In the five years since Congress deregulated online education, enrollments at for-profit colleges have nearly doubled. Six major corporations owning for-profit institutions have enjoyed initial public offerings on Wall Street, with each promoting the rapid growth of online classes to investors and netting millions in compensation for executives. Revenues have doubled at the University of Phoenix and Kaplan University, two of the largest players -- so has the rate at which its students have defaulted on their federal loans.
The story of how this single snippet of legislation became law, propelling a collection of for-profit colleges into a full-scale industry, presents a classic case of the workings of power in Washington. It reveals the degree to which for-profit colleges -- now confronting accusations that they have preyed on students and cheated taxpayers -- owe their growth to a sophisticated lobbying effort that has cultivated powerful allies in Congress and in the administration of President George W. Bush. The lobby has played a crucial role in fighting off consumer protection rules that limited the companies' expansion opportunities