'Good Day' for For-Profit Colleges

As they waited Thursday morning for the House of Representatives higher education subcommittee to vote on legislation to extend the Higher Education Act, lobbyists for for-profit and nonprofit colleges had strikingly different answers to the simple question "How are things going?"

Bruce D. Leftwich, vice president for government relations at the Career College Association, responded with an enthusiastic "Great, great." David S. Baime, who plays the same role for the American Association of Community Colleges, offered an uncertain "I have no idea."

July 15, 2005

As they waited Thursday morning for the House of Representatives higher education subcommittee to vote on legislation to extend the Higher Education Act, lobbyists for for-profit and nonprofit colleges had strikingly different answers to the simple question "How are things going?"

Bruce D. Leftwich, vice president for government relations at the Career College Association, responded with an enthusiastic "Great, great." David S. Baime, who plays the same role for the American Association of Community Colleges, offered an uncertain "I have no idea."

It was tempting to read the lobbyists' contrasting countenances as a barometer of their expectations for how the Education and the Workforce Subcommittee on 21st Century Competitiveness would handle the most contentious issue on its plate: the law's treatment of for-profit colleges, on which the two men are on opposite sides. And two hours later, when the panel -- in approving the mammoth and sprawling legislation ( H.R. 609 ) that governs federal student aid and other college programs -- had largely given commercial institutions what they wanted, the lobbyists seemed prescient.

"It was a good day for us," said Nancy Broff, the Career College Association's general counsel and Leftwich's colleague. "We got almost everything we wanted."

"A colossal loss," said Baime. 

The for-profit issue provided most of the drama at Thursday's session, in which the House subcommittee, in the second day of a two-day bill drafting session known as a markup, voted on all the amendments on which it had been unable to agree on Wednesday.

Most of Thursday's votes went along party lines, with Republicans rejecting a slew of Democratic amendments that would have radically increased the allowable size of the maximum Pell Grant and overturned a Bush administration change in the formula for determining Pell Grant eligibility that has resulted in tens of thousands of people losing their eligibility for grants, among other things.

The one area of bipartisan agreement (and a rare moment of humor) came on an amendment that would direct the Education Department to conduct a study on the extent of fraud and abuse in the student aid programs. Every Democrat and every Republican but one -- Rep. Virginia Foxx of North Carolina -- voted Yes. Before the vote became final, the subcommittee's chairman, Rep. Howard P. (Buck) McKeon, essentially gave Foxx a chance to reverse her vote, and she did, drawing chuckles from the audience.

That moment of lightness was in stark contrast to the tension that surrounded the for-profit issue. The subcommittee considered three amendments that took varying approaches to altering a provision in the bill drafted by the panel's Republican leaders that would create a "single definition" for an “institution of higher education” in the Higher Education Act. The higher education law currently has a separate description for for-profit institutions that lets them participate in the federal grant and loan programs but does not give them access to other pools of federal education money, such as funds that are available to community colleges and institutions that serve significant numbers of minority students under Titles III and V of the Higher Education Act.

Creating a single definition has been one of the highest priorities of for-profit institutions, which have increasing clout on Capitol Hill because of their growing enrollments (and because their political action committee contributes to lawmakers in ways that nonprofit institutions generally do not). "As a matter of equity and to create a modern Higher Education Act and higher education system, we ought to be recognized as equal participants through sharing a single definition," said Mark Pelesh, a senior vice president at Corinthian Colleges, Inc., a publicly traded higher education provider. 

But the traditional higher education establishment and faculty unions have opposed the for-profits' inclusion in the single definition, which they say would give the commercial institutions access to funds that are already in short supply. They have also opposed other provisions in the committee's legislation that they say would weaken protections against potential financial aid fraud and abuse at for-profit colleges.

Of the three amendments related to the single definition on Thursday, one -- sponsored by Rep. Betty McCollum, a Minnesota Democrat -- aimed to keep the status quo by stripping the single definition from the subcommittee's bill. It was favored by opponents of for-profit colleges but seen as unlikely to pass, given the Republicans' 18-15 majority on the subcommittee. The other two, both sponsored by Republicans, were compromises aimed at limiting the impact of the single definition. 

The committee first took up one of the compromise measures, which would create the single definition but bar access for for-profit institutions to the Title III and V funds for minority serving institutions and community colleges. It passed relatively easily, with five Democrats joining all but one of the subcommittee's 18 Republicans in voting Yes. 

