COCO Vita Coco Company Inc

Opposition is building in Congress against a U.S. Government Affairs Office report on for-profit colleges, but it remains unclear what effect the criticism will have.

Six members of the U.S. House of Representatives asked the GAO in a letter Tuesday for clarification of the agency's methodology in an investigation critical of 15 for-profit schools' recruiting tactics. Sen. Mike Enzi (R., Wyo.), ranking member of the Senate Committee on Health, Education, Labor and Pensions, issued a similar letter Dec. 7.

The GAO report on 15 for-profit colleges, released in August, found that admissions representatives from all the schools offered misleading or fraudulent information to undercover agents posing as prospective students. Included among the schools were campuses owned by Education Management Corp. (EDMC), Apollo Group Inc. (APOL), Corinthian Colleges Inc. (COCO) and Washington Post Co.'s (WPO) Kaplan Higher Education.

The agency on Nov. 30 issued revisions to the report, softening several examples of recruiters' deceptive practices. Still, the GAO said the revisions don't change its overall assessment.

Lobbyists for a number of for-profit schools have questioned the report's findings.

Even if the GAO report is further disputed, the schools are far from cleared. For-profit colleges face a firestorm over their recruiting practices, graduation rates and student debt loads and next year will face a series of new federal regulations including restrictions on recruiter compensation and possible penalties for graduating students with high debt burdens. The U.S. Department of Education on Wednesday issued data showing that 46.3% of dollars lent to students at for-profit schools in 2008 will eventually default, compared with an average 15.8% default rate by dollar across all schools.

Tuesday's letter was signed by Reps. Darrell Issa (R., Calif.), John Kline (R., Minn.), Alcee Hastings (D., Fla.), Carolyn McCarthy (D., N.Y.), Brett Guthrie (R., Ky.) and Glenn Thompson (R., Penn.). Issa is the incoming chair of the House Committee on Oversight and Government Reform, while Kline will take charge of the House Committee on Education and Labor.

"We received the letter and have reached out to set up a meeting," GAO spokesman Chuck Young said in a statement. "We plan to provide the members with the information they are seeking."

The Coalition for Educational Success, a lobbying group of for-profit schools founded in August, earlier this month filed a lawsuit against the Education Department, alleging it wrongfully withheld records related to the GAO report and other issues despite the group's filing of a Freedom of Information Act request.

Seven senators, led by Sen. John McCain (R., Ariz.), Wednesday sent a letter to Education Secretary Arne Duncan taking issue with the Education Department's proposed regulation that would link programs' access to federal student aid to graduates' loan-repayment rates.

What might come of the criticism remains to be seen. Senate Health, Education, Labor and Pensions Chairman Tom Harkin (D., Iowa)--who called the GAO's revisions "minor"--said he will continue to investigate for-profit colleges and intends to introduce legislation in 2011 to regulate the industry. The committee has already held a series of hearings on the subject.

Some observers say it is too late for any real change in sentiment, and the more-vocal criticism of the GAO report will only serve to increase frustrations and drag out scrutiny of the for-profit college sector.

"I appreciate how questioning the methodology in the report could invalidate the findings, but I think it's still very unclear at this point whether this effort is going to actually shift any opposition from the industry," said Jarrel Price of Height Analytics. "If you were already opposed, you're still opposed."

-By Melissa Korn, Dow Jones Newswires; 212-416-2271; melissa.korn@dowjones.com

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