April 2nd, 2012
For-profit colleges reflect on Sen. Dianne Feinstein
By Paul C. Barton
Many of Sen. Dianne Feinstein’s Capitol Hill colleagues want a crackdown on an industry worth hundreds of millions of dollars to her husband, San Francisco financier Richard Blum.
Blum’s private-equity firm, Blum Capital Partners, is the largest stockholder in two of the nation’s biggest for-profit college companies, ITT Educational Services Inc. and Career Education Corp., documents at the Securities and Exchange Commission show.
Much of the criticism of for-profit colleges comes from some of Feinstein’s fellow Democratic senators, especially Tom Harkin of Iowa, the chairman of the Senate Health, Education, Labor and Pensions Committee.
Since 2010, Harkin’s committee has issued several scathing reports claiming widespread industry abuse of students and the squandering of the federal student aid dollars. As a result, he contends, taxpayers are bilked, and students end up with large debts and inadequate career preparation.
“Rather than investing revenues in improving the education and student services they provide, these companies — many of which are owned by Wall Street investors — spend half or more of their revenues on profit and aggressive marketing,” Harkin says.