'Gainful Employment' Elimination: Opportunity for President to Show Commitment to Small Business

Now at the midpoint in his presidency, Barack Obama is confronted with some painful calculus: Stay the course — that saw the overhaul of our nation’s health care and financial systems — which cost his party huge governing majorities in Congress or make the prescribed midcourse correction, pivoting toward the business center.

In a Wall Street Journal opinion last month, the President unveiled, to much fanfare, an executive order designed to eliminate outmoded and especially onerous regulations. Concerned these anti-business regulations might “stifle innovation and have a chilling effect on jobs,” Mr. Obama ordered his administration to review its various regulatory regimes.

The severity of the shift in tone by the President suggests that a midcourse alteration may be underway. Unfortunately for many of the nation’s job creators, that rhetoric has yet to affect the reality of their bottom line.

Career colleges and universities have been among the hardest hit industries threatened by arbitrary regulations, under siege by bureaucrats in the Department of Education for the better part of this President’s administration.

Looking to impose a “gainful employment” rule on the industry, the Department’s proposed regulation endangers career schools’ financial aid programs if mandates on alumni student loan repayment schemes are not met.

The measure runs counter to both the letter and spirit of the President’s new executive order.

Education & Jobs Linked

Most notably, the adoption of the proposal would adversely affect the nation’s economic growth and competitiveness, upending job security for an otherwise un-served class of students. Those bureaucrats who pursue this measure do so at the disadvantage of working adults, female and minority students, restricting their collective access to affordable and convenient higher education.

If career colleges and universities are forced to close, American job-seekers will lose access to the training necessary for some of the nation’s most in-demand professions such as health care and computer-data processing. In addition, students attending career colleges and universities have a completion rate that is 38 percent higher than their counterparts at community colleges and graduate with skills in industries that are expected to add 1.8 million new jobs through 2016.

Just days before Mr. Obama’s regulatory overture, the Le Cordon Bleu of Pittsburgh, which currently instructs more than 600 students, abruptly announced it would stop accepting students and close its doors.

In a Pittsburgh Post-Gazette report of the school’s closing Toni Pais, chef and owner of Cafe Zinho in Shadyside said, “It’s going to be devastating … The restaurant scene in Pittsburgh has been growing like crazy in recent years; we’re really going to feel the pinch.”

Public Participation, Transparency

While crafting the “gainful employment” measure, the Department of Education allowed for only minimal input from the career school sphere. On its 17-member panel tasked with developing the rule, only one member represented the interests of career colleges and universities.

Beyond the unabashed hostility bureaucrats have foisted upon the industry, it was recently reported that short sellers with a financial interest in crippling the industry met with officials from the Department of Education.

Steve Eisman, who had disclosed to government officials that he had a financial stake in the failure of career schools, also shared with Obama Administration a presentation on “gainful employment.” But now, amid increased speculation over his involvement in the formation of the rule for which he stands to profit handsomely, the famed short-seller insists “no regulation was discussed,” in spite of the fact his presentation mentions the rule numerous times.

Most Innovative & Least Burdensome Tools

In detailing his vision of balanced regulation, the President’s executive order called for government rules that “identify and use the best, most innovative, and least burdensome tools for achieving regulatory ends.”

Instead, “gainful employment” willfully discounts the primary utility — namely, lifetime earnings — of higher education, imposing on recent graduates of career colleges and universities an arbitrary period during which they must repay loans. In measuring the repayment scale, regulators use privacy-protected earning data of which schools are not privy, and therefore unable to challenge.

For bureaucrats in the Department of Education, it will take more than a simple nudge to forgo their year-long campaign against career colleges and universities. If President Obama is serious about helping small businesses, he must take immediate action to halt the regulatory campaign his administration has launched against the schools that are preparing students to turn our economy around.

Barney T. Bishop III, is the President and CEO of Associated Industries of Florida, known as “The Voice of Florida Business since 1920,” and he can be reached at [email protected]