College Guide

Blog

June 18, 2012 6:21 PM For-Profit Colleges and the GOP

By Daniel Luzer

A year ago the Department of Education issued new regulations for vocational colleges. The so called Gainful Employment provision stipulated that in order to continue to receive federal funding such colleges 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.

For-profit colleges lobbied strenuously against tougher regulations but it turns out such institutions are looking for a way around even these relatively straightforward rules. According to an article by Kelly Field in the Chronicle of Higher Education:

After four years of bruising investigations, negative headlines, and tightened regulation, for-profit colleges appear ready for change in Washington—and not President Obama’s sort of change.
Over the past year and a half, political-action committees representing for-profit colleges have given roughly $300,000 to Republican candidates for Congress and the White House, almost twice the amount they’ve donated to Democrats, according to data provided by the Center for Responsive Politics. Employees of the 15 publicly traded companies in the sector have donated roughly $350,000 to campaigns, with almost three-quarters of that money going to Republican candidates.
For proprietary institutions, the stakes in this November’s elections are high: If Republicans reclaim the White House, they could repeal the Obama administration’s “gainful-employment rule” before its sanctions take effect.

They’ve given about twice the amount to Republicans as to Democrats. This is because, despite that fact that the entire for-profit business model is based on federal grants and loans (that whole wasteful government spending thing) the GOP politicians seem oddly much more willing to help for-profit colleges out.

Mitt Romney (incorrectly) claimed this winter that for-profit colleges “hold down the costs of education,” because “I just like the fact that there’s competition. I like the fact that institutions of higher learning will compete with one another, whether they’re for-profit or not-for-profit.”

For-profit colleges enroll only 12 percent of students but generate about 45 percent of student loan defaults.

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