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John Kline's Descent From Patriot to the Whore of Higher Ed

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The marbled corridors of the Rayburn House Office Building are deserted at the moment, save for the tardy staffer bravely power-walking in masochistic heels.

That wasn't the case five minutes ago.

Then, the hallways of this four-story structure, home to U.S. representatives and their staffs, teemed with a mix of hustle, Frank Underwood agendas, and generous self-assessments of grandeur.

Quiet replaces that energy now.

Minnesota Congressman John Kline, a Republican who represents the Twin Cities' southern suburbs in a district that stretches into Wabasha County, makes his appearance down the hall from his fourth-floor office. He's dressed to filibuster in a navy suit and a light blue tie that pulls the whole ensemble together. The 67-year-old retired Marine Corps colonel appears as if he could still bang out a Crossfit workout without spiking his heart rate.

See also: U.S. Rep. John Kline Named Worst Congressman in Bill Maher's "Flip a District" Contest

Rasmussen College in Bloomington

Rasmussen College in Bloomington

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On this early fall morning, Kline has no time to talk. He's late for a hearing as chairman of the influential House Committee on Education and the Workforce.

Behind schedule or not, Kline's stiff-arm comes as no shock. He's played behind the scenes for most of his career, preferring to quietly legislate away from cameras and microphones.

Besides, it's just a reporter approaching him, not someone allied with the for-profit college industry. If the latter were the case, Kline would not just have time for lunch. He'd most likely block out the rest of his day to bond over tumblers of moderately priced scotch.

As Kline disappears behind the elevator doors, so goes the biggest obstruction to reforming for-profit colleges in America, an industry grown fat and sweaty on the taxpayers' dime, while leaving students paralyzed in debt and working part-time at CVS.

Bring us your gullible

Since 2001, enrollment at America's for-profit colleges has nearly quadrupled to 3 million students. Much of that prosperity has come from preying on unsophisticated consumers.

Take the 37-year-old man who dreamed of becoming a cop. He enrolled in a two-year, $45,000 criminal justice program at the Ontario-Metro campus of Everest College in California — a degree that would cost just $13,000 at Normandale Community College.

It wasn't until six weeks later that a tutor noticed he most likely had a "developmental disability," unable to write his name in cursive or read above a third-grade level. When Everest's president ignored her concerns, she phoned the California attorney general.

Then there's Brandon Illies of Prior Lake. The Minnesota School of Business (MSB) graduate says his story is a standard narrative among former classmates.

Illies, a landscaper who rose to managing crews, enrolled at MSB to "get a better career, to do something with my life." A school admissions rep promised him just that, saying companies like Cargill and Cub Foods coveted MSB grads.

Illies would spend about $60,000 earning a pair of associate degrees in business. Staffers assured him that his managerial background, complemented by MSB schooling, was an unstoppable formula for success.

But Illies is now 30 and still landscaping. After sending out hundreds of résumés and attending job fairs, he discovered his diplomas have zero street cred.

"It's an overpriced school that can't provide a decent degree or just provide a good enough name."

(MSB did not discuss its school's reputation.)

Then there's Sherry Walker, a laid-off mom who was surfing the net one evening when she clicked on a pop-up ad featuring First Lady Michelle Obama. "Moms can go to college if they qualify!" the ad blared.

Attorney David Halperin

Attorney David Halperin

Walker was soon getting a phone call from a college recruiter.

If he could get her through college for free, he asked, would she be interested?

Of course, she said. But, says Walker, she also warned the University of Phoenix salesman: "You realize I wouldn't ever be able to pay for this."

No worries, she says the man responded. "All you have to do is keep your G.P.A. above a 'C' and you won't have to pay anything."

On three separate dates, according to paperwork provided by the university, Walker completed and signed financial aid applications. Likewise, she thrice signed the school's Master Promissory Note, promising to pay any loans she took out for tuition.

All the while, she says, school officials were assuring her that she'd never pay a dime.

"I was told just to sign and I wouldn't have to worry about anything as long as I kept my grades up, that it was all covered through grants. And if by any chance it wasn't, all I'd have to do is pay a little bit."

Congressman John Kline

Congressman John Kline

Walker kept her grades up. Records provided by the university are strewn with A's and B's.

In 2009, not long after starting classes, she received a bill for $3,000. Confused and concerned, she called the school. "Throw it away," she says she was told. "Your bill is already paid. It must've been sent to you by mistake."

Whenever she received a notice after that, she simply disregarded it.

But four years later, when she was just 23 credits shy of a bachelor's degree, the mother of two special-needs kids was going over her credit report, hoping to get her finances in order to purchase her recently deceased father's home. That's when she discovered she owed the University of Phoenix $48,000.

