July, 2018
Washington -- The time has come to restrain the U.S. Department of Education from its course of systematically undermining consumer and taxpayer interests in higher education.
Having gutted the "borrower defense" rule, which protects defrauded students against unscrupulous institutions, the Department is now about to eliminate the "gainful employment" rule, which requires institutions to demonstrate that their graduates can get jobs, or face loss of institutional eligibility for taxpayer-supported student financial aid.
All of which means more financial ruin for many students and families who will be victimized, and more taxpayers who will be simultaneously cheated.*
The best way to restrain the Department is to restore the integrity of the "triad" that determines institutional eligibility, which includes accreditation bodies and state governments as well as the federal government.
Excessive reliance on federal standards has led us to this sorry situation. Why would we think that federal officials are not subject to conflicts of interest and corruption? The recent exposé in The Atlantic should not come as a surprise to anyone who has been watching the Department for the past two decades.
The links in the triad that can restore integrity most quickly and effectively are state governments. Consider this: if state governments had been required to put up matching funds of their own to qualify institutions in their states for federal student aid eligibility, would we now have the interest-group ("iron triangle") takeover of the Department that has taken place? No. State governments approve shoddy schools when it costs them nothing, when all the aid is federal.
The time has come -- actually it is long past due -- for Congress to restore and reinforce the original checks and balances in the Higher Education Act, to engage the states as was originally intended through the mechanisms of cooperative federalism. The original Campus-Based aid programs and the State Student Incentive Grant (SSIG) program all had matching requirements, so as to engage the states through their own budget processes.
It is all well and good that many state attorneys general have now stepped up through their consumer protection divisions to try to protect their citizens from fraud and abuse perpetrated through federal student aid. But this is no remedy compared to getting integrity back into the programs in the first place.
The Higher Education Act is before Congress right now, for reauthorization. To me, there can be no higher priority than restraining the Department through the mechanisms of federalism. Democrats should not wait for the 2020 election to sweep corrupt officials out of power, which election may not go their way in any case. Republicans should be put on the spot about their principles: do they believe in federalism or do they approve of a Department that tries to undermine federalism at every opportunity – witness Secretary Betsy DeVos's attempt to pre-empt jurisdiction over student loan servicers.
James Madison, in Federalist 51, wrote: "In the compound republic of America, the power surrendered by the people is first divided between two distinct governments, and then the portion allotted to each subdivided among distinct and separate departments. Hence a double security arises to the rights of the people."
Has Madison's vision come and gone?
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* The cost of repealing the gainful employment regulation is estimated by the Department of Education itself at $4.7 billion. This represents federal money that will be spent on Pell grants at institutions that would otherwise lose their eligibility, and in defaulted federal student loans.
