Domestic, For-Profit, Investors, Required, University & College - Written by on Saturday, July 30, 2011 22:51 - 0 Comments

Boehner as Enabler of For-Profit College Bubble

WASHINGTON, DC - JUNE 02:  Speaker of the Hous...

By Paul Glader
We knew Rep. John Boehner played a role in deregulating online learning. On Friday, Chris Kirkham over at The Huffington Post writes this piece that breaks down now Speaker of the House John Boehner’s involvement in deregulating free-market higher ed and, therefore, helping to create the For-Profit Education bubble.

In the five years since Congress deregulated online education, enrollments at for-profit colleges have nearly doubled. Six major corporations owning for-profit institutions have enjoyed initial public offerings on Wall Street, with each promoting the rapid growth of online classes to investors and netting millions in compensation for executives. Revenues have doubled at the University of Phoenix and Kaplan University, two of the largest players — so has the rate at which its students have defaulted on their federal loans.

Kirkham points to Washington as a culprit in the astronomical growth of the for-profit colleges as a savvy lobbying effort during the Bush years side-stepped taxpayer concerns. And Boehner had a starring role:

Such was the case with the 2006 removal of a law known as the 50 Percent Rule, which had previously limited enrollment numbers at universities with online course offerings. That stricture was eliminated at the insistence of current House Speaker John Boehner, then the chairman of the House Education and Workforce committee — now the prime public negotiator in a high-stakes clash over raising the nation’s debt ceiling — and Sen. Mike Enzi, a Wyoming Republican who headed the Senate Education committee. Their legislative handiwork opened the floodgates to online enrollment, while enabling for-profit colleges to more aggressively tap Wall Street for the capital they have used to expand.

“Most of the large publicly traded institutions would not be able to exist the way they do today if that rule had not been taken away,” said Kevin Kinser, an associate professor at the University at Albany who studies the history of for-profit higher education. “You have an entirely new revenue source that’s been open to these institutions. … The cost goes down, the revenue goes up, and that’s a pretty attractive investment vehicle.”

Kirkham points to several conflicts of interest in the industry. Rep. Howard “Buck” McKeon (R-Calif.), was one of the congressmen who controlled the Education committees in the House and the Senate, while also trading shares on Corinthian Colleges Inc., a for-profit college corporation, during that time he was creating policy on the area, according to his required personal financial disclosure forms.

The industry has also benefited from Washington’s traditional revolving door: President Bush’s assistant secretary for post-secondary education, Sally Stroup, had served previously as a lobbyist for the Apollo Group, which owns the University of Phoenix. During her tenure overseeing higher education policy from 2002 through 2006, she authored a series of reports outlining an imperative to lift the online learning restrictions – a major impetus for Congress to ultimately scrap the 50 Percent Rule.


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