Freedom Line Blog

Among the foremost threats to individual freedom in America is the abusive and oftentimes lawless behavior of federal administrative agencies, whose vast armies of overpaid bureaucrats remain unaccountable for their excesses.

Among the most familiar examples of that bureaucratic abuse is the Department of Education (DOE).  Recall, for instance, the United States Supreme Court’s humiliating rebuke last year of the Biden DOE’s effort to shift hundreds of billions of dollars of student debt from the people who actually owed them onto the backs of American taxpayers.

Even now, despite that rebuke, the Biden DOE launched an alternative scheme last month in an end-around effort to achieve that same result.

Well, the Biden DOE is now attempting to shift tens of millions of dollars of student debt held by thousands of students onto the University of Arizona after the fact following U of A’s acquisition of the for-profit online university that it originally targeted.  In other words, the Biden DOE is compounding its habit of forgiving student debt by shifting the cost ex post facto onto the backs of Arizona taxpayers.

Not exactly the best way to flatter citizens of a swing state whose votes it desperately seeks amid sinking electoral prospects.

Here’s the background.

Amid a rapidly evolving educational environment, in August of 2020 the U of A announced its intent to acquire private online Ashford University in an attempt to extend its global reach, a pursuit shared by numerous other traditional universities.  The new entity was named the University of Arizona Global Campus (UAGC).

Well, years prior to the acquisition California and federal bureaucrats had accused Ashford of “deceptive” tactics, and last year the Biden DOE announced that it would discharge $72 million dollars in debt held by 2,300 of Ashford’s former students.

Lo and behold, this month the Biden DOE announced that it would seek to extract that amount from the U of A, which obviously had nothing to do with the conduct alleged by the DOE and California.

It all adds yet another questionable element to the Biden administration’s ongoing effort to boost its popularity among younger voters by shifting college student debt to anyone and everyone other than the legal borrowers themselves.  Whether that will please taxpayers in the swing state of Arizona might have been a consideration that escaped the Biden folks.

Rick Perry got some (admittedly earned) grief last week after a cringe-worthy moment at the CNBC Republican Presidential Debate in Michigan, when he couldn’t recall the third of three cabinet departments he wants to abolish (for the record, they were the Department of Education, the Department of Commerce, and — the one he blanked on — the Department of Energy).

The media fixation on the gaffe overshadowed a bigger point: Rick Perry is proposing some of the most dramatic reforms to the federal government of any presidential candidate in decades. At a speech in Iowa earlier today, the Texas governor laid out an agenda that makes clear that the cabinet proposals were far from an aberration. Check out this list of proposals from the remarks:

• Term-limiting federal judges
• Converting Congress into a part-time legislature, with half the salary and half the staff
• Tying legislative pay to balancing the budget
• Bringing federal spending down to 18 percent of GDP
• Passing a Balanced Budget Amendment to the Constitution
• Privatizing Fannie Mae and Freddie Mac
• Privatizing the TSA
• Dramatically scaling down and repurposing the EPA
• Performing a full audit of the federal government
• Creating an across-the-board moratorium on new federal regulations and auditing all regulations from the past five years
• Freezing federal salaries (Except for military and law enforcement) and cutting the president’s salary in half until there is a balanced budget.

Perry may be faltering in the polls, but this list reminds us why he was a contender in the first place. At the very least, let’s hope that the eventual Republican nominee has the good sense to co-opt this agenda.

Yesterday, Senator Jim DeMint of South Carolina introduced an amendment to block enforcement of the Department of Education’s recently released Gainful Employment rule. CFIF is pleased to see Senator DeMint take action against the rule, which goes too far in regulating private entities, and threatens to eliminate competition in higher education. Members of Congress on both sides of the aisle have made it clear that they oppose this rule, yet Senator Tom Harkin (D-IA) continues to lead a crusade against for-profit institutions. Moreover, Senate Majority Leader Harry Reid (D-NV) and Senator Dick Durbin (D-IL) have threatened to stop DeMint’s amendment in its tracks.

 As an organization that works to preserve free market principles against federal government assault, CFIF applauds Sen. DeMint for speaking out against the overbroad regulations that unfairly target career colleges. We call on all Members of Congress to continue to speak out and join Senator DeMint to prevent the enforcement of this unscrupulous rule.

Sorry to coin an awful word such as “lossful,” but in this case it fits. I wish to associate myself with Tim’s excellent post below about the Obamites advancing what he calls a “toxic” rule to undermine private, usually for-profit colleges. In addition to Tim’s history of excellent reports on this subject (and Renee’s), Mark Hyman has done several on-target pieces on the same subject. It’s also worth noting that this is not a typical, right-vs-left battle. As The Washington Times noted in an editorial, Marc Morial of The Urban League has joined a number of other left-leaning outlets in denouncing the administration’s outrageous policies. Mr. Morial told me the rule “would have disastrous consequences for those who are at greatest risk of a life in poverty if they don’t obtain a college education.”

