Elections

Missouri senator took campaign cash from schools accused of ripping off students

Sen. Roy Blunt, R-Mo., participates in a news conference on Capitol Hill in Washington with Senate Republican leadership, May 17, 2016.
Sen. Roy Blunt, R-Mo., participates in a news conference on Capitol Hill in Washington with Senate Republican leadership, May 17, 2016. AP

For the past two years, Sen. Roy Blunt has been a powerful ally to the nation’s beleaguered for-profit colleges as they fight government regulation.

At the same time, the industry and its lobbyists have funneled at least $100,000 in campaign donations to the Missouri Republican.

That total is a fraction of the $14.6 million Blunt has raised overall in his re-election effort.

But the money from for-profit colleges – and Blunt’s personal connections with lobbyists – closely tie the former college president from Springfield, Missouri, to an industry under attack for its business practices and, some say, for ripping off students.

We remember our friends.

Steve Gunderson, president of a for-profit college trade association

His influence may prove critical for the profit-driven schools during an especially tough era:

▪  More than two dozen companies that operate for-profit colleges have come under investigation by federal agencies and state attorneys general on suspicion of fraud and other illegal activity.

▪  Their businesses rely heavily on U.S. taxpayers for revenue, from both federal student aid programs and veterans’ GI Bill benefits.

▪  Blunt is the second-highest recipient in the Senate of donations in the 2016 election from individuals who work for for-profit education companies and their political action committees, with a total of $28,800. He’s gotten at least $73,550 more from lobbyists hired by for-profits, and an unknown amount from fundraisers those lobbyists threw for him, according to an analysis of public records by McClatchy.

▪  At least four times, Blunt’s campaign cashed checks from lobbyists within days of the senator taking action in the Senate that would have helped their for-profit client, Bridgepoint Education. The company recently agreed to forgive $24 million in private student loan debt after allegedly misleading students about repayment costs.

Blunt is battling Democratic challenger Jason Kander to keep his Senate seat. He declined an interview for this article. His deputy campaign manager, Burson Snyder, said in an email that the senator sees the federal crackdown on for-profits as an example of the Obama administration’s regulatory overreach.

At least four times, Roy Blunt’s campaign cashed checks from lobbyists within days of the senator taking action in the Senate that would have helped their for-profit client, Bridgepoint Education.

Snyder said the senator knows firsthand how problematic federal government interference in higher education can be.

Blunt, 66, was the first in his family to go to college. Before his election to Congress in 1996, he taught high school history and served as president of his own alma mater, Southwest Baptist University, a nonprofit private school in Bolivar, Missouri.

“He understands that higher education has been successful in this country in large part because the federal government stayed out of the way,” Snyder said. The senator, she said, “believes that any changes in policy should be thoroughly vetted and debated by the Congress, not enacted by regulatory fiat.”

‘Rose-tinted glasses’

Like Blunt, Kyle Hemming wanted to be the first in his family to graduate from college.

But Hemming, 29, says the college he attended in Kansas City, Missouri, was a scam. ITT Tech left him with more than $100,000 of debt and few job prospects. When he finally landed an interview with a telecom equipment company, the interviewer laughed out loud at his degree.

As the first person in his family to graduate college, Roy understands student debt and the cost of college. And as a former college president at Southwest Baptist University in Bolivar, he knows firsthand how problematic federal government interference can be.

Burson Syder, Blunt’s deputy campaign manager

ITT Tech declared bankruptcy in September and shut down its campus in Kansas City along with more than 130 other locations across the country. It was the latest setback for the for-profit education industry, which faces plummeting enrollments amid widespread allegations of fraud.

The industry and its investors blame their woes on tighter regulations imposed by the Obama administration. Institutions such as ITT Tech have poured millions of dollars into lobbying to weaken those regulations.

ITT Tech alone paid $290,000 over the past two years to lobbying firm Thompson Coburn. Thompson Coburn donated $14,000 to Blunt’s campaign and leadership PAC from 2015 to 2016, public records show.

Hemming, the ITT graduate, considers such donations as “nothing but legalized bribery.” He’s willing, however, to give Blunt the benefit of the doubt.

The Republican senator might be looking at for-profits “through rose-tinted glasses,” Hemming said.

“Being the first person in your family (to graduate from college) is a wonderful thing,” Hemming said, “but that’s not what schools like ITT Tech are doing, and either he doesn’t see it or he chooses not to see it.”

An industry favorite

The only senator who has gotten more money from for-profits than Blunt is John McCain of Arizona, whose state is home to the nation’s largest for-profit college, University of Phoenix.

A third of the nearly $30,000 in donations Blunt received from for-profits came from the Washington-based trade association that represents the industry, Career Education Colleges and Universities, records show.

The group’s political action committee donated $10,000 to Blunt this election cycle — more than any other federal candidate, according to the Center for Responsive Politics, a nonpartisan campaign watchdog group.

“We remember our friends,” said Steve Gunderson, the trade association’s president.

“When it’s incumbents running for re-election we support them based on their record,” Gunderson said. “Here you have, with Sen. Blunt, a senator who has a long record both in the House and the Senate of supporting our sector and supporting equal rules for all schools.”

At least two lobbyists who list for-profit colleges as their clients once worked as staffers for Blunt, Senate records show. Several more previously served alongside the Republican senator as members of Congress, including former Sens. Bob Dole of Kansas, Trent Lott of Mississippi and former Rep. Henry Bonilla of Texas.

Half a dozen lobbyists working on behalf of the for-profit industry – including Blunt’s former staffers – have hosted fundraisers for him in Washington.

Half a dozen lobbyists working on behalf of the for-profit industry – including Blunt’s former staffers – have hosted fundraisers for him in Washington.

They’ve also donated thousands of dollars to Blunt directly, sometimes within days of him filing or co-sponsoring legislation that would roll back regulations on the for-profit industry.

“This is an industry that is in crisis because the Obama administration has been really cracking down on some of the abuses, and now Congress represents their best hope for easing some of those restrictions,” said Viveca Novak, spokeswoman for Center for Responsive Politics.

At the very least, the companies and their lobbyists likely are getting excellent access to Blunt’s office, Novak said. “Their voices are being heard.”

All of this, she pointed out, is perfectly legal.

“But it’s the kind of practice that frustrates the public when they’re looking at what goes on in Washington,” she added.

‘Corporate welfare’

In January 2015, Blunt took the helm of a Senate subcommittee responsible for funding federal student aid programs. The post gave him considerable power over for-profit colleges’ main source of income: taxpayer-funded federal financial aid grants and subsidized student loans.

“He’s on the committee that controls essentially their primary source of funding,” said Kevin Kinser, head of the education policy studies department at Pennsylvania State University.

He’s on the committee that controls essentially their primary source of funding. Their viability as a business requires them to continue to have access to this money.

Kevin Kinser, head of education policy studies department, Pennsylvania State University

It’s not surprising that for-profit colleges might try to get cozy with politicians sitting on key committees that dole out those funds, Kinser said. “Their viability as a business requires them to continue to have access to this money.”

But for-profits’ dependence on federal aid dollars is costing taxpayers. Students attending for-profit colleges have run up massive federal student loan debt in the tens of billions of dollars, according to Department of Education data.

Eight of the top 10 contributors to federal student loan debt are for-profit colleges. Together those for-profits accounted for more than $86 billion in taxpayer-backed debt as of 2014, the data shows.

And though only about 9 percent of higher education students in the United States attend for-profit institutions, they account for 35 percent of student loan defaults.

The federal government is propping up for-profit institutions up by allowing them to rely on federal student aid, said Carrie Wofford, president of Veterans Education Success, a nonprofit that provides free legal services to service members and veterans deceived by colleges. “It’s corporate welfare that’s enabling consumer fraud.”

A loophole in federal education law gives for-profit institutions incentive to enroll as many veterans and service members as possible, Wofford said.

The so-called 90-10 rule bars for-profits from receiving more than 90 percent of their operating revenue from federal financial aid programs. Under current law, GI Bill funds and Department of Defense tuition assistance do not count toward that 90 percent limit, so veterans make especially attractive prospects for for-profit college recruiters.