She called the school again. This time, a staffer dismissed any discrepancy between what she was told and what she signed. The debt was legit, the woman said.

University of Phoenix spokesman Ryan Rauzon flatly dismisses these "unsubstantiated claims," claiming that nothing in the school's records provides supporting evidence.

"She was appropriately counseled regarding her financial obligations, including specifically the repayment obligations relating to her student loans," says Rauzon. "You should be aware that if you choose to proceed with a defamatory story based on Ms. Walker's unsupported and illogical allegations, your story will be immediately referred to the legal department."

Walker soon withdrew from the university. Collection agents started hounding her not long thereafter.

These days, she admits that a free education sounds too good to be true, adding that if gullibility is a crime, she's a felon.

"I am very gullible," Walker says. "I have been all my life. But when they told me about going to college for free, it was a dream. I had never been to college, and why wouldn't I trust them? They're a school. I thought they were beyond reproach."

U.S. Sen. Elizabeth Warren (D-Massachusetts) is now investigating her case.

America's predatory welfare queen

These are the kind of disconcerting testimonials that have cascaded from for-profit colleges for years now. That's because — by almost every measure — these schools fail spectacularly when stacked against their traditional peers.

Tuition can run up to four times the cost of conventional schools, often for substandard programs. Drop-out rates are into the stratosphere, with more than half of all students defaulting on their loans.

Recruiters have repeatedly been caught deceiving students to keep the turnstiles moving. It's a business especially known for preying on poor, guileless kids and soldiers with military benefits.

To top it off: Taxpayers are footing the bill. More than 80 percent of the industry's revenues come from student loans and grants.

This shouldn't surprise anyone, says Bill Allison of the Sunlight Foundation, a Washington, D.C., nonprofit dedicated to transparency in government.

"The business model is very much geared toward the federal student loan as basically the main lifeblood of their operations. Next to defense, I can't think of another industry besides for-profit colleges that's almost entirely dependent on federal policy and federal tax dollars." The problems have been public knowledge for years.

In 2010, a U.S. Senate committee on education delivered a damning report on for-profit colleges. There were few kind words. In page after page, the schools were depicted as exploitive and predatory, wrapped in the vestments of an altruistic mission.

The committee's investigation of Minnesota's own Rasmussen Colleges, Inc. proved emblematic of the industry as a whole.

Rasmussen is headquartered in Minnetonka, with two dozen campuses and an online division. The school's enrollment skyrocketed from 2,637 to 17,090 students over an eight-year period starting in 2003.

So did the company's financial fortunes. Between 2006 and 2009, Rasmussen's revenues more than tripled to $147 million. More than 80 percent of that came from taxpayers.

But the company's own data showed it was less interested in educating kids than simply luring them through the door. Though it employed one teacher for every 56 students, it hired one recruiter for every 38.

Worse, students were paying Escalade tuition for moped instruction. At the time, a Rasmussen associate's degree in business management cost more than $39,000. The same degree at Normandale ran just $7,000. (Rasmussen did not respond to repeated interview requests.)

The school also proved a disastrous investment for taxpayers. While annual federal dollars to the company pushed $200 million, 63 percent of its students were dropping out without a degree.

"You say you're a college and you get accreditation, which is easy to get, and you're eligible for federal grants and loans," says David Halperin, a Washington, D.C., attorney who's written extensively on for-profits for republicreport.org. "It's a bonanza. And it turned out there wasn't enough accountability to prevent you from running a boiler room recruiting operation, spending very little on education and a whole lot on marketing....

"These schools started to be juggernauts with a huge incentive to sign up as many students as possible. As industry people have told me, they're trying to get 'asses in classes.' They're trying to sign people up so they can deposit their federal student aid checks. After they do that, they don't care about the consequences."

A congressman finds a new BFF

John Kline marches across the TV screen in a dark, ill-fitting suit. He steps confidently, his feet landing like he's on a crusade.

In "Stop the Pork," an ad from a previous campaign, Kline blasts earmarks, calling them "a massive abuse" of tax dollars. He asks viewers to "join the fight. Sign the petition to demand Congress reform the rules and stop wasting your money."

Since entering Congress in 2003, Kline had carefully nourished this self-image of waste-cutting conservative. But when he was named chairman of the House Committee on Education and the Workforce in 2010, that zeal mysteriously dissipated.

Kline was in a prime position to slash the $33 billion annually going to for-profit colleges. Instead, he became the industry's fiercest bodyguard.

The ink was barely dry on that incriminating Senate report when Kline announced that he would "push back really hard" against reform.

His rationale: New regulations would be unnecessarily harmful to for-profit colleges and their students.

About the same time, Kline began taking major donations from for-profit schools. Theirs was fast becoming a relationship of co-dependency. With every new threat to the way the industry did business, his fealty only seasoned.

