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October 06, 2010

Finding the Truth About For-Profit Education

By CREW Staff

Today's American Prospect article, Why Are Progressives Fighting Student-Loan Reform?, has it all wrong when it comes to CREW's role. According to the story, CREW used the Freedom of Information Act (FOIA) to "launch[] a legal probe" of advocates of the Department of Education's proposed regulations of the for-profit education industry. Further, it claims CREW's FOIA request alleges Wall Street short-seller Steve Eisman influenced Department of Education officials through political donations and that we suggested Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars & Admissions Officers, and Pauline Abernathy, vice president for the Institute for College Access & Success, were paid off by Mr. Eisman. 

These claims are flat wrong. A review of CREW's FOIA shows CREW asked for records regarding contacts that 11 individuals and entities - including Mr. Eisman, Mr. Nassirian, and Ms. Abernathy - had with the Department of Education regarding the for-profit education industry. There is no suggestion - explicitly or implicitly - that Mr. Eisman or any other of these individuals made political contributions or otherwise bought off any Department of Education officials in order to influence the outcome of the agency's regulation of the for-profit education industry.

As we have previously stated (and explained again to the American Prospect reporter), CREW is concerned Mr. Eisman and others may be attempting to manipulate the regulatory process for their own personal financial benefit. As the portfolio manager of a hedge fund that already has profited significantly from short-sales of stocks in this industry, Mr. Eisman has a lot to gain personally through his public criticism.

CREW's concerns were reinforced by a Pro Publica report that Johnette McConnell Early, while investigating the for-profit education industry at the behest of an unnamed financial firm, solicited signatures for a letter to Secretary of Education Arne Duncan pledging support for the department's efforts to tighten regulations of the industry. When later informed of Ms. Early's undisclosed conflict, one signatory to the letter said, "I think it's sleazy to basically use me and use other executive directors that have a real issue to make a profit for some companies."

CREW could not agree more. While the for-profit college industry clearly has serious problems that merit further scrutiny by federal officials, Americans also should know whether some of those yelling the loudest about this issue are doing so to promote their personal financial interests.

CREW routinely submits FOIA requests to agencies to learn more about their actions. In this case, we expect the records we have requested will shed light on the Department of Education's rulemaking process -- a role entirely consistent with CREW's fundamental mission of bringing greater transparency and accountability to government. Unfortunately, the department apparently is not eager to share this information. As a result, CREW soon will file a lawsuit against the Department of Education for failing to provide these records . . . records that should be of interest to anyone following this issue.

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