By Peter Byrne 
As documented in a previous investigation, a series of conflicts of interest appear to exist between the University of California and some members of the UC Regents. Among the most notable are UC’s $53 million investment in ITT Educational Services and Career Education Corporation, two for-profit educational corporations that are largely owned by Blum Capital Partners, a company run by Richard C. Blum, a regent who sits on the UC investment committee.
Watchdog organizations have characterized the overlapping investments between UC and Blum Capital Partners as conflicts of interest. But Mr. Blum’s conflicting interests extend beyond California higher education institutions to the legislative floor of the U.S. Congress, where Mr. Blum’s spouse, Sen. Dianne Feinstein (D-California), has taken legislative action that has financially benefited Blum Capital Partners.
In a bill that continues to have positive financial impacts for Mr. Blum, Sen. Feinstein introduced legislation that has directly benefited her husband’s investments in ITT Educational Services and Career Education Corporation. In February 2007, Sen. Feinstein and Sen. Barbara Boxer (D-California) called for an increase in federal tuition aid by $20 billion over five years via Pell Grants to low-income students attending community and for-profit colleges. This measure, which became part of the College Cost Reduction and Access Act, became law in September 2007.
The increase in federal funding to Pell Grants impacted hundreds of thousands of students attending community colleges and so-called “low-cost institutions,” such as for-profit colleges. But it was also a boon to the educational corporations such as ITT Educational Services and Career Education Corporation, whose students pay tuition by relying on federal grants and loans that are guaranteed by taxpayers.
After the announcement of the Pell Grant increase, the stock price of the two for-profit college corporations controlled by Blum Capital Partners began to rise. ITT Educational Services stock increased from $79 per share to $127 shortly after the legislation passed. The stock of Career Education Corporation increased from $29 per share to $34.
