For-profit colleges, under fire from the Obama administration and Congressional Democrats, will be rooting for Republicans the mid-term elections, optimistic that Republican gains would ease the pressure on the for-profit sector.
The outcome of the election is expected to have a more immediate effect on the fight over for-profits than on any other federal higher-education policy debate. If Republicans reclaim the House of Representatives, as political forecasters and polls predict, they could block bills aimed at for-profits and attempt to overturn the administration’s proposed “gainful employment” rule, which would penalize programs whose graduates carry unmanageable levels of debt. They could also shift the spotlight from for-profit colleges to higher education as a whole, drawing equal attention to problems at nonprofit institutions.
Yet even the most sanguine of the sector’s supporters acknowledge that a Republican takeover of the House wouldn’t be a panacea for for-profits. While Democrats stand to lose some seats in the Senate, most experts expect them to hold on to that chamber. If they do, they could continue their investigation into for-profit colleges and thwart a Republican effort to repeal the gainful-employment rule.
Even if the Republicans take back both chambers of Congress, it’s doubtful that a challenge to the gainful-employment rule would survive a Senate Democratic filibuster and a presidential veto. That means some pain for for-profits is inevitable, no matter who controls Congress.
Employees and political-action committees of for-profit colleges, meanwhile, are hedging their bets, giving generously to Democrats in an effort to reward allies, win friends, and influence party leaders. During the 2010 campaign cycle, they’ve donated $675,063 to Democratic candidates, more than three times as much as they’ve given to Republicans, according to a Chronicle analysis. The top recipient was Rep. George Miller, Democrat of California and chairman of the House education committee. Harry M. Reid, Democrat of Nevada and the Senate majority leader, was third. Rep. Robert E. Andrews, Democrat of New Jersey and a consistent supporter of for-profit colleges, was fifth.
The biggest threat facing for-profit colleges is the proposed gainful-employment rule, which would cut off federal student aid to programs whose graduates have high debt-to-income ratios and low loan-repayment rates. That would have a devastating effect on for-profits’ growth and profit margins, forcing them to shutter thousands of ineligible programs or lower their tuition considerably.
For-profit colleges have submitted tens of thousands of comments opposing the rule, prompting the department to postpone its release of a final regulation until after Election Day.
Opponents of the rule hope that a Republican-led House could persuade the administration to soften its approach, in exchange for cooperation on other education measures, such as the reauthorization of the Elementary and Secondary Education Act. That bill, formerly known as The No Child Left Behind Act, is due for debate early in the next Congress.
“To the extent that they want other priorities to move, they need to be able to work with Republicans,” said Nancy Broff, a counsel at Dickstein Shapiro who has represented for-profit companies.
A House Democratic aide who asked not to be named agreed that the rules could be relaxed if Republicans take over the House.
“The Education Department would realize that they need to pick their battles,” the aide said. If they want to do the education reauthorization, the aide added, “they may have to give up on this one.”
But supporters of the rule say the prospects for such political horse-trading are dim, amounting to little more than wishful thinking on the part of for-profit colleges.
“This is part of the rumor mill fueled by the industry’s cheerleaders to make themselves feel better,” said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers, who supports stricter oversight of for-profits. “It’s possible, but it’s also possible I’m from Mars.”
In fact, some opponents of the rule say the administration is more likely to dig in its heels, figuring that it stands a better chance of advancing its agenda through regulation than through a divided Congress.
“They’re true believers,” said one Senate Republican aide who asked not to be named. “They’re on a mission.”
If the department sticks to its guns and issues a final rule without concessions to critics, House Republicans would have three options for attacking it, said Mark Kantrowitz, publisher of the Web site FinAid, which provides student-aid information to families.
The Republicans could try to repeal the rule under the Congressional Review Act, which allows Congress to overturn a regulation within 60 days of its publication. They could attach language to an appropriations bill barring the department from using any funds to enforce the rule. Or they could pass legislation defining “gainful employment,” and specifying how it should be measured, overriding the department’s definition.
The chances of any of those strategies succeeding are slim, given opposition from Senate Democrats and the likelihood of a presidential veto. The Congressional Review Act has been used successfully only once in its 14-year-history, to repeal a Clinton-era ergonomics rule.
While lawmakers have had somewhat better luck with appropriations riders, the Education Department might not issue its rules until after Congress completes work on its spending bills. As for separate legislation, it would probably be difficult for Republicans and Democrats to reach consensus on a bill defining gainful employment.
Even if they fail to stop the rule, House Republicans could make it difficult for the department to carry it out, lawyers for the for-profit sector say. They could hold hearings challenging the department’s authority to issue the rules. And they could bombard the department with questions about its ties to interest groups and community colleges, and the data it used in drafting the rule.
Republicans also could turn up the heat on nonprofit colleges, expanding the Democrats’ inquiry into the for-profit sector to look at problems that pervade higher education, including hyperinflationary tuition growth and mounting student debt.
They could also steer the conversation to graduation rates, which are lower at community colleges than at two-year for-profit institutions.
Senate Republicans have argued forcefully for expanding the investigation to include nonprofits, arguing that it is “naïve” of Democrats to think that problems are limited to the for-profit sector. At a recent hearing, Sen. Michael B. Enzi of Wyoming, the top Republican on the education committee, accused Democrats of discriminating against for-profits, ignoring nonprofits “with the same record.”
But analysts say Senate Republicans would be more likely to abandon the Democrats’ investigation altogether if they regain the Senate. They point to Sen. John McCain’s remarks at the same hearing, where he said he hoped the committee would have a “different agenda” in January, after the elections.
“It’s more likely it dies a silent death,” said Scott Fleming, a former Republican Senate education aide who has lobbied for for-profit colleges.
Mr. Fleming argues that the Democratic investigation has generated a lot of negative headlines but not much public outrage. “It hasn’t metastasized like the student-loan issue did for them,” he said.
If Democrats retain control of the Senate, they are expected to continue hammering for-profit colleges with data requests and hearings. Sen. Tom Harkin of Iowa, the education-committee chairman, has already announced a December hearing to focus on the large share of military spending that flows to for-profits, and promised legislation early next year.
Mr. Harkin hasn’t said what his subsequent legislation will focus on, but his comments suggest that it could be aimed at accreditation and federal spending on for-profit education. Among the possibilities, analysts say, are a ban on for-profits’ gaining accreditation through the purchase of nonprofit institutions; increased accountability for accreditors; and limits on the amount of federal aid that can be spent on advertising. The senator might also seek to include military aid in the federal share of the 90-10 rule, which requires colleges to obtain at least 10 percent of their revenues from nonfederal sources.
Whatever the topic, Senator Harkin’s bill is likely to be comprehensive and controversial, critics and supporters of the senator agree.
Excerpted from the October 31st edition of The Chronicle of Higher Education, article by Kelly Field.
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