The Influence Industry

Fighting Obama education plans, colleges boost lobbying

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By Alec MacGillis
Washington Post Staff Writer
Thursday, August 19, 2010

Academia may be a bastion of liberalism, but in the past two years, the higher education industry has often lined up opposite the White House and congressional Democrats -- and has spent a lot on lobbyists in the process.

The most recent example is the resistance from for-profit colleges to the Obama administration's proposal to raise standards for institutions receiving federal student aid. But traditional colleges and universities also have opposed Democratic initiatives.

First there was President Obama's plan to cap the charitable tax deduction for the wealthy, bringing their tax break closer to everyone else's. The measure would have raised $318 billion over 10 years, but it died quickly on Capitol Hill.

Charities were the most visible opponents, but universities also worried that it would reduce giving by wealthy donors: the American Council on Education (ACE), higher education's main trade group, lobbied on the issue in 2009, records show.

"We certainly registered our concern," said Terry Hartle, the group's chief lobbyist. "But . . . we were just a small part of any number of organizations that registered their concerns."

The next conflict was over the Democratic proposal to eliminate subsidies for student loan providers. The overhaul would provide billions of dollars in Pell grants for low-income students and billions more for colleges to improve graduation rates.

But schools were ambivalent about cracking down on private lenders, with whom they had built close relationships over the years. And they were opposed to the strings that would come with the additional institutional funding: requirements that they provide more data on student outcomes and submit to more state oversight.

The rules would apply mostly to community colleges, which were willing to accept them in return for extra funding, but four-year colleges opposed them anyway, wary of creating a precedent. They persuaded lawmakers to drop some of the provisions, and by the time the bill passed, the institutional funding was reduced so much that the provisions were mostly gone.

"Higher education is an interest group like any other, and what it wants is a lot of money from the taxpayer and no oversight of how that money is spent," said Kevin Carey of the think tank Education Sector. "And they've been very successful getting it for a long time."

Sarah Flanagan, a lobbyist for the National Association of Independent Colleges and Universities (NAICU), said the provisions crossed the line. They "put out national incentives and fund states and get states to get colleges to increase performance. That's not how colleges operate," she said. "The state bureaucratic model on higher ed reform was very problematic for us."

Hartle agreed. "This administration has made support for student aid and research one of their priorities, and we are enormously grateful for that," he said. "However, this administration is also much more comfortable with the idea of centralizing policymaking over higher education, including academic matters, and this is always a problem for those of us who represent higher ed."

NAICU has spent $514,000 on lobbying since the start of 2009. ACE has spent $442,626, in addition to $137,000 it has paid Ernst & Young to lobby on tax issues. The industry's lobbyists are well-connected -- Ernst & Young's representative for the colleges, for example, is Nick Giordano, former tax counsel for Senate Finance Committee Chairman Max Baucus (D-Mont.).

The groups also have lobbied on credit card reforms (many colleges offer cards, together with banks) and against a proposal by Sen. Sherrod Brown (D-Ohio) to allow collective bargaining by teaching assistants. They also lobby on less controversial topics, such as patents and student visas.

The latest focus is the administration's proposal that colleges can qualify for federal student aid only if at least 35 percent of their graduates are repaying their loans, to assure that schools aren't simply enrolling students to get the revenue from Pell grants and taxpayer-subsidized loans.

For-profit colleges are pushing back, aware that, by the government's count, many of them fall short of that 35 percent. The Career College Association increased its quarterly spending on the Podesta Group, a lobbying firm, from $50,000 to $80,000 in the second quarter.

Ramping up its lobbying even more is Kaplan, which is owned by The Washington Post Company and relies on for-profit colleges for most of its business. It spent $180,000 on lobbying in the second quarter, far above its usual $40,000, and enlisted extra help from Akin Gump, paying it $125,000 so far this year. The government says Kaplan's loan repayment rate is 28 percent, and The Post Company has warned that the rules could have a "material" impact on earnings. "It would be irresponsible for us not to strengthen our outreach at a time when there is a lot of attention . . . on the whole for-profit sector," said Kaplan spokesman Mark Harrad.

macgillisa@washpost.com


© 2010 The Washington Post Company

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