June 25, 2012

The annual convention of the biggest association of for-profit colleges, APSCU, concluded last Friday in Las Vegas. Republic Report wanted to cover the event, because we all helped pay for it: Taxpayers provide $32 billion a year to this industry — for some schools, over 90 percent of their revenue.

These corporations could strive to be worthy of this massive government support by prioritizing education for their students. Instead, many for-profit colleges engage in deceptive recruiting and offer high-priced, low-quality programs that leave many students — veterans, people of color, low-income parents, etc. — jobless and deep in debt. Aided by APSCU, such companies then use aggressive lobbying and campaign contributions to fight against efforts to hold them accountable.

APSCU refused to let Republic Report attend the convention, but we’ve tapped our sources to report on it anyway.

Last Thursday, we posted exclusive audio of former D.C. public schools chancellor Michelle Rhee’s remarks. Called out by Republic Report for agreeing to speak at the event, Rhee pledged to tell the for-profit colleges “hard truths.” But she didn’t; her gentle remarks barely scratched the surface of the problems with this industry.

The event’s other big speaker, President George W. Bush, probably would have been even more willing than Rhee to tell the for-profit colleges what they wanted to hear. After all, it was under Bush that the U.S. Department of Education turned a blind eye to misconduct in the industry, unleashing a decade of waste, fraud, and abuse with taxpayer money and immense profits for the for-profits. But Bush perhaps didn’t get a full briefing about what the audience might be looking for.

Speaking on Friday, Bush barely addressed higher education, but in discussing his signature education initiative, the No Child Left Behind plan for K-12 schools, Bush said, “Any time you reform, it sparks controversy…. My attitude all along is that you’ve got to measure…. If government spends money, doesn’t it make sense for government to ask, are there results? I think it does.” Bush paused, perhaps waiting for applause, but he didn’t get any. Not surprising, because APSCU and its members spent millions lobbying furiously to block Obama Administration rules aimed precisely at measuring performance and results for schools receiving federal student grants and loans.

The attendees also had to contend with a small cluster of protestors, including some former students who complained of mistreatment by their schools. A conference welcome message from APSCU’s new CEO, Steve Gunderson, told his members to watch out for lurking dissenters: “One thing I’ve learned during the early days of my leadership at Apscu is that there are those who philosophically oppose private-sector education delivery. Even worse, they’re desperate to define our sector in the worst possible way without acknowledging any of the good associated with it. We must be cognizant of this during our convention. As you conduct your important work, I want to encourage a heightened level of awareness, as there are some who will attempt to advance their political or ideological agenda at the expense of our schools.”

The wealthy for-profit education corporation owners at APSCU got an additional jolt when the Department of Education on Thursday starting sending them information about their performance with respect to the hotly-contested “gainful employment” rule that could, in a few years, cut off federal aid to programs that consistently leave students unable to repay their loans. Not all of their schools may fare well under this analysis. The Department announced on Friday that it will release the data this week.

But the APSCU attendees were buoyed when a trade reporter speaking on a panel announced that he had just learned that a long-awaited report from the Education Department’s Inspector General, investigating possible official misconduct in developing the gainful employment rule, “detail[ed] the influence of short sellers … and could be pretty spectacular in its findings.” The crowd applauded loudly. Industry lobbyists have long implied a conspiracy between the Department and Wall Street short-seller Steven Eisman, who compared the industry to the collapsed subprime mortgage market. In fact the Inspector General report, released late Friday, offered nothing spectacular on that issue or any other; instead, its key conclusion was “The Department Appropriately Handled Sensitive Information During the Gainful Employment Negotiated Rulemaking Process.”

Still, even if the APSCU executives and lobbyists were able to believe for that brief moment that they might be on the verge of exacting some revenge on the Education Department for daring to hold the industry accountable, they couldn’t escape some bad indicators. “There’s not enough money,” said APSCU CEO Gunderson. Severe federal budget pressures mean that federal financial aid — the only reason that many APSCU member schools are able to exist — almost certainly will decline.

But at least there was enough money in the industry this year to not only pay for Rhee and Bush’s appearances, but also for one of the big companies that feeds students to the for-profits, EducationDynamics, to fly in Shannen Doherty — “best known for her role on Beverly Hills, 90210, Charmed, Heathers and numerous others.” Doherty came to pose for photos with for-profit execs and to raffle off a copy of her book, “Badass: A Hard-Earned Guide to Living Life with Style and (Right) Attitude.” And Gunderson is confident there will be enough money to pay for another big convention in 2013. “See you next year in Florida,” he said as the Vegas session closed.

UPDATE: A source of ours who attended the APSCU conference has more to report:

Clearly the sector is concerned about its prospects, given new

regulations and accountability. The conference featured crowded (and

anxiety-tinged) sessions on “Gainful Employment” regulations, the

threat posed by the new Consumer Financial Protection Bureau, and

avoiding “misrepresentations” in recruiting. In plenary sessions,

APSCU officials made repeated reference to the upcoming reauthorization of

the Higher Education Act, which defines the sector’s access to

taxpayer funds, and implored member schools to get involved with the

trade association’s “grassroots” efforts to lobby Congress. But the

mood wasn’t totally pessimistic. In a members-only session on Thursday

afternoon, the General Counsel of APSCU, Brian Moran, expressed

confidence that the trade association would obtain a favorable

decision in their ongoing lawsuit to block the Department of

Education’s “gainful employment” measures. Further, the panel — which

also included Tony Guida of Education Management Corporation and Roger

Dalton of National College — openly mocked Senator Kay Hagan’s

proposal to prohibit the use of federal loan funds for advertising and

marketing. (Some publicly traded for-profits spend 20% or more of

their taxpayer-funded budgets on marketing.) The panelists called

Hagan’s provision “unenforceable,” unless the government used “marked

bills,” and noted that it had little chance of passage, as indicated

by unified Republican opposition in the Senate HELP Committee.

Republic Report does not share the APSCU panelists’ apparent dismissive view of Senator Hagan’s bill. The “marked bills” comment is presumably a reference to the fact that money is fungible, so it would be theoretically difficult to tell schools that they cannot spend federal aid money on marketing costs. But in fact, as Senator Hagan noted on a conference call I was on last week, many for-profit colleges spend more on marketing than they receive in revenue from sources other than the federal government — and more on marketing than they do on education. So, in fact, the bill seriously challenges the way those schools do business now. Senator Hagan was well aware of the challenges ahead in passing the bill; she noted on the call that, in the gainful employment fight, the for-profit college industry hired “practically every lobbyist on the Hill.” But, in fact, her legislation is advancing — it was included in a bill passed earlier this month by a Senate Appropriations Subcommittee.