For-Profit Schools’ Lobbying Efforts

For-profit colleges apparently lobbied hard to undermine the rules recently enacted by the federal government to police for-profit colleges.

According to an article by Eric Lichtblau in the New York Times:

The story of how the for-profit colleges survived the threat of a major federal crackdown offers a case study in Washington power brokering. Rattled by the administration’s tough talk, the colleges spent more than $16 million on an all-star list of prominent figures, particularly Democrats with close ties to the White House, to plot strategy, mend their battered image and plead their case.

A who’s who of Democratic lobbyists — including Richard A. Gephardt, the former House majority leader; John Breaux, the former Louisiana senator; and Tony Podesta, whose brother, John, ran Mr. Obama’s transition team — were hired to buttonhole officials.

And apparently it worked. When the administration finally issued new regulations for education companies in June the Education Trust said that the new rules were “a 436-page a la carte menu of ways for-profit companies can game the system.”

Under revised rules for-profit schools must make sure that at least 35 percent of former students are paying down their loans, former students must not have to pay more than 30 percent of their discretionary income on loan payments, and former students must not spend more than 12 percent of their total income on loan payments.

But thanks to extensive efforts by for-profit colleges companies that fail to meet even this minimum standard have several years before they’re cut off from the federal student loan gravy train.

Lichtblau explained that industry officials met with the White House and the Department of Education more than two dozen times in crafting the rules.

Lobbying, of course, is a standard part of lawmaking in Washington. In this case, however, it’s fairly easy to see exactly the role lobbying played in undermining the rules originally proposed by the Obama administration. According to the article, the rules will “leave a maximum of 5 percent of schools facing financial sanctions.” Under the originally proposed rules about 16 percent of schools would have been in trouble.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer