For-Profit Colleges Have Uncounted Government Connections

Just as the bottom line for many for-profit colleges is directly linked to government funding, the executive offices and board rooms of many of these companies have direct links to government itself.

Two sitting U.S. senators are married to individuals with sizeable investment stakes.

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Former Maine Gov. John McKernan, chairman and former CEO of one of the largest firms, Education Management Corporation, is the husband of Sen. Olympia Snowe (R-ME). In her most recent financial disclosure, filed last year, Snowe listed holdings in Education Management of $2 million to $10 million.

Richard Blum, husband of Sen. Dianne Feinstein (D-CA), is an investor in two for-profit college companies – Career Education Corporation and ITT Educational Services. In her 2010 financial disclosure, Feinstein listed Career Education holdings valued at $2.16 million to $4.55 million. The couple’s stake in ITT Educational Services was valued at $1.45 million to $3.12 million.

The relationship map below shows the Blum-Feinstein holdings. An interactive version can be found on Muckety.com.

Dianne Feinstein's connections to for-profit colleges

We find no instances where either Snow or Feinstein voted on a measure that was directly lobbied by her husband’s company.

Yet for-profit colleges have government entanglements that go well beyond legislation. For instance:

  • The majority of their income derives from Title IV education grants and the Veterans Education Assistance Act.
  • The Education Department sets rules governing eligibility for these funds. (See story on for-profit schools lobbying.)
  • McKernan’s firm has been sued by the Department of Justice, which charged that the company falsely claimed that recruiter pay was not based on the number of students enrolled.

Snowe has not cited the lawsuit or her husband’s business activities as considerations in her decision not to seek re-election this year.

Critics have accused the senators of having potential conflicts of interest. Both Snowe and Feinstein have said that their spouses’s business activities were kept separate from their Senate responsibilities.

The two are not the only members of Congress with holdings in the for-profit college sector.

A review of financial disclosure data compiled by the Center for Responsive Politics shows that the following members also reported investments in 2010:

Member Company Investment
Orrin Hatch (R-UT) Apollo Group Inc. $1,001 to $15,000
John Kerry (D-MA) Education Management Corporation $250,001 to $500,000
John Kerry (D-MA) Capella Education $250,001 to $500,000
Lamar Smith (R-TX) DeVry Inc. $1,001 to $15,000

Washington connections don’t end with Congress. They also encompass the media and former high-level officials, including:

The Washington Post Co. – Kaplan Higher Education Corporation is a subsidiary of Kaplan, Inc., which is a subsidiary of the Post Co. In 2011, Title IV funds programs accounted for about $1.1 billion, or 79 percent, of total KHE revenues, and 45 percent of Kaplan, Inc. revenues. The Post is also an investor in Corinthian Colleges.

Former Vice President Al Gore – Gore is a co-founder of Generation Investment Management, which is an investor in Strayer Education Inc. According to its 2012 annual report, Strayer University derived about 78 percent of its revenues from Title IV in 2009 and 2010. (The figure for 2011 had not yet been calculated.)

Former Rep. Vin Weber (R-MN) – Weber is a director of ITT Educational Services. He is also a lobbyist for Capella Education.

Former Rep. William E. Brock III (D-PA) – Brock is a director of Strayer Education and a lobbyist for Education Management.

In addition to its lobbying activities, the for-profit college sector is also a contributor to political campaigns and committees. The table below shows PAC contributions of major companies during the 2010 and 2012 election cycles.

Laurie Bennett is a longtime newspaper journalist and winner of the Polk Award. She is co-founder of Muckety.com and also blogs for Forbes.


Company 2012 Cycle 2010 Cycle
Bridgepoint Education $239,199 $40,548
Apollo Group Inc. $213,800 $189,600
Association of Private Sector Colleges and Universities $161,250 $358,497
Education Management Corporation $83,595
Corinthian Colleges $54,700 $103,603
Career Education Corporation $21,327 $56,204
Capella Education Company $20,700 $26,669
DeVry Inc. $20,600
Alta Colleges, Inc. $20,000 $14,900
Universal Technical Institute Inc. $20,000

Source: Center for Responsive Politics

Related Post: For-Profit Colleges a New Lobby Force in Washington

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