July, 2019
Washington -- Secretary of Education Betsy DeVos has unwisely rescinded the "Gainful Employment" regulation put into place in 2014 to prevent waste, fraud, and abuse of students and taxpayers, largely at for-profit institutions.
The regulation was designed to eliminate programs that did not provide students with gainful employment, comparing their student loan debt to their employment earnings. The GE regulation will not be enforced henceforth and will be totally gone by July 1, 2020.
Both the New York Times and Inside Higher Ed reported that the cost of the Secretary's action would be $6.2 billion over ten years. Without the regulation, students will receive Pell Grants and student loan subsidies to attend programs that otherwise would have been shut down. The cost is confirmed in the fine print of the Secretary's notice.
Question: How is the Secretary's rescission not blatantly abetting waste, fraud, and abuse?
There are Orwellian answers to this question in the Federal Register notice: the GE regulation was targeted too much at for-profit institutions; the Secretary looked for alternatives to GE but could find none other than "buyer beware;" and repealing regulations always saves on paperwork.
To make these arguments, however, the Department of Education had to distort outside research on institutional performance. One researcher has publicly complained, and not for the first time. I am familiar with this body of research myself and conclude much of it is put to ill use in the rescission rationale. Moreover, the Department's own NCES contracted research knocks the DeVos conclusions into a cocked hat.
If the Secretary actually and sincerely wanted an alternative to the current GE approach to program gate-keeping, others are available. The Secretary has broad regulatory authority to make HEA Title IV programs work effectively and efficiently. For example, gate-keeping alternatives might require institutions to meet standards to participate in the College Work Study program, or to receive no more than a certain percentage of revenues from the GI Bill, or require states to have skin-in-the-game to share risk. No such alternatives were pursued, however, because clearly the goal of the rescission is to get billions of taxpayer money back into the hands of the for-profit owners, to go back to the status quo ante, before the 2014 crackdown.
Question: How does this action get around various Executive Orders and OMB guidance designed to protect taxpayers?
President Trump declared in 2017 that any new agency regulation would have to be accompanied by the repeal of two existing regulations. The spirit of this order was to make certain that any new burdens were offset by eliminating old ones. In OMB guidance as to how this must be accomplished, however, scant attention was given to repealing a regulation for which there would be such a high cost – $6.2 billion. The Secretary's GE notice does not explain how her action is consistent either with the letter or the spirit of the president's order or the OMB guidance. Apparently there is a crack in the guidance through which the Secretary can squeeze: OMB excludes Pell Grants as "costs" because they are "transfers." Hence there is no need to consider them, let alone provide an offset for them. Just let taxpayers pay for the waste, and let students at worthless programs suffer the inevitable consequences of student loan indebtedness.
My concern here is not particularly how research can be twisted or even how taxpayer interests can be steamrolled through budget tricks, important as those issues may be. It is, rather, that at the Secretary's command employees at the Department of Education would produce such a document. Who wrote this notice, civil servants or political appointees? I suspect the latter*, but with too much help from civil servants who don't have the fortitude to object.
Much has been said about a "Deep State," a pejorative applied to what many of us consider our most hallowed institutions. Among them is a non-partisan civil service devoted to the rule of law. But with this provocative notice from Secretary DeVos, doing away with a regulation preventing billions of waste, fraud, and abuse, we are seeing that the Deep State is really a "Shallow State." The Shallow State is made up of a go-along-to-get-along cohort in the civil service, always present in any agency but nevertheless a huge disappointment to those who have always taken their oaths of federal employment more seriously.
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* Doubtless much of the notice was prepared under the aegis of the acting assistant secretary for postsecondary education, Diane A. Jones, whose long employment history in the for-profit sector constitutes a conflict of interest. She has an extensive record of distorting the work of others and even committed perjury, in my view, at a recent appearance before a House oversight subcommittee when asked about the reinstatement of the troubled accreditor ACICS. She is not alone: see earlier posts for identification of individuals in a revolving door network that has a long record of taking advantage of weaknesses in the Shallow State. To me, the publication of the GE notice is another significant piece of evidence demonstrating that this network has, once again, crossed the line into corruption and racketeering. Abetting over $6 billion in waste, fraud, and abuse is a matter due for appropriate investigations and, for a change, consequences.
