- The Washington Times - Wednesday, August 25, 2010

Is the U.S. Department of Education undermining the for-profit higher-education sector? The department recently rolled out its so-called “gainful employment” regulations governing the eligibility of college students at for-profit institutions to quality for government-sponsored Title IV student loans.

To qualify for such a loan, the department proposes to selectively “track” the salaries of students who have attended a for-profit university - using IRS data - to determine whether those students are making or will make enough money to repay student loans at a for-profit college or university.

In its proposed gainful-employment regulations, the Department of Education not so cryptically states that “the Department is proposing to obtain average annual earnings by program from another Federal agency, using actual wage information maintained by that Federal agency for a program’s students.”

And what is this so-called “other federal agency”? As reported in Bloomberg News, the Department of Education proposes abandoning the use of existing data already compiled by the Bureau of Labor Statistics on incomes for college graduates in particular professions and instead use “actual income” data compiled by the Internal Revenue Service at the individual level.

Using IRS data to determine whether select students can receive student loans at a college or university of their choosing is a direct intrusion into the private financial affairs of each student who makes or wants to make a free choice to attend a for-profit institution of higher learning.

Even more insidious is the inference of this potential risk: individual IRS audits that, in effect, will help steer students away from for-profit colleges and universities that are ready and willing and possess the quality accreditations needed to educate these students.

The Department of Education should admit that it is using the Internal Revenue Service to send a not-too-subtle message to prospective students: Attend a for-profit college and risk that your private financial data may be analyzed to ensure that all your financial transactions are accounted for and allowed.

Thus, the Department of Education, rather than putting the interest of students first, is forcing hardworking adults to go through yet another hurdle to pursue upward mobility.

In their war against individual freedom and personal choice, the nanny bureaucrats never rest; they also roll out the red carpet for the trial lawyers. Clearly, the actual impact of such tracking of student incomes by the IRS will create a new business opportunity for class-action law firms, which will use these new student financial statistics, assembled and provided the Department of Education, to justify billion-dollar litigation.

Picture the following late-night TV ad: “Did you pay for college thinking that you were going to make more money and you didn’t? Call toll-free and join our fight for justice. You can get all your tuition money back, and more!”

Too far-fetched? Not really.

Class-action law firms are already trolling for prospective clients. One class-action law firm targets students in its Online College and Trade School Investigation and asks if students:

c “Were misled about the cost of tuition.”

c “Were misled about student loans and financial aid.”

c “Are unable to transfer credits to other schools.”

c “Were promised job placement and can’t find a job.”

c “Can’t get other colleges to recognize their degree.”

c “Received loans with high and undisclosed interest rates.”

c “Received loans for which they never signed up.”

If the gainful employment notice of proposed rule-making is adopted as proposed, we can add to the above, “Were you promised gainful employment, but are stuck in a low-paying job?”

Sadly, Washington bureaucrats don’t seem to care about America’s future competitiveness. The nanny bureaucratic lobby, trial lawyers and their Democratic allies in Congress are creating an avalanche of bean-counter trivia in order to abort the free-enterprise for-profit colleges and universities. This anti-business regulatory audit has been embraced by the Department of Education in its war against students who dare to choose for-profit colleges and universities.

The fact is that for-profit education is something that education bureaucrats loathe. Think of higher-education institutions stripped of the costly, politically correct social clubs and the ethnic studies departments that divide America.

The success of the for-profit education sector - one of the fastest-growing parts of the American economy - is based upon individual choice and sound business principles: success vs. failure with money on the line. It is the free-enterprise system working to provide high-quality education. This is precisely why liberals want to undermine for-profit higher education.

Cesar Conda, formerly assistant for domestic policy for Vice President Dick Cheney, is a principal at Navigators Global, a Washington-based public-affairs firm.

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