Attention, Rep. Bobby Scott: Investigate Conflicts of Interest at Ed Dept

Four Top Officials Have Close Ties to Scandal-Ridden Career Education Corporation
Blog Post
Jan. 24, 2019

If the Democratic leaders of the House of Representatives Committee on Education and Labor are planning to increase oversight over the Trump administration’s management of the U.S. Department of Education, here’s a good place for them to start: the shockingly close ties multiple high-level Department officials have with the scandal-ridden for-profit college company Career Education Corporation (CEC).

The timing could not be better for a Congressional investigation into the department’s links with the large publicly-traded company, which was founded in 1994. Earlier this month, 49 state attorneys general reached a nearly $500 million settlement with CEC over allegations that the company had engaged in misleading and deceptive recruiting practices in order to pump their enrollment numbers. As part of the settlement, the company, which didn’t admit to any wrongdoing, agreed to cancel $493 million in private loans with which it had saddled its students.

Meanwhile, former CEC officials who now help run the Education Department began a rulemaking process this month that could be of great financial benefit to the company. According to my colleague Clare McCann, the Department’s proposals “are designed to make it easier for schools to take students’ money, and harder for states, accreditors, and the Department itself to hold them accountable when they provide a poor-quality education.” For example, these Trump officials want to make it easier for companies like Career Ed Corp to operate distance education programs in states without any supervision, and for poor-quality accreditation agencies like ACICS (which accredited a number of CEC schools) to continue to operate as gatekeepers to federal student aid dollars.

So what are the links between top Education Department officials and CEC? Consumer advocate David Halperin revealed these connections in a recent post he wrote for Republic Report:

Remarkably, [Education Secretary Betsy] DeVos’s top three higher education aides all have an association with CEC. Acting Under Secretary of Education Diane Auer Jones was from 2010 to 2015 senior vice president and chief external affairs officer at CEC. Robert Eitel, senior advisor to DeVos at the Department, was vice president of regulatory operations at CEC from 2013 to 2015. And the acting head of the Department’s student aid office, James Manning, was, sometime between 2015 and 2017, a consultant to a student loan company run by William Hansen, who now sits on the CEC board of directors; Manning was Hansen’s chief of staff when Hansen served as deputy education secretary under George W. Bush.
In addition, the DeVos Department’s general counsel, Carlos Muñiz, according to his April 2017 federal disclosure form, “provided consulting services” to Career Education Corp. as a private lawyer before coming to the department… Two sources with knowledge of the matter tell me that Carlos Muñiz did represent Career Education Corporation in dealing with the state attorney general investigation and negotiations. One of those sources said of Muñiz, “He was on the team that negotiated the settlement,” and that Muñiz was communicating with state AG offices as late as January 2018.

Rep. Bobby Scott, the Virginia Democrat who leads the House Committee on Education and Labor, should call Auer Jones, Eitel, Manning, and Muñiz, who has just been named to a seat on the Florida Supreme Court, to testify at a public hearing about the roles they played at and for Career Ed Corp, their knowledge of the recruiting abuses the states’ attorneys general found, and whether they have used their offices to benefit the company.

Allegations of fraud and abuse at CEC are not new. Over the past 15 years, the company has been under nearly constant scrutiny from federal and state regulators, who have repeatedly taken actions against this company. Over the coming weeks, I will write more about the company’s sordid history.

But at this moment, when the Trump administration is leading an all-out assault over the mechanisms the government uses to oversee for-profit colleges, it is vital that House Democrats expose the extent to which the fox is guarding the hen house at the Education Department. Otherwise, unscrupulous schools’ actions may go unchecked, and millions more students could be put in harm’s way.

Related Topics
Higher Education Accountability & Consumer Protection