“The idea that these lobbyists are walking the halls of Congress defending their . . . behavior makes you embarrassed for America,” Wofford said.

Former staffers turn fundraisers

The for-profit company with the closest connection to Blunt is Bridgepoint Education. Bridgepoint operates Ashford University, an online college that enrolls about 6,000 veterans among its 75,000 students.

Among the top-flight lobbying firms Bridgepoint hired in recent years are CGCN and Fierce Government Relations, both of which employ lobbyists who know Blunt. In four cases, they made donations within days of Blunt taking action on legislation that would help their clients.

Half a dozen lobbyists working on behalf of the for-profit industry – including Blunt’s former staffers – have hosted fundraisers for him in Washington.

One of those lobbyists, Sam Geduldig, is a partner for CGCN. He spent four years working as a senior adviser to Blunt when the lawmaker was House majority whip. Geduldig’s bio on his lobbying firm’s website notes the connection to Blunt and boasts that he knows how to “kill legislative threats to his clients.”

He maxed out his individual donations to the senator’s campaign committee with a $5,400 contribution on March 11, 2015, one day after Blunt signed on to co-sponsor a bill that would weaken regulations on the for-profit education industry.

Geduldig also donated $5,000 to Blunt’s leadership PAC on June 10 of this year, a day after the senator had introduced an appropriations bill with a provision that would restore year-round Pell Grants, a change sought by for-profits.

And in May, Geduldig hosted a fundraising dinner for Blunt at Carmine’s, a restaurant in Washington’s trendy Penn Quarter.

Another CGCN lobbyist, John Stipicevic, worked as a member of House whip operations under Blunt, his bio says. He donated $500 to Blunt on June 2, a week before Blunt filed the Pell Grant bill.

In 2010 Stipicevic had hosted a barbecue fundraiser in the run-up to Blunt’s successful Senate campaign, along with Geduldig and Kirsten Chadwick, a lobbyist with Fierce Government Relations.

Chadwick worked closely with Blunt as a lobbyist in the House, helping him count votes and rally support for trade legislation, according to The Hill newspaper. The National Journal listed Chadwick as “among the handful of lobbyists that Blunt seeks out for strategic counsel.”

She donated $2,700 to Blunt’s campaign on June 29, 2015, four days after he reported out of the Appropriations Committee an education funding bill he’d written. That bill would have blocked a requirement that for-profits prepare students for well-paying jobs.

Chadwick has hosted multiple fundraisers for Blunt over the years, including a dinner on June 23 at Microsoft’s Washington offices. She shared hosting duties that night with other Bridgepoint lobbyists and Blunt donors.

In all, individuals from both firms have given more than $31,000 to Blunt.

Neither CGCN nor Fierce Government Relations responded to requests for comment.

Snyder, from Blunt’s campaign, noted in an email that Geduldig and Chadwick have long histories of supporting the senator, and she attached a spreadsheet showing records of their contributions dating to 2004.

“This should help put their support this cycle in context,” she said.

Legal business, political liability?

Blunt did not respond to written questions from McClatchy about the timing of the lobbyists’ donations. He also didn’t answer whether he was aware that Bridgepoint Education has come under investigation by four federal agencies and attorneys general in multiple states.

In September, the U.S. Consumer Financial Protection Bureau forced Bridgepoint to forgive $24 million in private student loan debt and pay an $8 million civil penalty for allegedly deceiving students about the cost of borrowing from its in-house loan program.

Bridgepoint also paid a fine in August to the Department of Education for allegedly awarding more financial aid than students needed and failing to verify students’ enrollment status before taking their financial aid money.

In July, the Justice Department began looking into whether Bridgepoint has violated the law that prohibits colleges from deriving more than 90 percent of their operating revenue from federal student aid dollars.

And the Securities and Exchange Commission is investigating Bridgepoint’s accounting practices, loan programs and student enrollment.

Thousands of veterans who attend Bridgepoint colleges could lose access to their GI Bill benefits because of the company’s legal woes.

