Sunday, April 10, 2011

"Being Smart With Federal Dollars" Now Equals "Regulation," Says Chairman of House Education and Workforce Committee

It is funny that when the administration wants to make certain federal programs more efficient, opponents decry this as an example of 'regulation' going to far, as if a poorly designed government is itself an entitlement for any person or enterprise seeking to profit from it.

I wonder what UC's and our private local counterparts think of the (hopefully forthcoming) regulations.


Anonymous Anonymous said...

The implication here is that Boalt is going to lose its status with the Dept of Ed?

Otherwise, why the hell do I care about for-profit colleges?

4/10/2011 11:00 AM  
Blogger Patrick said...

There is a lot more to this issue than most people think.

Fact number one: Many for-profit colleges (e.g., the University of Phoenix, or certain unaccredited law schools) happily help students obtain federally backed loans for some of the country's most expensive "education," knowing all the while that those students don't have a snowball's chance on a barbeque of meaningful entrance to their profesision. The schools (and their shareholders) are happy because by the time students figure this out, the schools have already raked in the bucks. So, when thinking about this issue always remember that regulation of for-profit schools' tuition or educational services is, at bottom, a threat to their profit model.

Fact number two: last October, the Obama administration announced that it was considering looking into these schools' practices, and for-profit college stocks took at whack. (Look at ticker APOL from October 13-14 of 2010.)

Fact number three: hedge funds noticed the market reaction and, somewhat predictably, began to short those stocks. But they went even further: in addition to shorting the stocks, some funds started to lobby for further "regulation," on the theory that pushing regulation through would hurt the education companies, and profit the funds.

With that background, here is my take. Federal student money for publicly owned, for-profit colleges amounts to little more than government subsidization of private shareholders, on the backs of people too poor or under-qualified to make it into an ordinary public school. They're the victims. Some oversight of these schools' practices with respect to these students would be good, and total scrappage of the whole arrangement might even be better.

But do I see these particular regulations as "hopefully forthcoming?" No really. I see them as hopefully not inflicting more harm on poor people who just want to go to college. Notwithstanding the familiar political cries of "regulation" and "transparency" and "making things efficient," the rhetoric on this issue is only the publicly visible tip of a giant, largely hidden iceberg. This is a fight between two groups of sharks over which should get to keep from money that was supposed to go to the needy and undereducated. In all the ranting about this issue, I have a hard time finding anyone who is truly on the side of the good.

4/10/2011 11:57 AM  
Anonymous Anonymous said...

the Democratic party profits enormously from support from unions that hate for-profit colleges. this is good old fashioned politics. and if we're going to shut down schools that mislead applicants and students about employment prospects, we'd have to shut down all 200 law schools.

4/10/2011 12:32 PM  
Anonymous Anonymous said...

The Dems profit from big business, too. I love how all of a sudden everyone's obsessed with unions, though.

4/10/2011 3:09 PM  
Blogger DannyZ said...

The proposed regulations do not only apply to for-profit colleges.

Whatever your take is, the point is that government has every reason to make rules for how it spends taxpayer dollars.

4/10/2011 4:20 PM  

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