How the Sausage Is Made

Education Department discussion of financial aid rules begins with debate pitting for-profit colleges against their naysayers.
November 3, 2009

WASHINGTON -- Tensions between for-profit institutions and their foes came to the fore as a panel of concerned parties convened here Monday afternoon to begin the multi-month process of working out new regulations governing the integrity of federal financial aid programs.

It was the first day of a four-day session (to be followed by two more four-day sessions, one in December, the other in January) of negotiated rule making, intended to help the Department of Education craft regulations on a series of issues that the department can use to oversee institutions that receive federal financial aid under Title IV of the Higher Education Act of 1965.

Among the issues up for discussion are incentive compensation for recruiters, the alleged misrepresentation of information to students, and how to disburse financial aid to programs that offer instruction in modules or compressed timeframes, rather than typical semesters. All are controversial issues in the world of for-profit colleges. The audience of the open-to-the-public event included dozens of for-profit lobbyists and staffers.

So, as could have been anticipated, the first real discord in the process came in finalizing just who would serve on the panel. The department selected committee members who “represent the interests significantly affected by the topics proposed for negotiations,” but gave just three of the panel’s 28 spots to representatives of private, for-profit institutions. After the meeting started, a fourth -- Michale S. McComis, executive director of the Accrediting Commission of Career Schools and Colleges -- was added without objection as an alternate.

Elaine Neely, the only primary negotiator representing for-profits, proposed the addition of two more primary negotiators: Jeff Arthur, of ECPI College of Technology and co-chair of the Career College Association’s regulatory affairs committee, and William Leach, of Lincoln Educational Services. “It’s important that we have other members of proprietary schools at the table given the number of issues and … students we represent,” she said.

Neely is senior vice president of regulatory affairs for the large and publicly traded Kaplan Higher Education, which, she argued, is far different in size and governance structure from the privately owned, module-based ECPI and the smaller, publicly traded Lincoln. David Rhodes, president of the School of Visual Arts, is Neely’s alternate.

Arthur and Leach, she said, merited being on the panel just as the department has included negotiators from three kinds of nonprofit institutions -- 2-year publics, 4-year publics, and privates -- as part of the discussion. Arthur offered the name of a CCA colleague as alternate for himself, and Leach proposed alternates from DeVry, Inc., and the University of Phoenix.

The most vocal opposition came from Margaret Reiter, a lawyer and the primary negotiator representing consumer advocacy organizations. In 2007, as a California deputy attorney general, she filed suit against Corinthian Colleges, Inc., and won a $6.5 million settlement for the state. She said the group was already large enough with 14 primary negotiators, all with alternates, and should “go forward with the size group we have.”

Pressed for further explanation of her position, Reiter said she thought the panel was already “a well-balanced group representing a variety of constituencies.” Adding more representatives of for-profits, she said, would make the conversation “a little more weighted” and do so unnecessarily since “the proprietary schools tend to have a fairly consistent view among them.”

Neely said she would be open to adding just one more negotiator to the panel, making Arthur the primary representative and Leach the alternate.

Other panelists and members of the public nominated a few more people as potential negotiators, including Chris Young, of the test publisher Wonderlic, and Ray Testa, of the American Association of Cosmetology Schools, which represents institutions that measure credits in clock hours, an issue up for discussion in the session’s agenda. Panelist Terry W. Hartle, senior vice president of government and public affairs at the American Council on Education, proposed the addition of a primary seat for the Sharon Tanner of the National League for Nursing Accrediting Commission, who is currently an alternate to Barbara Brittingham, of the Commission on Institutions of Higher Education of the New England Association of Schools and Colleges, who is representing regional/programmatic accreditors.

The panel’s private, nonprofit representative, Todd Jones, president of the Association of Independent Colleges and Universities of Ohio, said he didn’t want to see the number of people actively involved in the negotiations grow. “We’re at a point where we’re going to substantially increase the size of this panel and the ability to ferment dissent,” he said.

Any one panelist’s opposition to a measure renders it dead, but Jones was open to hearing Arthur’s case on being added to the panel, with Leach as his alternate. Arthur discussed his experience administering financial aid at institutions where students take classes sequentially -- far different from what Kaplan does -- and working at a small, family-owned college, rather than a major corporation like Kaplan, which is owned by the Washington Post Company.

Arthur’s explanation convinced Jones to drop his opposition. But, in the final vote, Reiter, the lawyer representing consumer advocates, voiced her dissent. Sighs, groans and nods of disapproval came from much of the crowd.


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