For-profit higher education companies are on a spending spree for lawyers with experience in congressional investigations, as they try to respond to an expansive new inquiry into their operations.
The industry is under scrutiny after experiencing a growth spurt during the recession. More unemployed workers are trying to improve their job prospects by taking technical classes. Critics, including U.S. Sen. Tom Harkin (D-Iowa), question whether the companies have been too aggressive by exaggerating the job prospects of their graduates or by gaming the federal system for financial aid. Harkin, the chairman of the Senate Committee on Health, Education, Labor and Pensions, last month sent letters to 30 for-profit education companies asking for information about job placement rates, the cost of programs and the debt that students take on.
To help respond to the committee’s requests, the companies have turned to several prominent Washington lawyers. They include Michael Bopp, co-chairman of the public policy group at Gibson, Dunn & Crutcher; Reginald Brown, a partner at Wilmer Cutler Pickering Hale and Dorr; Theodore Hester, a partner at King & Spalding; Mark Paoletta, a partner at Dickstein Shapiro; and Peter Spivack, co-chairman of the investigations practice at Hogan Lovells, according to lawyers with clients before the committee.
It’s standard practice for companies that receive congressional requests for information to hire lawyers with experience in such matters, but the expansive nature of Harkin’s request — in effect, surveying the entire multibillion-dollar industry — means that a large number of law firms are getting phone calls. There are no public filings of lawyers who represent clients before congressional committees, so the exact number isn’t clear.
Separately, the industry is boosting its lobbying muscle. In the past month, three companies registered with three lobbying firms: Broydick & Associates, Dutko Worldwide and Prime Policy Group. In March, as public scrutiny increased, Heather Podesta + Partners registered for three companies, including DeVry Inc.
The 30 companies that received congressional requests for information include some of the industry’s largest players by enrollment, including Apollo Group Inc., which owns the University of Phoenix, and Kaplan Higher Education, which is owned by the Washington Post Co. Half are publicly traded.
Harkin’s interest in the industry is already encouraging plaintiffs’ lawyers. A class action complaint filed on Aug. 11 against Alta Colleges Inc. quotes testimony from initial hearings before the committee, and Alta Colleges is among the 30 companies that Harkin wants to learn more about. Plaintiffs’ lawyers have also filed recent class actions against Corinthian Colleges Inc. and American Public Education Inc., two other companies that are on Harkin’s list.
“We want to be transparent. There’s no reason not to provide this information to the Congress and others who are interested,” said Harris Miller, president of the Association of Private Sector Colleges and Universities, a trade group. Miller said he has encouraged lawmakers and congressional staff — few if any of whom attended for-profit schools — to visit campuses and speak with students and staff for themselves. “They will leave impressed, just as they leave impressed after they visit a traditional college,” he said.
Harkin’s inquiry signals a new approach for a committee that, under its previous chairman, the late Sen. Edward Kennedy (D-Mass.), put a much greater emphasis on moving legislation than on conducting oversight of private industries.
In May, soon after Congress finished its work on Democrats’ health care overhaul, Harkin announced the creation of a new “investigation unit.” In a statement at the time, he said the unit would have a focus on “standing up to powerful institutions” and “play an active role in consumer protection and to make sure that public money is spent well rather than wasted or squandered through fraud.”
Heading up the unit — and its investigation of for-profit higher education — is Beth Stein, a lawyer who has worked for Harkin in other capacities since 2004. She has a background centered on investigations, rather than policy, as a former counsel for the Senate’s Permanent Subcommittee on Investigations. Among the other congressional investigations she’s worked on has been the Senate’s high-profile look at campaign finances after the 1996 presidential election. A committee spokeswoman declined to make Stein available for an interview.
Adding ammunition to Harkin’s investigation is an August report from the U.S. Government Accountability Office. The office conducted “undercover tests” at 15 for-profit colleges, and the report says that investigators found “deceptive or otherwise questionable statements” made to college applicants at all 15. In one case, the report says, a financial aid officer wrongly told an undercover investigator not to disclose $250,000 in savings. In 2009, students at for-profit colleges received more than $20 billion in loans from the U.S. Department of Education, according to the report.
Harkin has told senators to prepare for a Sept. 30 hearing based on his staff’s latest findings. If Democrats retain control of the Senate, Harkin is expected to hold more hearings this fall and winter.
David Ingram can be reached at email@example.com.