May 19 (Bloomberg) -- U.S. Representative Danny Davis, a Democrat from Chicago’s South Side, was surprised to see his name in an October ad that criticized proposed regulations on for-profit colleges.
Davis, who is black, supports the federal rules because he says they will help protect black and Hispanic students from going into debt and paying too much for worthless degrees. The Coalition for Educational Success, a for-profit college trade group, said it put Davis’s name in the ad without his knowledge, apologized and withdrew the ad.
For-profit colleges are clashing with minority lawmakers and advocacy groups over student-aid rules that the Obama administration has proposed to keep poor students out of debt. While the colleges say they give black and Hispanic students access to higher education, most minority lawmakers in the U.S. House of Representatives voted to let the rules go forward in February’s budget negotiations.
“The way the for-profits and their lobbyists point to their supposed care for and support of low-income students and people of color is, to me, offensive,” said California Representative Maxine Waters, a Democrat and member of the Congressional Black Caucus.
The Leadership Conference on Civil and Human Rights, a coalition of more than 200 U.S. advocacy groups for minorities and the poor, and the National Association for the Advancement of Colored People support the proposal, called the gainful employment rule. Under the regulation, for-profit colleges would lose access to federal student aid if they fail to meet benchmarks for loan repayments and if graduates’ incomes are too low to repay debts.
Supporting for-profit colleges are such groups as the National Black Chamber of Commerce, which represents 130 U.S. chapters with about 100,000 member businesses. The National Urban League has asked for a study of the rules’ impact on minorities. The Hispanic Leadership Fund, an Alexandria, Virginia-based group that promotes “limited government, individual liberty and free enterprise,” has also publicly opposed the rules.
About 57 percent of students who attend U.S. for-profit colleges are minorities, compared with 37 percent at public non-profits and 33 percent at private non-profits, according to the Education Department. For-profit college students, who represent about 12 percent of U.S. college students, get a quarter of the federal Pell Grant funds designated for the poor.
For-profit colleges “offer minority students opportunities they don’t have at many traditional schools,” said Harris Miller, president of the Association of Private Sector Colleges & Universities, a Washington-based trade group. “We really are performing a public service that benefits a lot of lower-income people, including minorities.”
Black and Hispanic lawmakers are crucial to the $33 billion industry because minority students represent both a mission and a business opportunity for the for-profit colleges, said Jarrel Price, an analyst at Height Analytics in Washington. Poor minority students have been underserved by the traditional educational system, and support from their representatives in Congress would show that companies such as University of Phoenix parent Apollo Group Inc. are filling an important gap, he said.
“It’s a key political group for explaining the mission and risk profile of the industry,” he said in a telephone interview.
A study commissioned by for-profit colleges found that programs serving 300,000 students might be closed or sanctioned by the rules. More than 3 million students attend these schools annually, according to the APSCU trade group. A revised version of the Education Department’s regulations went to the White House Office of Management & Budget May 2 for review before becoming final.
For-profit colleges doubled their annual spending on Washington lobbying to at least $6.6 million in 2010 to head off the Education Department’s rules. The lobbying touched off a massive letter-writing campaign to the department, resulting in a delay of the regulations.
Representative Alcee Hastings of Florida, a Democratic member of the Congressional Black Caucus, supports an amendment to halt the rules. He didn’t return calls to his office seeking comment.
While the amendment passed 289 to 136 in the House, all three minority caucuses opposed it. In the Congressional Black Caucus alone, members voted 30 to 10 against it with two abstentions. The Senate voted down a similar measure and it was later cut from a budget compromise between the Obama administration, the House, and the Senate.
“For-profit colleges have rushed to paint the perspectives of a few minority lawmakers as the view of all,” said Democratic Representative Michael Honda of California, a member of the Congressional Asian Pacific American Caucus, which voted in favor of the Education Department’s rules.
At the forefront of the forces opposing the rules is Lanny Davis, a one-time special counsel to President Bill Clinton. He criticized the agency and Education Secretary Arne Duncan in a May 4 press release for “secrecy” on the gainful employment rules and for ignoring the impact on low-income and minority students. He isn’t related to Danny Davis.
Six months earlier, Lanny Davis apologized to Representative Davis for including the congressman’s name in the Washington Post ad that criticized the proposed rules. At the time, Lanny Davis was a lobbyist for the Coalition for Educational Success, the trade group that paid for the ad. Davis is no longer with the coalition, according to the group.
Headlined “Stop the Rush to Regulate: Minority Leaders Ask Secretary Duncan to Reconsider Proposed Changes to College Access Rules,” the ad said the tougher rules would “block access to higher education and jobs for underserved groups.”
“African-American and Hispanic leaders voiced their concern,” the advertisement said.
The ad quoted from a Sept. 8 letter Representative Davis sent to the Education Department, which said that for-profit colleges offer a “flexible” option for students whose schedules conflict with those of traditional schools. The ad left out the rest of Davis’s letter, which praised the proposal to toughen restrictions on for-profit colleges as “an important step in strengthening higher education and helping vulnerable students.”
Lanny Davis sent an apology Oct. 28 to Representative Davis for the unauthorized use of his name in the ad. In a meeting a few days later, Lanny Davis pointed out to Representative Davis that his letter to the Education Department did make suggestions for improving the proposed rules, and it was quoted accurately.
The failure to ask the congressman’s permission to use his name in the ad was “a protocol violation, a lack of professional courtesy,” Lanny Davis said in a telephone interview.
Representative Davis said the ad mischaracterized his view, which supports the Education Department’s regulations.
Lanny Davis now lobbies for the National Black Chamber of Commerce. Minority lawmakers who support the Education Department’s rules don’t know how many low-income students will lose their student aid when the rules go into effect, Lanny Davis said.
“They don’t understand the details and the fine print,” he said. “I would change their minds if I were able to spend some time with them.”
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