In early 2011, the Department of Education sought new "gainful employment" rules. Among the proposed regulations: At least 35 percent of a school's former students had to be paying on their student debt. If not, their federal education funds would be pulled.

It was a timid move by any definition. A school could have a default rate of 65 percent and still keep its federal cash. But at least the purest diploma mills would be yanked from the public teat.

Many education advocates, including Kati Haycock of the Education Trust, a nonprofit focused on quality and accessibility in education, saw the crackdown as a joke.

"Programs that can't meet this extraordinarily low bar plainly provide little or no benefit to their students or taxpayers," she wrote at the time.

Kline thought otherwise. In what would become a fortified line of defense, he moved to protect the industry's worst offenders, introducing an amendment to tear funding from the Department of Education so it couldn't enforce the rules.

It passed the House by a whopping 150 votes.

(Kline declined comment for this story, referring all questions to his spokesman, Troy Young, who did not respond to repeated interview requests.)

Mere days after the victory, Kline's for-profit fans showed their appreciation with a fundraiser. Those attending the soiree at the Capitol Hill Club — hosted by the Association for Private Sector Colleges and Universities (APSCU), the industry's lobbying arm — were required to drop $2,500 to "sponsor" the evening, though a $1,000 donation could get you in on the cheap.

Still, staying on top means you get to party for only so long. The patriot-turned-politician would soon be asked to pit his own interests against those of his former military brethren.

Kline wouldn't hesitate.

Soldiers turn golden goose

The GI Bill dates back decades. It helped a generation of vets forge American prominence following World War II.

In 2009, a more generous version went into effect. It paid the full cost of any four-year public college, or covered up to $20,000 annually at private schools.

To for-profit colleges, this represented a fat, new, irresistible source of taxpayer coin.

The University of Phoenix, for example, took in nearly $1 billion in GI Bill cash from 2009-2013. Soldiers didn't get much for their money. According to the Department of Education, Phoenix's company-wide graduation rate is less than 15 percent.

So the Senate Appropriations Committee decided to crank down the spigot by invoking what's known as the 90/10 rule. It dictates that colleges must get at least 10 percent of their total revenue from non-federal sources.

The idea is to make schools prove they're legitimate enough to convince at least a few students to pay out of pocket. The unworthy lose access to federal funds.

But due to a quirk in the guidelines, military benefits weren't factored as public money. Some on the Senate Appropriations Committee wanted to close this obvious loophole.

That move, however, would be cataclysmic to for-profit colleges, pushing many over that 90 percent threshold — and removing them from the golden trough of government.

"Right now, the way the 90/10 rule is constructed, it offers an incentive to the schools like Phoenix that are right up against the threshold to get as many military veterans as possible," says Aaron Glantz, a reporter for the Center for Investigative Reporting who's covered for-profits' handling of veterans. "For every military vet they capture, those dollars mean they can get nine additional students on Pell grants or student loans."

The Senate committee also wanted to bar schools from using soldiers' benefits on recruitment, marketing, or advertising.

Kline understood the consequences. The rules would not only prove ruinous to for-profit colleges, but to his own political existence. The schools had quickly become his largest campaign donors.

Along with three other congressmen, Kline sent a letter to key members of the House Appropriations Committee, picking apart the Senate provisions. He decried the implication that schools were preying on unsophisticated soldiers and their families, insisting the new rules be quashed.

He would get his wish. The bill never made it out of committee.

No friend to students

Kline has long described his advocacy as a matter of freedom. For-profit schools, he's argued, serve a segment of students overlooked by traditional universities. Besides, government shouldn't be reigning over the private sector.

"Nobody is forcing anyone to go to the University of Phoenix or ITT Tech or DeVry," says Glantz, distilling the congressman's argument. "It's discussed as a matter of student choice."

That view jibes with the conservative ethos of free markets. But it also presumes that government should have no say in getting the most bang for its buck. Nor any role in protecting the young and the meek from unscrupulous merchants.

So when a clash rose between students and lenders, there was little doubt where the congressman's allegiance would lie.

Two summers ago, student loan interest rates, which had been fixed by Congress since 2006, were set to expire. If Washington didn't act, rates would double to 6.8 percent in 2013.

Some members saw it as a chance to throw students — and the economy — a rope.

Years of double-digit tuition hikes across higher ed had created a $1 trillion pile of student debt. Students weren't just personally screwed. The purchasing power of an entire generation was being wiped from the economy, since it would be years before they could afford a car or a home.

Members of both the House and Senate wanted to give students the same interest rates the feds offered to big banks. At the time, that was less than 1 percent.

Others, like Congresswoman Rep. Karen Bass (D-California), sought to cap all federal student loans at 3.4 percent.

