For-Profit Education Under Assault

For-profit education is under assault from elitists who hate the idea of free market educational institutions.  It is also under attack from bureaucrats at the U.S. Department of Education who are trying to make it hard for students to arm themselves with the education needed to find a job.  Elitism is alive and well at the Department of Education.


The Department of Education announced yesterday that they are “on schedule to implement new regulations of the for-profit education sector dealing with gainful employment and 13 other issues to protect students and taxpayers.”  The non-profit sector feels threatened; therefore allies in the Administration are trying to use the power of the federal government to provide non profit schools a competitive edge to slow the growth of for-profit institutions.  For-profit institutions are the trend and they are becoming more popular.

Senator Jim Risch (R-ID) has introduced legislation to prevent the Department of Education from denying federal financial aid to students attending for-profit colleges and vocational certificate programs.  Senator Risch said of his effort:

The ‘gainful employment’ rules could deny hundreds of thousands of students access to the training and skills development they need to secure a job in today’s troubled economy.  Highly-skilled workers are in high demand in certain sectors and propriety schools are uniquely qualified to meet that need.  It is simply irresponsible for the government to throw roadblocks in front of students and institutions at a time when job creation in America should be the administration’s number one priority.

Senator Risch’s legislation, S.3837, the Education for All Act, would forbid the Department of Education from singling out students from proprietary and vocational institutions and treat them differently than other students.  These institutions have proven to be uniquely qualified to help students find jobs in today’s complex economy.


Risch joins Senators Mike Enzi (R-WY) and Congressman Joe Sestak (D-PA) in writing letters expressing concern about this proposed rule.  Enzi wrote that the proposed rule “unfairly holds for-profit institutions to a higher standard for student debt and default than all other institutions of higher education.”  These elected federal officials are all concerned about the Department’s action on this issue is the number of members sending letters of interest to the Department of Education is up to 80 members of Congress according to the Coalition for Educational Success.

The Department of Education has proposed a rule to “require proprietary institutions of higher education and postsecondary vocational institutions to provide prospective students with each eligible program’s graduation and job placement rates, and that colleges provide the Department with information that will allow determination of student debt levels and incomes after program completion.”  Although this may sound reasonable, the next step is for the department to evaluate the eligibility of students in order to deny students access to student loans if they deem them unfit for the loan.  The proposed regulations provide a massive new regulatory structure over what High School diplomas qualify as satisfactory and provides new regulations defining “satisfactory academic progress.”  The bottom line is that these are complex new regulations intended to make it harder for the for-profit educational institutions to operate.


There are two troubling aspects to this rule.  First, these regulations are not a requirement of not for profit institutions.  If these types of regulations are not applied to for profit institutions, then it is not fair to treat the for-profit schools differently.  Furthermore, the fact that the Department is trying to do without legislation is troublesome.  This is an important enough decision to put Members of Congress on record.  If this is a good idea, then the Congress can have hearings and pass this dramatic change and burden with regard to for-profit institutions.  

The Department of Education had to publish the new “Gainful Employment” rule and allow for public comment as part of this rule making process.  The Chronicle of Higher Education reported that the Department received more than 85 thousand comments on it.  Under a provision of the Administrative Procedure Act (APA), the Department is supposed to review these comments, because they are supposed to read them and respond when necessary.  The Department states that a final decision on these regulations is on schedule, yet they modified the schedule to insure that they reviewed the commentary and did not violate the APA.

The Department of Education received more than 85,000 comments on the “Gainful Employment” rule, according to the Chronicle of Higher Education.  I have had experience in this process and sometimes the bureaucracy is not responsive to the comments.  In the bill creating the Transportation Security Administration was a provision allowing the arming of pilots in the wake of 9/11.  A public comment period was conducted in January of 2002 by the Federal Aviation Administration.  After overwhelming support for the idea of arming pilots against terrorism and setting up a program to train commercial pilots to protect the cockpit from hostile takeover, the FAA concluded that they were going to ignore the comments and not move forward with the program. 


In May of 2002, Transportation Undersecretary John Magaw announced at a Senate Commerce Committee hearing that he would not approve of the program.  Congress ultimately stepped in and established the program that is still in effect today and is a success.  This armed pilots fact pattern may be repeated if the Department of Education also ignores the will of the American people and Congress.  It is possible that if the Department of Education moves forward, Congress will step in and overturn the decision through legislation.

A combination of threatened not for profits and their elitist alumni who look down their noses at a sector that traditionally serves the somewhat under served may be one reason for this effort.  Also, it’s probably accurate to say that there are plenty in the Obama orbit who simply think the words ‘for profit’ and ‘education’ don’t belong together under any circumstances. They want to snuff out the sector and they are continuing down the road to do so with this regulation.  Hopefully Senator Risch and other allies of students who desire to attend for-profit educational institutions win the war of ideas on this issue.



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