Corinthian Colleges Secretly Funded D.C. Think Tanks, Dark Money Election Efforts

(This post is from our new blog: Unofficial Sources.)

The spectacular crash of Corinthian Colleges after years of systematically deceiving thousands of students into enrolling into low-quality, high-cost education programs has once again raised questions about how the for-profit college industry staved off stronger rules governing the $1.4 billion per year in federal loans that helped keep Corinthian afloat.

Some hints emerged today in the giant chain’s filing for Chapter 11 bankruptcy protection in Delaware. It shows that Corinthian made secret payments to an array of political consultants, think tanks and political dark money groups.

The filing doesn’t list amounts, but shows that Corinthian made payments to Crossroads G.P.S., a group co-founded by Karl Rove that has raised over $300 million to elect Republican members of Congress through campaign advertising. Crossroads G.P.S., a 501(c)(4) nonprofit, does not disclose any of its donors.

Crossroads G.P.S. spent over $700,000 to help elect Sen. Marco Rubio, R-Fla., during his 2010 election. As Bloomberg News revealed, Rubio later filed a letter with the Department of Education, requesting that the agency “demonstrate leniency” with Corinthian.

Corinthian registered only two lobbying firms last year — Akin Gump Strauss Hauer & Feld LLP and Akerman LLP. But the filing shows that Corinthian also paid a myriad of other consulting firms that work to influence the political process.

Corinthian’s creditor list includes: TheGroup DC LLC, a public affairs firm founded by Art Collins, an advisor to Barack Obama’s 2008 election; Stanton Communications Inc., a firm that specializes in “crisis management”; and Strategic Partnerships LLC, a Virginia-based public affairs company founded by Kenneth Smith, a former Reagan administration advisor who now serves as the president of Jobs for America’s Graduates, Inc.

APCO Worldwide, a lobbying firm, is among the Corinthian creditors, though the firm never registered to represent Corinthian under the Lobbying Disclosure Act.

The listing reveals a number of payments to influential D.C. groups that have battled regulations on the for-profit college industry. The U.S. Chamber of Commere is listed multiple times as a Corinthian creditor. The Chamber has run campaign advertisements on behalf of opponents of the Department of Education’s “gainful employment” regulation, which would measure the performance of vocational programs. The Chamber made defeating the rules a top priority.

The American Legislative Exchange Council, a nonprofit that helps corporate interests draft model legislation, is listed as a creditor. As Republic Report reported, although for-profit colleges are far more expensive for programs offered by community colleges and other public institutions, ALEC drafted a resolution calling for state officials to “recognize the value of for-profit providers.”

Another gainful employment regulation opponent, the American Enterprise Institute, is listed as a Corinthian creditor. AEI scholars have repeatedly attacked the rules, calling them an example of the Obama administration’s “crusade against for-profit colleges.” Last October, Andrew Kelly, AEI’s resident scholar on higher education reform, specifically defended Corinthian and criticized the “Obama administration’s bloodlust for such schools.”

Payments are listed for current and previous board members to Corinthian, including former Defense Secretary Leon Panetta, Urban League President Marc Morial, and Sharon Robinson, president and chief executive officer of the non-profit American Association of Colleges for Teacher Education. Payments are also listed directly to the Panetta Institute and Morial’s National Urban League.

Corinthian allegedly lied to students by providing bogus job-placement statistics, misled accrediting agencies by claiming unemployed graduates were employed, and steered students to in-house loans for bachelor’s programs with a price tag as high as $75,384. Though Department of Education rules state that students do not have to make loan payments while attending school, the Miami Herald reported that Corinthian “frequently demanded that its students pay while attending classes” and were publicly shamed through classroom removals if they did not pay.

“This is public money that’s going into a for-profit college, that then is used to fund organizations that do lobbying work and other PR work on behalf of this company,” says Ann Larson, an organizer with the Debt Collective, a group pushing for loan forgiveness for Corinthian students who say they were defrauded.  “In the end, Corinthian can file for bankruptcy while tens of thousands of students, most of them low-income, are stuck with this debt.”

“It’s certainly not surprising that the corporate and political elites managed to come up with this scam,” Larson said.

Photo: David McNew/Getty