Kline had a different notion of reform.

He wanted to base rates on the yield of the 10-year Treasury note — with a 2.5 percent bump to make lending more lucrative.

For Republicans, he provided critical push-back in negotiations with the White House, which was looking for bipartisan love.

When all was said and done, interest rates actually went up — from 3.4 to 3.9 percent.

Kline's idea to tie interest to market rates also carried the day. As a result, student interest rose again this summer, to 4.6 percent.

As the deal was signed, Kline could be seen standing over Obama's shoulder with a grin that appears plucked from a Cracker Jack box. Both called it a tribute to bipartisanship.

Educators saw it differently. Obama had caved to Wall Street interests, they argued. Kline, meanwhile, had ably inflated the money flowing to banks — leaving young people to pay the freight.

"There was no consideration as to the financial health of the students," says Natalia Abrams of Student Debt Crisis, a nonprofit group seeking to reform the way higher education is paid for in America.

"It was really more of the same. As the head of the education committee, we would expect Congressman Kline to be more creative in helping students."

Kline protects his payday

Three years into his chairmanship, Kline was on a roll, undefeated in sabotaging reform.

It would only embolden him.

Last year, about the time he was giving the keynote speech at the annual conference of the Minnesota Career College Association, the trade group for the state's for-profits, Kline authored legislation to neuter a second go-around of "gainful employment" rules.

Grandly titled the Supporting Academic Freedom through Regulatory Relief Act, his bill would ensure that students could select the college of their choice — no matter how poorly those schools performed.

The bill blocked the feds from forcing colleges to disclose graduation rates and median student debt-loads, keeping students in the dark. It also barred the government from enforcing any standards that might strip a school of its federal money.

Kline framed the bill in the familiar rhetoric of liberty, limited government, and personal choice. Left unmentioned were his own vested interests.

Over the years, the success of the congressman and the industry he fronts had become one and the same.

Before Kline became the chairman of the House education committee, for-profit colleges weren't even in the top 50 of his campaign contributors. But once he took the gavel, the money rained.

Not long before Everest College sold that illiterate, disabled man on a $45,000 criminal justice degree, Kline's political treasury received a check from the school's parent company, Corinthian College.

It was the first of many. The industry followed suit.

During the 2010 elections, Kline's campaign and his political action committee took in a combined $124,000 from the for-profit college industry, according to the Center for Responsive Politics (CRP), a nonpartisan group that tracks money in politics.

Two years later, Kline's take rocketed to $413,000, with the University of Phoenix's parent company accounting for $33,000.

This year, he's collected roughly $300,000 from the industry — with the final tally expected to soar. His single largest contribution came from Robert King, Rasmussen's corporate chief.

According to CRP, Kline has pocketed almost $900,000 from for-profit colleges since 2009.

To put this largesse in perspective, that's more money than his current challenger, Mike Obermueller, has raised for his entire campaign.

Politicians have long defended such corporate downpours as simply like-minded companies supporting like-minded candidates. That's certainly true in some cases. But when an industry owns such a sordid reputation, it's difficult to paint Kline's zeal as altruistic.

"In some cases, somebody who gets a lot of support from the NRA, it's entirely possible they supported gun rights before they got a dime from the NRA, and the NRA supports him because he agrees with their issues," says Allison of the Sunlight Foundation.

"But when you get into the sort of more esoteric-type areas — like how much oversight and regulation the for-profit-college education industry should have — it becomes harder and harder for the public to believe that members may be acting 100 percent out of sheer belief. It looks more and more like they're carrying water for that industry."

Kline's convictions were never more apparent than this past summer. On the line was the financial lifeblood of more than 100 for-profit colleges.

Two Democrats from California, Mark Takano and Susan Davis, crashed one of Kline's committee hearings. They were armed with a story by the Center for Investigative Reporting, which detailed how for-profit schools were targeting vets to soak up their GI Bills.

They pointed to the University of Phoenix's San Diego campus, where only 15 percent of those veterans had graduated or found jobs.

The Californians tried once again to protect soldiers by factoring military benefits into the 90/10 rule.

Kline, the decorated soldier who had served in Vietnam and Somalia, was likely more aware than most that veterans were being lured into dead-end educations.

Yet he kiboshed the proposal right there, ruling it out of order. A 20-13 party-line vote sealed its fate.

Attorney Halperin says Kline's arrangement with for-profit colleges "is pretty clear. The real question is: What is the risk? This stuff has been under-the-radar so much [Kline] doesn't feel there's that much risk. It needs to be pointed out that he is taking this money and that his actions are hurting people."

The problem, says Halperin, is that for-profit donors are closely watching the congressman to ensure he does their bidding. Kline's "constituents are not."

Which begs the question: Will Minnesota watch now?