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Exclusive: Manufacturing Dissent at the Education Management Corporation

Published:  August 31, 2010

Higher Ed Watch has learned that at least one major for-profit higher education company is going to extraordinary lengths to strong-arm its faculty and staff to lobby against new rules the Obama administration has proposed that would cut off federal financial aid to for-profit college programs whose students take on the most unmanageable levels of debt (in relation to their expected future earnings) and have the poorest record of repayment.

Education Management Corporation (EDMC) has hired DCI Group, a controversial Republican advocacy and public relations firm that is expert in the art of  manufacturing grass-roots lobbying campaigns for corporations (otherwise known as “astroturfing”), to contact the company’s employees individually to help them craft  letters to the U.S. Department of Education opposing the administration’s new proposed “gainful employment” regulations.

“This week, employees throughout EDMC and our schools will be receiving phone calls during business hours from our partners, the DCI Group, to assist you in crafting personalized letters to U.S. Secretary of Education Arne Duncan detailing for him your own views on Gainful Employment,” Todd Nelson, EDMC’s chief executive officer, wrote last Tuesday to the company’s approximately 20,000 employees in an e-mail, which was obtained by Higher Ed Watch.

 “You will be asked a series of short questions that will help DCI Group create a unique letter. These personalized letters will then be delivered to you for a signature, along with a pre-addressed stamp envelope,” wrote Nelson. “We encourage you to mail the letters as quickly as possible so that your comments are received before September 9. The entire process should take no more than 10 minutes of your time, but its impact on EDMC would be immeasurable.”

While Nelson emphasizes that “no employee is under any obligation to take part in these activities,” people who have worked for the company aren’t buying it. They fully expect that those who refuse to acquiesce will suffer some form of retaliation -- perhaps not immediately, but eventually.

“This is scaring a lot of people because they know that, no matter what the company says, it will keep track of those who refuse to cooperate,” said a former EDMC recruiter, who wished to remain anonymous. “That’s just the way the company operates.”

High Stakes

When it comes to the recently proposed gainful employment rules, the stakes are particularly high for EDMC, the country’s second largest publicly-traded chain of for-profit colleges.

That’s because the company, which enrolls about 136,000 online and at 101 campuses around the country, offers just the sort of training programs that the Obama administration is targeting – those that are overpriced and lead to jobs in low-paying fields, such as art and cooking (where the average starting salary is just $18,000). According to a recent article in BusinessWeek, EDMC charges students at its schools (Argosy University, the Art Institutes, Brown Mackie College, and South University) $50,000 to earn an associate’s degree and $100,000 to earn a bachelor’s degree in these fields. The vast majority of these students -- who mostly come from low-income and working-class backgrounds -- take out loans to cover these costs but have trouble paying them back.

The Education Department recently released data showing that only 38 percent of students who left the company’s schools in the last four years have paid down any principal on their federal student loans as of September 2009. Under the administration’s proposal, for-profit college programs with high debt-to-income ratios and repayment rates below 45 percent could have serious restrictions placed on their federal student aid eligibility.

“The proposed rule’s potential consequences on EDMC could be substantial,” Nelson wrote in the all-staff e-mail he sent out last week.

Bare-Knuckled Lobbying

Bringing on the DCI Group is just the company’s latest gambit to try and mobilize its employees to speak out against the administration’s effort to crack down on for-profit schools that overload students with debt they may never be able to pay off.

In the spring, EDMC hired BIPAC, a pro-business advocacy organization, to set up the “Higher Education Action Center,” a set of websites that faculty and staff (as well as students, alumni, employers, and “friends and family”) could use to send personalized letters, containing the company’s talking points opposing the Gainful Employment proposal, to the Education Department and Congress.

Warning that the proposed rule would “threaten jobs and result in lay-offs of faculty and staff,” EDMC officials tried to scare employees to speak out against this “inappropriate” proposal that, would “limit choices and educational access for students, while threatening critical jobs across the country.”

The response from employees, however, was apparently under whelming. “The voluntary effort obviously hasn’t worked,” the ex-recruiter, who remains in contact with former colleagues, said. “So now they are increasing the pressure.”

The company that EDMC has hired to apply that pressure is known for its “brass-knuckled” approach to lobbying -- specializing in “in P.R., lobbying, and so-called "Astroturf" organizing, generally on behalf of corporations, GOP politicians, and the occasional Third-World despot,” according to the Washington Monthly. DCI Group has repeatedly come under fire for its shady lobbying tactics. The firm, for example, has reportedly set up phony front groups to fight health reform, support President Bush’s efforts to privatize Social Security, lobby on behalf of the tobacco industry, and even to improve U.S. relations with the ruthless military junta in Burma. It also apparently has ties to the Swift Boat Veterans for Truth, the group that relentlessly attacked 2004 Democratic presidential nominee John Kerry's military service.

This is, in other words, a firm that is unlikely to have any qualms about browbeating EDMC employees to do their company’s bidding.

At Higher Ed Watch, we believe that it is vitally important for Education Secretary Arne Duncan and his colleagues at the agency to be informed about the source behind the flood of letters they are about to receive. Because to us, the fact that EDMC has resorted to hiring a firm with such a checkered past to twist its employees’ arms speaks volumes.

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