Romney Attacks Student Loan Reform, Touts For-Profit Colleges
Photo Credit: Gage Skidmore via Wikimedia Commons
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Mitt Romney has just released his plan for educating America’s young people, and it’s wholly consistent with his overall philosophy: Allow money to dominate politics, and everything will work out great. Except that, when it comes to policies on college education, we tried that approach under George W. Bush, and it was a disaster for students and taxpayers.
Specifically, Romney attacks — and pledges to undo — two critical reforms implemented by the Obama Administration: (1) reforming student loans and (2) holding for-profit colleges accountable for waste, fraud, and abuse.
In the recent bad old days, the big firms dominating the student loan business — Sallie Mae, Citigroup, Wells Fargo, JPMorgan Chase, etc. — got paid as if they were lenders, when in fact they were merely loan servicers; it was us taxpayers who actually took the risk of students defaulting on loans. These banks then used our money to hire lobbyists to protect their billions in unwarranted profits. The Obama Administration stood up to them, and Congress, with nowhere left to cut spending, finally ended this absurd giveaway. There’s absolutely no logical reason to restore this massive waste of taxpayer money. You would only do it if a central principle of your presidency was to hand out gifts to special interests who helped you get elected. Unfortunately it looks like Romney might want to be just that kind of President. JPMorgan Chase, Citigroup, and Wells Fargo employees are ranked numbers 3, 6, and 10 among the top 2012 Romney donors.
Then there’s the issue of the for-profit college sector, whose multiple bad actors have been caught in the act of defrauding our veterans and low-income students with deceptive recruiting practices, and defrauding government with phony reporting. For-profit colleges have grown rapidly and now account for about 12 percent of students, but their financial footprint is even bigger: With high prices, high dropout rates, and poor job placement, they account for 25 percent of federal financial aid — over $30 billion a year — and 45 percent of student loan defaults.
Romney takes direct aim at the Obama Administration’s “gainful employment” rule — an effort to channel federal student aid to college programs that actually help students learn and get jobs, rather than to programs that leave students deep in debt and ruin their lives. Many of the biggest for-profit schools get 90 percent or more of their revenue from taxpayer funds. They devoted a big chunk of that money to a lobbying and public relations campaign that succeeded in watering down — but not eliminating — the new Obama rule. But that’s not good enough for Mitt Romney.
Why? One possibility is that the for-profit college owners are his friends and business associates. On the campaign trail, Romney has pointed to a for-profit college, Florida’s Full Sail University, as an innovative, cost-effective leader in higher education. Never mind that Full Sail has sky-high prices and, at best, a mixed record when it comes to helping students. Romney did not inform voters that his campaign and Super PAC have received nearly $100,000 from Full Sail CEO Bill Heavener and from C. Kevin Landry, chairman of TA Associates, the private equity firm that owns Full Sail.
Nor did Romney tell voters about the private equity fund Solamere Capital, which is run by Mitt’s son Tagg Romney and Spencer Zwick, who also serves as the top fundraiser on the Romney campaign staff. Solamere was launched with a $10 million investment from Mitt and Ann Romney, and Mitt also has provided strategic advice. Solamere Capital offered its clients a stake in TA Associates, which owns not just Full Sail but a number of for-profit schools, including troubled Vatterott Colleges, marked by exploitative recruiting practices and high student loan defaults.