- - Monday, July 28, 2014


Even in war there are rules. Nations adopt rules of engagement to protect civilians, and the global community prosecutes war criminals who flout international agreements. In the Obama administration’s war on for-profit universities, however, anything apparently goes. The latest target of the administration’s scorched-earth campaign is Corinthian Colleges, which has been driven out of business by regulatory punishments imposed without due process.

Federal law requires for-profit universities — but not their public or nonprofit counterparts — to document and report “job placement” numbers for their graduates. However, defining “job placement” is left to states and accrediting agencies, which have adopted varied and vague standards. It’s almost like the rule is tailor-made for a government that acquires a target for destruction first and then looks for convenient violations to excuse their attacks second.

Target Corinthian Colleges the government did. No less than the Department of Justice, Consumer Financial Protection Bureau, Securities and Exchange Commission, and numerous state attorneys general opened investigations. The Department of Education then demanded that Corinthian supply in just 30 days job-placement disclosures for every program over the past several years on its hundreds of campuses, along with a range of personal information about their graduates, such as Social Security numbers, current telephone and cellphone numbers, employers’ names, job titles, and several other data one wouldn’t typically expect — or want — on file at a university.

Perhaps the Department of Education would have had more luck asking the National Security Agency for students’ private information since, unsurprisingly, Corinthian couldn’t satisfy the demand in time. In reprisal, the Department froze aid due to Corinthian students and effectively forced the company into bankruptcy, threatening its 12,000 employees with unemployment.

To be clear, there’s good reason to think that legitimate infractions and improprieties were committed by Corinthian Colleges, but the company was never convicted of anything before being run out of business by the government. It’s difficult to give this administration the benefit of the doubt, given the president’s open hostility to the industry as a whole. What matters, though, is that due process is not just for the innocent. If the government gets to pick and choose who deserves due process and who does not — even if they have done serious wrongs — then it fails as a means for preserving rights.

Unfortunately, the administration’s efforts don’t stop at Corinthian Colleges. Regulators are currently mulling implementation of so-called “gainful employment” rules, which would deny financial aid from being used at universities that run afoul of arbitrary government standards on student debt to postgraduate earnings, among other measures of postgraduate performance. As with the “job placement” disclosure requirements, the rules single out for-profit universities with additional burdens not asked of their competitors. They also punish those operating aboveboard, instead of just bad actors or others in the industry accused of wrongdoing like Corinthian.

The apparent intention to protect students may seem noble, but the proposed rules are fundamentally flawed. Measuring programs based solely on the economic performance of its graduates ignores the inherent selection bias in higher-education student populations. Public universities are highly selective about who they allow to attend, but those denied acceptance by the public system are equally deserving of opportunities. In other words, the types of students enrolling at for-profit universities are typically of a lower economic status to begin with, and the perverse impact of the rule would be to encourage for-profit colleges to begin also refusing services to these students so as to satisfy government performance quotas.

Not only are the “gainful employment” regulations both overly broad and counterproductive as a means of protecting students, they are also clearly unnecessary for punishing misbehavior. The sheer number of investigations opened in the case of Corinthian, and the effectiveness of the punishments imposed, illustrates that sufficient tools already exist for policing for-profit higher education. Regulators just need to respect the due-process rights of the accused, and reserve punishments for after investigations are actually completed.

Andrew F. Quinlan is the co-founder and president of the Center for Freedom and Prosperity.

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