Next came the second compromise, sponsored by Rep. Michael N. Castle, a Delaware Republican. It too would create the single definition but ensure that for-profit institutions could not automatically tap into funds that are now available to colleges through other laws that use the Higher Education Act’s definition of an “institution of higher education." In other words, it would prevent for-profit institutions from competing for research grants from the Agriculture Department or the National Institutes of Health unless the laws that govern those grant agencies were specifically amended to allow them to. 

Lobbyists for nonprofit colleges were heartened as five of the panel's Republicans (who always vote first because they are the majority party) cast ballots for Castle's amendment. But it came time for the Democrats to vote, a majority of them opposed it, and it failed, 21 to 11.

Tension in the room grew as the panel voted on McCollum's proposal to do away with the single definition entirely. One Republican, Rep. Tom Osborne of Nebraska (a former University of Nebraska football coaching legend), voted No, and two others, Castle and Rep. Vernon J. Ehlers of Michigan, voted "present," which are equivalent to abstentions. As the Democrats voted, Rep. Carolyn McCarthy of New York sided with the for-profit institutions. With one Democrat unavailable to vote, the final tally was 16 opposed to McCollum's amendment and 14 in favor, with Castle and Ehlers on the sidelines. (Lobbyists surmised that Republican leaders had cracked down on Castle and Ehlers to put their party's interest first, even though both have made clear their concerns about potential abuse by for-profit institutions.)

The overall result left the single definition provision largely intact, with only the restriction on funds from Titles III and V. Lobbyists for nonprofit colleges were furious at the Democrats for not supporting Castle's amendment more uniformly; some were believed to have opposed it because they preferred McCollum's amendment, and others because they did not want to support a compromise crafted by a member of the opposition. Baime of the community college association said they'd made a huge mistake. "To not take three-quarters of a loaf because you prefer the whole loaf that you may not get" is idiotic, he said after the vote.

Broff of the career college group, who was clearly pleased, said she did not understand why the traditional sectors of higher education so opposed equitable treatment for the for-profits. "They're so scared of having to compete with us, and it's pathetic," she said.

The Rest of the Bill

Although the for-profit issue dominated the debate and voting on the Higher Education Act legislation, the measure deals with many other important issues. Among other things, the bill approved by the subcommittee Thursday would:

  • Change the way campus-based aid programs like Supplemental Educational Opportunity Grants and Work Study are distributed. The current formula favors institutions that have been in the programs for decades, and are perceived as shortchanging community colleges and other emerging institutions.
  • Cut a number of subsidies for lenders and make a broad array of changes in the federal student loan programs.
  • Increase Pell Grants to students who perform well academically in their first and second years in college, and make grants available to students year-round.
  • Seek to ensure that colleges provide intellectually diverse environments that guarantee academic freedom and free speech for professors and students alike.
  • Give parents more and easier-to-use information about colleges' costs, and publicly identify institutions that consistently raise their tuition prices by significant amounts.
  • Make it easier for students from institutions accredited by national accrediting bodies -- many of which are for-profit and online institutions -- to transfer their credits to nonprofit institutions.

"The College Access & Opportunity Act is simple in its purpose: we want to restore the focus of the Higher Education Act to students,” McKeon said in a news release. “We believe federal resources must be used more efficiently and effectively to expand college access and ensure every American student who strives for a college education has the opportunity to reach that goal.”

The full House Education and the Workforce Committee is expected to consider the bill next week, and members of both parties were expected to raise at that time some contentious issues on which they held back at the subcommittee.

The committee's Republican leaders are expected to unveil some compromise proposals on student loans, and Democrats may introduce amendments that would (1) challenge a provision in the bill that incorporates an agreement reached between lawmakers and higher education groups over intellectual pluralism and David Horowitz's Academic Bill of Rights, and (2) sustain a current rule that bars from awarding federal aid institutions that offer more than half their courses via distance education or enroll more than half of their students in online programs.

It is also possible, and even likely, that the full committee will end up re-fighting some of the battles that the subcommittee waged this week. Gabriella Gomez, a lobbyist for the American Federation of Teachers, said the closeness of the subcommittee's vote on the proposal to strip out the "single definition" virtually ensured that the issue would crop up again -- possibly with a different result. "I think this is very get-able," she said.


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