The Wall Street Journal today published an op-ed by former Senator Bob Kerrey and private equity man Jeffrey Leeds attacking the U.S. Department of Education's new "gainful employment" rule, which is aimed at reducing taxpayer aid to career colleges that consistently leave students with insurmountable debt. The piece is riddled with misleading arguments about for-profit colleges that I can't type fast enough on this Amtrak train, but I would be glad to debate either or both authors anyplace anytime on the substance.
Now I just want to point out that the article fails to disclose at least one of the authors' direct financial interests in the industry they defend -- a blatant affront to the reader. Jeffrey Leeds' firm, Leeds Equity Partners, owns for-profit colleges. This was documented by the Senate HELP committee's comprehensive report, and is touted on Leeds Equity's own web pages -- it is invested in Education Management Corporation (EDMC), the second biggest for-profit college company, and EduK Group, which is "the largest for-profit provider of postsecondary education in Puerto Rico and is building a presence in key Hispanic markets within the U.S."
UPDATE: Leeds, according to his bio, in fact serves on the board of directors of EDMC, which the U.S. Justice Department has sued for fraud, alleging the company paid its recruiters based on the number of students signed up, in violation of federal rules. He's also on the board of the for-profit colleges' main trade association, APSCU, which has used heavy-handed lobbying and campaign contributions to wage an aggressive attack on all efforts by the Obama Administration to hold predatory for-profit colleges accountable for waste, fraud, and abuse with taxpayer dollars. Leeds has been on the boards of numerous for-profit education companies, including Datamark, whose CEO was Arthur Benjamin. Benjamin went on to serve as CEO of ATI, a for-profit college which engaged in so much fraud during Benjamin's tenure that the Justice Department recently shut it down completely. (Benjamin, who also previously served on the APSCU board of directors, still sits on the board of an APSCU member college.)
The for-profit college industry has engaged in a consistent pattern of presenting defenses by powerful people without disclosing that the authors have a financial interest in the success of the industry. The impressive credentials of these advocates are meant to sway the reader, but the reader, in evaluating the validity of the views presented, should also know that the advocates will be making money if their views prevail.
As for Bob Kerrey, he quit his post as president emeritus at New York's New School this year, soon after becoming executive chairman of an "experimental" online higher education venture, the Minerva Institute for Research and Scholarship. Minerva apparently is not planning to run on federal financial aid. But Kerrey, in his failed run for the Senate in 2012, received the maximum $5000 contribution from Leeds Equity Partners.
I don't know at this point whether Kerrey has an ownership stake in any for-profit college, has any other financial connection to Leeds, or was paid to put his name on the piece. But whether he is getting paid or not, it's sad that someone who was a leader for progress in Congress is standing up for an industry where many big players are systematically ruining the lives of veterans, single mothers and others with a toxic mix of deceptive recruiting, high prices, and poor quality programs.