying, almost three times as much as it spent in 2009. The industry also doled out over $1.3 million in campaign contributions over the 2010 election cycle.

The subject of the lobbying fight is a proposed rule by the Department of Education aimed at stemming a growing student debt and default problem in the industry.

The new rules aim to mitigate a growing default and debt problem among for-profit college students. For-profit schools account for approximately 12 percent of all higher education students and they receive 25 percent of all Federal Pell Grants, while accounting for 44 percent of all student loan defaults.

Investigations by the GAO, the Los Angeles Times, and the Senate Committee on Health, Education, Labor, & Pensions (HELP) uncovered practices in the industry that indicated an emphasis on acquiring new students while ignoring the progress of those who have already been accepted to the schools. (These practices were uncovered in a 60 Minutes investigation in 2005.) This policy led to huge rates student dropouts and loan defaults. Meanwhile, the schools reaped profits from the government loans each new student received.

The rules, as proposed so far, label an institution eligible for federal funding as having "at least 45% of their former students paying down the principal on their federal loans; or their graduates will have a debt-to-earnings ratio of less than 20% of discretionary income or 8% of total income." Programs that would lose funding "will have less than 35% of their former students paying down the principal on their federal loans; and their graduates will have a debt-to-earnings ratio above 30% of discretionary income and 12% of total income." The Department of Education is set to release the final rules soon.

The Association of Private Sector Colleges and Universities (APSCU), the industry’s advocacy and lobbying arm, officially states, "The Department’s proposal will deny access by shuttering programs and putting millions of students out of higher education. That’s a bad deal for all concerned."

Two weeks ago the fight came to a vote in Congress when, in an amendment to the Continuing Resolution to fund the government, the House of Representatives voted to deny funds for the enforcement of the Department of Education’s rules on for-profit colleges on gainful employment. The vote was 289-136.

Ninety-two of those voting received contributions from the industry. The sixty-one lawmakers who received contributions and voted yes received more than twice as much ($8,263), on average, as the forty who received contributions and voted no ($4,035).

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