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Senate Dems Drop For-Profit College Criticism to Appease Biden Nominee

Elizabeth Warren ignores SEC pick's for-profit college ties after attacking industry

Gary Gensler / Getty Images
• March 8, 2021 5:00 am

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Top Democrats have long attacked "predatory" for-profit colleges for exploiting low-income students of color. But when it came to President Joe Biden's pick to head the Securities and Exchange Commission—who made millions representing one of the industry's infamous actors—they remained silent.

During a Tuesday confirmation hearing, Gary Gensler avoided scrutiny from Senate Banking Committee Democrats over his eight-year tenure on the board of Strayer University. The for-profit college has faced criticism for "aggressively" targeting "vulnerable" students in urban areas using celebrities such as Queen Latifah and Steve Harvey. Gensler accumulated between $1 million and $5 million in stock options for his work at Strayer, according to a 2009 financial disclosure. An updated filing obtained by the Washington Free Beacon shows that Gensler has since sold the stock, raking in a sizable profit in the process.

Leading committee Democrats ignored Gensler's stint at Strayer despite having derided for-profit colleges for years. Sens. Elizabeth Warren (D., Mass.) and Sherrod Brown (D., Ohio), for example, joined forces on a 2019 bill aimed at ending taxpayer subsidies to the industry. Warren accused schools such as Strayer of "sucking down billions in taxpayer dollars as they cheat students and load them up with debt for worthless degrees." Sen. Mark Warner (D., Va.) also turned a blind eye to Gensler's for-profit college ties, even though he denounced Trump administration education secretary Betsy DeVos for hiring industry executives who he said "cheated or defrauded" students.

Strayer's use of insistent ad campaigns to recruit students in urban areas is also a tactic that Warren, Brown, and other Senate Democrats have criticized in the past. A 2019 Black Entertainment Television report noted that such ads were "expertly designed to attract those most unfamiliar with higher education" in an attempt to entice "those who are victims of institutionalized barriers." Veterans Education Success senior director Aniela Szymanski said that the strategy is par for the course in the for-profit education industry. She highlighted a 2012 Senate Health, Education, Labor, and Pensions Committee report, which found that Strayer spent $2,448 per student on marketing, compared with just $1,329 per student on instruction.

"Almost to a tee, every for-profit university spends vastly more money on marketing than they do on education," Syzmanski said. "It's easy to put profits before product in circumstances where you're publicly traded on the Nasdaq."

Warren, Brown, and Warner did not return requests for comment.

Strayer—like many for-profit colleges—offers an abysmal graduation rate, varying between 3 percent and 27 percent for an eight-year program. At the end of Gensler's Strayer tenure in 2009, the school also held a loan default rate of 31 percent, according to a Brookings Institution report. Students owed Strayer nearly $6.7 million in 2014, placing the school among the top institutions for debt in the country.

The school's chairman and CEO made nearly $42 million in 2009, while its chief operating officer received $10.8 million.

Senate Democrats' disdain for the for-profit college industry is echoed by Biden and Vice President Kamala Harris. Biden's July 2020 "unity task force" stated that education "is a public good and should not be saddled with a private profit motive," calling for banning "for-profit private charter businesses from receiving federal funding."

Harris, meanwhile, announced a $1.1 billion judgment she obtained against "predatory" for-profit chain Corinthian Colleges in 2016 by saying that the institution "profited off the backs of poor people." She went on to tout the effort in her August 2020 speech accepting the Democratic nomination for vice president.

"I took down one of the nation's largest for-profit colleges," Harris said. "I know a predator when I see one."

The White House did not return a request for comment.

This is not the first time Warren and other Senate Democrats have failed to apply their own past attacks to Biden nominees. The Massachusetts Democrat on Tuesday brushed aside questions about Consumer Financial Protection Bureau nominee Rohit Chopra's past work for consulting giant McKinsey & Company. During the 2020 Democratic primaries, however, she demanded that rival Pete Buttigieg release his McKinsey client list so that voters could "know about possible conflicts of interest."

The Senate Banking Committee is expected to vote on advancing Gensler's nomination this week.

Published under: Elizabeth Warren, Gensler, Mark Warner