Bloomberg: For-Profit Colleges Double Spending, Hire Ex-Congressmen to Beat Aid Rules

Written by admin on December 23rd, 2010

Bloomberg reports on the revolving door from Congress to the lobbying business for the for profit college business, a business that derives the vast majority of it’s fees from US Government grants and loans.


For-profit colleges more than doubled spending on lobbying and hired six former members of the U.S. Congress this year to fight regulations that threaten the industry.

Ten education companies and their trade association spent $3.8 million on lobbying in the first nine months of 2010, up from $1.5 million in the comparable period last year, according to reports filed with Congress.

For-profit colleges are resisting a U.S. Department of Education proposal to restrict funding and objecting to a law that limits their revenue from government sources. The proposed restriction, called “gainful employment,” would tie eligibility for federal student-aid programs to graduates’ incomes and loan repayment rates.

Pittsburgh-based Education Management hired former U.S. Representatives Tom Loeffler, a Texas Republican, and William Gray, a Pennsylvania Democrat.

Career Education Corp…… hired former Connecticut Democratic Representative Toby Moffett.

Washington Post Co., owner of the Kaplan education business,……..hired former California Democratic Representative Vic Fazio.

Campaign Contributions

For-profit colleges have also contributed to political campaigns. Two for-profit colleges were among the 14 biggest donors to the re-election effort of John Boehner, an Ohio Republican who now will be the speaker of the House, according to the Center for Responsive Politics, a Washington-based research group. Employees of Corinthian Colleges Inc., based in Santa Ana, California, and Apollo Group Inc., owner of the University of Phoenix, gave $18,250 and $14,000 respectively, according to the center.

Representative John Kline, the Minnesota Republican who will take over leadership of the House Education and Labor Committee next month, received $56,500 from educators and their families, his fourth-biggest source of campaign contributions during his re-election campaign, according to the center.

The biggest spender on lobbying among publicly traded colleges in the first nine months was Corinthian Colleges, which hired Richard Gephardt, a Missouri Democrat and the former House majority leader.

Capella Education Co…… hired former Minnesota Republican Representative Vin Weber, now managing partner of Clark & Weinstock, a lobbying firm in Washington.

Education companies are permitted by law to get as much as 90 percent of their revenue from federal student aid, and some are close to the limit. The companies want to change the law or extend an exemption on some revenue that currently expires in 2011.

Apollo Group, based in Phoenix, and Corinthian Colleges have each said that close to 90 percent of their revenue comes from government grants and loans, and that they’re in danger of violating the rule next year. Apollo, the biggest U.S. education company, spent $340,000 on lobbying in the first nine months of 2010, down from $440,000 a year earlier.


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