Amid Bridgepoint’s troubles, the company has continued its lobbying and campaign spending. Bridgepoint Education employees and its PAC have given the most money to politicians of any for-profit education company – more than $312,000 this cycle, according to the Center for Responsive Politics.

Bridgepoint’s PAC donated $5,000 to Blunt.

Other politicians have come under fire this year for accepting donations from Bridgepoint. Republican Sen. Kelly Ayotte of New Hampshire, locked in her own tough re-election battle, returned $8,000 she’d received from Bridgepoint’s PAC earlier this year, saying she wasn’t aware that the company was under investigation.

“It’s evidence that for-profits have some political liability associated with them,” said Kinser, the professor from Penn State. “There’s a lot of people who think the for-profit industry as a whole is a scam and anybody associated with them is tainted. That’s why politicians might distance themselves from them.”

But as Kinser pointed out, it’s still “a legal business they’re operating in.”

A spokeswoman for Bridgepoint did not respond to phone calls or emails requesting comment.

Gunderson, the for-profit trade association president, said the industry had been unfairly targeted by the Obama administration and Democratic attorneys general.

“There’s no question we are a political football in the current environment,” Gunderson said. “Other sectors in the higher education environment can do the same things we do and get away with it. If you sense we are a little defensive about the inequity of treatment, you’re right.”

‘The cards are stacked against us’

For students in Missouri who say they were ripped off by for-profit colleges, the flow of money from the industry to politicians like Blunt is a painful reminder of their own powerlessness.

Joseph White, who attended ITT Tech in Arnold, Missouri, traveled to Washington last year with other students of for-profit colleges to press the federal government to forgive their student loans.

I was fed a lot of lies and at one point I did believe the Kool-Aid but now, no. It ruined me.

ITT Tech graduate Joseph White, 39

White, a 39-year-old veteran of the Missouri Army National Guard, said he’d met with some congressional staffers, but no lawmakers had time to see him.

“I think that the cards are stacked against us as far as money’s concerned,” said White, who accuses ITT Tech of using up his veterans’ tuition assistance and signing him up for a private loan without his knowledge or permission. Now he owes $170,000 in student loans.

“I don’t have a lot of money,” White said. “So I don’t think I have that much play with these folks in Washington.”

He said it depresses him that both Democrats and Republicans accept money from for-profits. Hillary Clinton is one of the top recipients of for-profit industry donations this election, for a total of $63,747, according to the Center for Responsive Politics. Even Sen. Bernie Sanders, the liberal Vermont independent senator, got $16,962.

Googling for more information led White to articles about Republican presidential nominee Donald Trump’s controversial for-profit real estate training program, Trump University, as well as headlines about Democratic former President Bill Clinton earning $18 million as a board member for Laureate Education Inc., the world’s largest for-profit education company.

“I don’t trust anybody at this point, Democrat or Republican,” he said.

“I think they’re all bought and paid for.”

Jessica Campisi contributed to this article.

Lindsay Wise: 202-383-6007, @lindsaywise

Blunt in key position to influence policy on for-profit colleges

▪  He serves as chairman of an Appropriations subcommittee that determines funding for student financial aid, a major source of revenue for for-profits.

▪  A bill Blunt co-sponsored in March 2015 would block implementation of an Education Department rule requiring for-profit colleges to prepare students for well-paying jobs and meet minimum debt-to-income ratios. The schools also have to release information about their graduates’ typical earnings, their levels of debt and how many find work in their fields after graduation.

▪  A bill Blunt wrote and reported out of the Appropriations Committee in June 2015 had a policy rider prohibiting funding for several recent regulations affecting the for-profit education industry, including: developing a post-secondary institution rating system and the Education Department rule requiring for-profits to “prepare students for gainful employment in a recognized occupation” or risk losing federal funding.

▪  A bill Blunt wrote and reported out of the Appropriations Committee in June 2016 would restore year-round Pell Grants, a change sought by the for-profit industry’s trade association. For-profits receive much of their revenue from Pell Grants and other taxpayer-subsidized student aid programs.

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