At first sight it's a battle royale between an expansionist federal education administration (ED) and a well-bankrolled for-profit 'sector' of higher education.
The feds' targets include stock-owned corporations like Kaplan, Education Management Corporation, Corinthian, ITT and Apollo/University of Phoenix, to name five.
Those organizations and their lobbyists know where to find and how to approach Capitol Hill politicians who might help soften ED's rulemaking. Corporate executives and their Washington-based industry association have produced a substantial media blitz and lobbying effort.
Here are some clips and snippets that caught our attention recently.
Apollo Group, owner of the University of Phoenix, is represented in Washington, DC by four different firms - reporting average monthly fees of about $54,000 between January and September 2010. The four firms are SNR Denton LLP, Van Scoyoc Associates, Wheat Government Relations, Bond & Company. Inside Higher Ed
Corinthian Colleges is itself a registered lobbyist, assisted by two other firms, Akerman Senterfitt and Gephardt Group. Combined they reported spending more than $100,000 per month during the same nine month period. Inside Higher Ed
The for-profits anticipate that the prospective federal re-engineering will remove large numbers of students and their accompanying financial aid from their classrooms, in favor of community colleges. A group of for-profit schools are underwriting a public relations campaign by the Coalition for Educational Success against U.S. community colleges. Here are two samples of the ammunition in use by that campaign ...
Career colleges graduate 58 percent of their students. Community colleges
graduate 20 percent. Career colleges graduate 48 percent of their African-
American students. Community colleges graduate 12 percent. Career colleges
graduate 60 percent of their Hispanic students. Community colleges graduate
City Colleges of Chicago has an average graduation rate of less than 7 percent,
which results in a total taxpayer cost per graduate of approximately $137,000.
Ivy Tech Community College: 8 percent and $120,000. Northern Virginia
Community College: 13 percent and $74,000.
Meanwhile, the latest published government student loan default rates show that at schools with academic programs less than two years in duration, (on a body count basis) students attending for-profit schools are more than ten times as likely to borrow and twice as likely to default. U.S. Dept. of Education reporting the '2008 cohort'
For-profit colleges are on the receiving end of pressure from law firms filing class action suits on behalf of disgruntled shareholders. The number of such firms is small, but their ability to cause financial pain and brand damage is well established. Kevin LaCroix of OakBridge Insurance Services is a blogger who says an avalanche of class actions occurs "where in one sector everybody has the same problem." He also notes that "the same law firms are driving all these litigations." TodaysCampusOnline
That pressure follows on the heels of short-sellers whose financial stake improves when stock prices fall. Steve Eisman is a major attention-getter who is being heard on Wall Street and in Washington. Eisman said "Until recently, I thought that there would never again be an opportunity to be involved with an industry as socially destructive and morally bankrupt as the subprime mortgage industry. I was wrong. The for-profit education industry has proven equal to the task." Mother Jones
Food for further thought. Did you note Eisman's reference to sub-prime loans? The now-busted U.S. real estate industry was brought to its knees by public policy favoring home ownership and the overuse and abuse of E-Z credit to finance the purchases. The same government is boosting the emphasis on public policy favoring college attendance. And, a Stafford Loan -- which is usually issued on the spot to an adolescent -- is the ultimate in E-Z credit.
By Jeff Wendt Publisher