As Linda Chavez wrote, “Shouldn’t the Education Department devote its resources to expanding opportunities for Americans to receive schooling, not restricting them?”

There’s new political malfeasance from the Obama Administration.  Its Department of Education has sent the destructive so-called “Gainful Employment Rule,” which unfairly persecutes and effectively eliminates private college competition in higher education, over to the Office of Management and Budget for final review.

In addition to its harmful effects, the Rule is also riddled with corruption, from allegations of insider trading to defective Government Accountability Office reports.  The Education Department’s handling of this issue has been simply appalling.  Even more outrageous is the fact that the Department has not made the most recent version of the Rule – the one that was just sent to OMB for final review – available to the public.

In February, we applauded the House of Representatives when it passed a bipartisan amendment to H.R. 1 that stated that “no funds may be used to ‘implement, administer or enforce’ the U.S. Department of Education’s proposed Gainful Employment rule, nor may the Department ‘promulgate or enforce any new regulation or rule’ that would have the same effect as the Gainful Employment rule.  Unfortunately, however, that amendment was not included in the final budget.  But the battle to preserve student choice and market freedom in higher education is far from over.

At a time when our country has fallen behind in the rate of college graduates, we need competition in higher education now more than ever if we want to survive in an increasingly competitive world economy.  The Rule is clearly not close to being ready for final review, and the Department of Education must  reconsider its implications.  Most particularly, its harmful impact on less wealthy and working students who rely on career colleges and ultimately on our economy.

Conservatives are rightly convinced that private sector initiative is the key ingredient to almost every major improvement, be it economical, cultural, etc.  But before individuals can make big changes, they must be legally allowed to do so.

Thanks to Education Secretary Arne Duncan’s Race to the Top program, states like California opened up their public school districts to more parent involvement.  (These kinds of reforms are necessary to qualify for Race to the Top funding.)

According to Parent Revolution, a Los Angeles-based organization helping parents maximize their rights under the law,

The Parent Trigger is a historic new law that gives parents in California the right to force a transformation of their child’s current or future failing school. All parents need to do is organize – if 51% of them get together and sign an official Parent Trigger petition, they have the power to force their school district to transform the school.

If successful, parents have five options:

1) Charter conversion:

If there is a nearby charter school that is outperforming your child’s failing school, parents can bring in that charter school to transform the failing school. The school will then be run by that charter school, not the school district, but it will continue to serve all the same students that have always attended the school.

2) Turnaround:

If parents want huge changes but want to leave the school district in charge, this option may be for them. It forces the school district to hit the reset button by bringing in a new staff and giving the local school community more control over staffing and budget.

3) Transformation:

This is the least significant change. It force the school district to find a new principal, and make a few other small changes.

4) Closure:

This option would close the school altogether and send the students to other, higher-performing schools nearby.  Parent Revolution does NOT recommend this option to parents – we believe schools must be transformed, not closed.

5) Bargaining power:

If parents want smaller changes but the school district just won’t listen to them, they can organize, get to 51%, and use their signatures as bargaining power.

Parents get to pick which option they want for their children and their school. For a much more detailed overview of each one of these options, please click here.

All public policy needs to do is create space for private initiative to occur.  Once it does, the ingenuity of the American people will make the most of the opportunity.

For more on Parent Revolution, click here.

Remember when the Obama Administration proposed thousands of new Internal Revenue Service (IRS) agents to enforce ObamaCare’s mandate that American businesses file 1099 tax forms every single time they spent over $600 with any supplier?  The resulting uproar was loud and justified.

Unfortunately, reports suggest that Obama’s Department of Education (DOE) similarly seeks to snoop through private IRS records to enforce its destructive “Gainful Employment Rule” against for-profit career colleges.

We at CFIF have chronicled the Obama Administration’s ongoing effort to cripple for-profit colleges via that rule, which would limit financial aid to students attending career colleges based upon arbitrary income data.  Along the way, we reported allegations of collusion between DOE personnel and short-sellers who had wagered that for-profit college stocks would decline.  Those allegations were sufficiently grave to trigger investigation by Senators Tom Coburn (R – Oklahoma) and Richard Burr (R – North Carolina).  Then, the GovernmentAccountability Office (GAO) withdrew, then revised and republished a defective study originally released last summer involving undercover “students” sent to capture information on for-profit colleges.  The GAO’s revisions all slanted in one direction – the original report inaccurately cast career colleges in an unfavorable light, while the revisions indicate that the GAO’s undercover students may have intended to entrap career college admissions personnel.  According to the GAO’s own estimate, only 1 percent of reports require correction, and the statistical likelihood that all of its flaws skewed in the same direction (unfavorably toward for-profit colleges) was 1 in 65,536.  Tellingly, the stock value of for-profit colleges reportedly fell 14%, or $4.2 billion, following the GAO report.

