Introduction

When the Biden administration’s proposal to make community college tuition-free was jettisoned by congressional negotiators last fall, higher education was left with little more than a proposed increase in the maximum Pell Grant, from $6,495 to $7,045. Ordinarily, a $550 Pell increase would stir scant controversy. But that’s not the case, thanks to a plausible sounding yet ultimately phony “equity” campaign mounted by lobbyists for for-profit colleges, their Republican allies, and a smattering of Democratic lawmakers.

The New York Times, Washington Post, Reuters, and Politico all covered the Pell Grant increase for one reason: the House-passed Build Back Better bill barred students from using the added funds at for-profit colleges. Industry lobbying against this exclusion offers a sneak preview of the gaslight anthems for-profit advocates are sure to sound throughout the upcoming year when the U.S. Department of Education seeks to regulate the sector’s career training programs in new gainful employment (GE) and borrower defense (BD) regulations.

A September 2021 analysis by the Institute for College Access & Success found that in the initial public comment period for the Biden administration’s upcoming rulemaking, the list of the most common comments submitted by for-profit college companies and their lobbyists was topped by the statement that any future GE rule “should be applied to all institutions, not just proprietary [i.e., for-profit] schools.”

The truth is that industry lobbyists and GOP legislators now object to every federal policy that attempts to draw any distinction between for-profit colleges and other institutions of higher education as acts of institutional “discrimination,” whether the policy has to do with certifying eligibility for COVID-relief funds or expanding eligibility for Pell Grant funding to very short-term postsecondary career training programs.

This equity language has been misleading from the start. Republican lawmakers, as the Times reported, asserted that the exclusion of for-profit colleges from the Pell Grant increase was “discriminatory,” stemming from Democrats’ desire to settle “an ideological score” against for-profit schools. “This blatantly discriminatory policy” will only “punish hundreds of thousands of low-income students,” said Jason Altmire, the new president and CEO of Career Education Colleges and Universities (CECU), the industry’s chief trade association. Altmire, a centrist Democrat and former U.S. congressman who succeeded Steve Gunderson, former GOP congressman and longtime CECU head, told Inside Higher Ed: “Congress has never done anything like this.”

Most reporters have largely accepted industry and conservatives’ claims that barring for-profit colleges from receiving a Pell Grant increase is unprecedented and amounts to institutional discrimination, with low-income students as the ultimate victims. Higher Ed Dive reported that the exclusion of for-profit schools from the Pell Grant boost was a “radical departure in policy, as the federal government has never parceled financial aid by institution type.” Veteran higher ed lawyer John Przypyszny told Inside Higher Ed that the federal government had “never distinguished access to Title IV programs [federal student aid] based on the tax status of the institution a student chooses to attend.”

Yet go to the videotape—or in this case, the history of federal regulation of for-profit colleges—and it shows that differential regulation of the for-profit sector has in fact happened repeatedly. If differential regulation isn’t quite the norm, it’s far from being the exception.

The two most long-standing federal student loan programs (guaranteed federal student loans, aka Stafford Loans, and the Perkins Loan program, which ended in 2017) initially barred for-profit schools from participation altogether. Those prohibitions stemmed from widespread abuses by for-profit schools of the World War II GI bill—abuses eerily similar to the well-publicized misrepresentations about job placement, predatory marketing, and fraud perpetuated by many for-profit schools over the last decade.

Today, for-profit colleges still face special requirements to retain eligibility for the federal student aid program, including the “90-10 rule,” which requires for-profit schools and for-profit schools alone to demonstrate that they get at least 10 percent of their revenues from non-federal sources. Congress explicitly strengthened the 90-10 rule in 2020 by closing a notorious loophole that allowed for-profit colleges to count veterans’ GI Bill benefits as “non-federal” monies.

For-profit schools are also ineligible, and always have been, for an array of other, smaller federal aid programs. In fact, GOP lawmakers are currently promoting legislation to eliminate the government’s long-standing differential regulation of the sector, even as they claim that differential regulation is unprecedented.

The for-profit industry’s objections to regulations targeting itself are part heartfelt and part tactical. For-profit schools and their primarily adult, job-focused students are often looked down upon, unfairly, by elite traditional colleges that do not primarily serve mid-career working class and low-income adults. For-profit educators want to be treated like their peers, and not, as former House Speaker John Boehner (R-OH) once put it, as the “second-class citizens” of higher ed. At the same time, the sector’s insistence that all institutions must be regulated “equally,” however heartfelt, is also politically beneficial—it sends out the Bat-Signal to traditional colleges and their lobbyists that if they don’t watch out, their institutions too could also face the heavy hand of government regulation.