When the Obama administration announced it was going to rein in for-profit colleges that exploit low-income students, consumer groups cheered and the industry jumped into action. The for-profit college industry spent $16 million on a lobbying blitz, enlisting big Democratic names, to persuade the administration to water down its proposed regulations. In the end, the industry got what it paid for. Rules were loosened that were supposed to protect students from being burdened by huge student loans after the lucrative careers they were promised by for-profit schools never materialized. President Barack Obama has denounced the "outsize" influence of lobbyists in Washington, yet his administration acceded to lobbyist wishes because the right people were hired to do the asking.
According to the New York Times, the $30 billion for-profit college industry went on the offensive when faced with the prospect of having federal student aid cut off unless it demonstrated that students and taxpayers got their money's worth. Among those hired to lobby against the new "gainful employment" rules were a list of Democratic all-stars. They included Richard Gephardt, a former House majority leader; John Breaux, a former Louisiana senator; and Tony Podesta, the brother of John Podesta, who ran Obama's transition team.
In addition, Anita Dunn, Obama's former White House communications director, worked with the for-profit Kaplan University. And investors in for-profit schools who had close ties to Democrats used their influence to undo the proposed rules. In all, the New York Times reports, the advocates for the industry interacted with the White House and Department of Education more than two dozen times.
The White House official who oversaw the rulemaking said the lobbying effort had no impact on the final rules. But after the rules were announced, stocks for for-profit colleges soared, suggesting that the administration settled for a passing glance rather than strong consumer and taxpayer protection.
The biggest problem with for-profit colleges is that the cost of tuition is too often disproportionate to a graduate's job prospects. Students, who are often low-income, load up on federally guaranteed student loans and then can't find good-paying jobs in their field of study (such as culinary services) that allow them to handle their student debt. This leaves taxpayers on the hook. And too many of these colleges use misleading recruiting tactics, hiring hundreds of recruiters who make false promises about good jobs yet put little effort into job placement.
After the lobbying barrage, the Department of Education altered the proposed gainful employment rules, which establish standards for student debt levels relative to their postgraduation income. The department made it easier for for-profit colleges to comply and pushed back the start of penalties from 2012 to 2015. What started out as a real crackdown on a big, profitmaking business that gets as much as 90 percent of its revenue from federal aid and too often doesn't deliver on its promises, ended up as a full-employment measure for Democratic-connected lobbyists. It was a missed opportunity to stand up for students.