Now, instead of simply using aggregated, readily-available Bureau of Labor Statistics (BLS) data to enforce their Gainful Employment Rule, the DOE seeks to access private, individualized IRS records.  Not only does this intrude upon individual citizens’ private information, it serves to deter Americans from exercising free will in choosing the colleges that best fits their needs.  Additionally, as noted by Cesar Conda in The Washington Times, the Obama DOE’s effort constitutes a new get-rich scheme for the trial lawyer lobby:

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.”

So in addition to crippling private career colleges that it considers politically unfavorable, the Obama Administration apparently wants to pore through students’ confidential IRS individual data.  Congress must maintain its current effort to defund this Obama Administration abuse, and Americans must support that effort and maintain its resolve.

Finally, some good news to report on the Collegegate front.

A bipartisan group of Congressional Republicans and Democrats is preparing to take action that would interrupt the Obama Department of Education’s plans to unfairly cripple career colleges.  Chairman John Kline (R-MN) of the House Education and Workforce Committee, Chairwoman Virginia Foxx (R-NC) of the Subcommittee on Higher Education, and Representatives Alcee Hastings (D-FL) and Carolyn McCarthy (D-NY) are expected to offer an amendment later this week blocking Education Department funding for implementation of the abusive so-called “Gainful Employment Rule.”  In order to put an end to this overly burdensome regulation, we must show our support for providing education opportunities for students who attend career colleges, and urge Congress to support defunding the Gainful Employment Rule.  Please use CFIF’s directory to call your Member of Congress now, and tell them to support the Kline/Foxx/Hastings/McCarthy Amendment to the Fiscal Year 2011 Continuing Resolution on Gainful Employment.

The festering “Collegegate” saga that CFIF has been following for weeks today reached front-page status in The Wall Street Journal.

We’ve detailed the allegations of insider trading against career colleges, which prompted Senators Tom Coburn (R – Oklahoma) and Richard Burr (R – North Carolina) to ask whether officials within Obama’s Department of Education, “may have leaked the proposed regulations to parties supporting the Administration’s position and investors who stand to benefit from the failure of the proprietary school sector.”  We also detailed how the Government Accountability Office (GAO) withdrew, then revised and republished a defective study originally released last summer involving undercover “students” sent to capture information on for-profit colleges.  The GAO’s revisions all slanted in one direction – the original report inaccurately cast career colleges in an unfavorable light, while the revisions indicate that the GAO’s undercover students may have intended to entrap career college admissions personnel.  According to the GAO’s own estimate, only 1 percent of reports require correction, and the statistical likelihood that all of its flaws skewed in the same direction (unfavorably toward for-profit colleges) was 1 in 65,536.  Tellingly, the stock value of for-profit colleges reportedly fell 14%, or $4.2 billion, following the GAO report.

Now, under the headline “A ‘Short’ Plays Washington,” the Journal exposes how hedge fund operators sold short their stocks in for-profit career colleges, and sought meetings with federal officials at the Department of Education:

‘Hello, my name is Steven Eisman,’ began an email to an Education Department official in May.  ‘I wanted to bring to your attention many of the unsaid or unknown aspects of this industry.’  Mr. Eisman runs a hedge fund called FrontPoint Financial Services, whose hugely profitable 2007 bet that housing would collapse was chronicled in the book ‘The Big Short.’  In the past year, Mr. Eisman has sold short the stocks of for-profit education companies.  He and some other investors betting on these stocks to fall have sought meetings with Education Department officials, and in some cases gotten a hearing.  In emails and presentations, the investors have painted the for-profit industry in a highly critical light.”

The Journal also quotes Citizens for Responsibility and Ethics in Washington (CREW), which wrote Obama’s Education Secretary Arne Duncan that hedge fund managers were able to secure “direct and sustained input into the regulatory process.”  “In what the group called ‘more troubling,'” the article states, “it said Education Department officials sought and received investors’ input despite knowing their financial motives.”

Career colleges have flourished for good reason.  They offer an education focusing on hands-on occupational training, and excel at serving non-traditional students who often have children, are working, are typically older and are more diverse than their peers at traditional schools.  This is particularly important during the current period of job scarcity and worldwide economic competition.  Unfortunately, the Obama Education Department seeks to cripple them by declaring them ineligible for federal aid.  CFIF has formally petitioned House Committee on Oversight and Government Reform Chairman-Elect Darrell Issa (R – California) to investigate the Obama Education Department’s continuing campaign against for-profit colleges, and that investigation is underway.

We at CFIF do not begrudge any citizen’s First Amendment right to petition the federal government for redress of grievances.  It is important, however, that the new 112th Congress ensure that these troubling allegations don’t reveal impropriety within the government itself.

