So here's an underreported bit of good news from the deal on funding the federal government: The Department of Education's "gainful employment" rule, which would prevent federal loan assistance from being used to pay for education at colleges with high student-loan default rates or where students end up having to pay a huge portion of their salaries to pay down their debts, appears to have survived.
The rationale here is really simple: Since for-profit colleges make an extraordinary amount of money from federal aid, it's in the taxpayer's interest to make sure that their money only goes to pay for an education that is of some future use to the students who acquire them. But because for-profit colleges have made a lot of friends in both parties by spreading around the campaign cash, there was a bipartisan rider in the continuing resolution that would have prevented the Department of Education from implementing the rule. But it was one of the riders that was apparently dropped from the deal:
But a spokesman for Senate Majority Leader Harry Reid of Nevada confirmed Sunday that the legislation would not contain a provision sought by a group of House members that would bar the Education Department from using any of its fiscal 2011 funds to carry out the controversial gainful employment rules, a new version of which the department is poised to release. The measure would have effectively delayed implementation of the regulations until October at the earliest. Opponents of the measure urged members Saturday to continue to push for the provision, but the Reid spokesman said it was dead.
The gainful employment provision was one of 66 "policy riders" that House Republicans sought to attach to the 2011 budget legislation, "and this was one they pushed for," the spokesman said. "But Sen. Reid and the White House firmly said no."
This is really good news. This is an industry that makes money not by providing the advertised service, but by sucking up taxpayer money that is meant to help people of modest means get an education. It's one of the most odious hustles imaginable.
Naturally, while some Democrats also supported blocking the rule, the Republican Party leadership includes people who were strongly opposed to this rule and those who helped open the federal spigot for these institutions in the first place. The principle here seems to be that it's better that corporations get taxpayer money for nothing than waste financing a usable education for someone who couldn't otherwise afford it.
This really isn't a "free market" problem either. The goal here should be maximizing taxpayer's investment -- if the money is being wasted, then federal student loans become nothing more than corporate welfare.
