Federal Government Continues Its Pursuit Against For-Profit Education
09-21-2011 at 07:17 am - David Williams - Posted in: David Williams, Education, Taxpayers Protection Alliance - 0 Comment

The Taxpayers Protection Alliance (TPA) has written extensively (click here, here, here, and here) about the federal government’s relentless pursuit of for-profit colleges through “gainful employment” regulations.  DOEd proposed “gainful employment” rules which require for-profit schools to prove their graduates are either paying back loans or are capable of doing so.  If not, the schools will lose access to federal student aid.  Even though the final regulation was less onerous than what was proposed, the rule is directed solely at career colleges and universities, which will be heavily penalized if graduates fail to meet debt-to-income ratios. Students will no longer be able to secure federal student aid to attend a program that would give them the skills and credentials to advance their marketability in the workplace.

From a poorly written Government Accountability Office (GAO) report that had to be revised, to allegations of short selling that accused high-level Department of Education officials colluding with Wall Street short-sellers to improperly leak contents of highly controversial gainful employment regulations in advance of their publication, the regulatory process has been a mess (click here for a timeline of missteps, possible illegalities, and gaffs by the federal government).

Now, the Department of Justice has joined the crusade against for-profit colleges by suing the Education Management Corporation (EDMC) for illegal recruitment.  According to the Wall Street Journal, “The facts of the case involve the Education Management Corporation [EDMC], a Pittsburgh company that runs dozens of for-profit schools in the U.S. and Canada. According to the plaintiffs, the company broke federal law by paying its admissions recruiters on the basis of student enrollment. While the schools are allowed to take recruiters' success into account, they are not permitted to use it as the only factor determining particular for-profit group is under attack in the court system.”  A spokesperson for EDMC has denied any wrong doing and said in an August 8, 2011 New York Times article that “EDMC’s 2003 compensation plan followed the law in both its design and implementation, as EDMC’s response to the governments’ complaint will show.”

There has been an all-out assault on for-profit colleges. For-profit colleges have grown exponentially over the last decade because they are filling a huge market demand for workforce training. The for-profits have moved into this niche, developed online courses that outstrip the capacity of their not-for-profit competitors. At a time when the government should be supporting market growth, the for-profit college sector is being penalized for its success.

Wrong doing should be taken seriously, but any taxpayer-funded investigation should not be done because of a political agenda.  With the abysmal track record of the Obama administration and certain members of Congress in proposing and ultimately implementing the new gainful employment regulations against for-profit colleges and universities, there needs to be extra scrutiny when proceeding with the investigation.

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