CFIF has been monitoring the developing scandal surrounding the Obama Administration’s assault against for-profit colleges, and we’re pleased to report the new Congress is already taking action to get to the bottom of it.

First came allegations of insider trading within Obama’s Department of Education.  As detailed in a letter by Senators Tom Coburn (R – Oklahoma) and Richard Burr (R – North Carolina), Education Department officials “may have leaked the proposed regulations to parties supporting the Administration’s position and investors who stand to benefit from the failure of the proprietary school sector.”  Then, the Government Accountability Office (GAO) withdrew, then revised and republished a defective study originally released last summer involving undercover “students” sent to capture information on for-profit colleges.  That GAO report had been cited as vital evidence for the Education Department and a Senate committee as they prepare to promulgate the Gainful Employment rule, and even the Washington Post (whose parent company owns one of the largest for-profit schools) ran an article exposing that defective report.  The GAO’s numerous revisions are all clearly slanted in one direction – the original report inaccurately cast career colleges in an unfavorable light, while the revisions indicate that the GAO’s undercover students may have intended to entrap career college admissions personnel.  By the GAO’s own estimate, only 1 percent of reports are corrected, and the statistical likelihood that all of its flaws skewed in the same direction (against for-profit colleges) was 1 in 65,536.  Tellingly, the stock value of for-profit colleges reportedly fell 14%, or $4.2 billion, following the GAO report.

Now, incoming Oversight and Government Reform Committee Chairman Darrell Issa (R – California) along with Democrats Alcee Hastings (D – Florida) and Carolyn McCarthy (D – New York) and fellow Republicans John Kline (R – Minnesota), Brett Guthrie (R – Kentucky) and Glenn Thompson (R – Pennsylvania) have written the GAO demanding answers to the following “number of troubling questions” by today’s date:

1.  Has GAO’s Office of the General Counsel (‘OGC’) examined or investigated the facts surrounding the need to revise the August 4, 2010 report?  Please explain.

2.  Has OGC reexamined the report’s conclusions to ensure that they accurately reflect the analysis contained in the report?

3.  Has OGC verified the allegations that the methodology GAO used in the report is flawed and biased?  Please explain what was found.

4.  What are GAO’s procedures for revising a previously issued report?  Please provide specific steps.  Were these procedures followed in this instance?

5.  Why is there no announcement from the release of the modified report on GAO’s web site?”

This constitutes a promising start by the new Congress, including its suggestion of possible disciplinary action.  Stay tuned…

In this week’s Freedom Minute, CFIF’s Renee Giachino discusses the Department of Education’s war on for-profit colleges and universities, and the negative impacts of its proposed “gainful employment” regulations.

For-profit colleges provide an invaluable tool for everyday Americans to climb the ladder and improve their skills, particularly during a period of high unemployment when every little advantage matters.  That’s one reason why, according to estimates, enrollment at for-profit colleges has increased over 20% even since the recession began.  Despite this, such colleges find themselves in the crosshairs of the Obama Administration, whose Education Department seeks to impose suffocating restrictions on loans to students who wish to attend them.

Stop for a moment and imagine the outcry if the Bush Administration had pursued such targeted restrictions, which hit poorer and minority enrollees disproportionately hard.

Now, however, there’s even more disturbing news.  Senators Tom Coburn (R – Oklahoma) and Richard Burr (R – North Carolina) sent a letter to the Education Department last week citing public documents indicating that it “may have leaked the proposed regulations to parties supporting the Administration’s position and investors who stand to benefit from the failure of the proprietary school sector.”  The Senators’ letter comes on the heels of a lawsuit whose evidence includes emails between Education Department advisers and short-sellers.

The Obama Administration’s mindless attack against these important colleges for working Americans is bad enough, but allegations of corruption and insider trading obviously exacerbate that looming disaster.  We’ll be following these alarming developments in coming days, as should anyone who cares about the American workforce maintaining its edge amid fierce global competition.

It looks like Texas Governor Rick Perry isn’t the only state official who thinks the Obama Administration’s “Race to the Top” education funding competition is a game not worth the candle.  With 45 states participating, and 14 making the final round, only 2 states (Delaware and Tennessee) won.  The Department of Education also announced a cap on future awards – but not on federal requirements that follow the money – prompting several states to reconsider before reapplying.

But there is one benefit so far:

In Colorado, Van Schoales, executive director of Education Reform Now, a national advocacy group that supports Colorado’s participation in the competition, said the new award limit had strengthened the hand of teachers’ unions and rural school boards that, in opposing further participation, denounce federal intrusion.

“I’m surprised to see that there is a growing tide of people, an unholy alliance between unions and rural educators, who want us to say no to reapplying,” Mr. Schoales said.

If such an “unholy alliance” is what it takes to get states to kick their addiction to quick-fix federal dollars, so be it.