Freedom Line Blog

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.

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…

It was embarrassing enough when the Government Accountability Office (GAO)  recently withdrew its defective “undercover study” issued last summer as part of the Obama Education Department’s campaign against for-profit colleges.  Readers will recall how the GAO sent undercover “students” to several schools to capture information as evidence for the Education Department and a Senate committee.  This was all part of their larger effort to justify the proposed “Gainful Employment” rule targeting for-profit career colleges that provide critical training and education to struggling Americans.  Worse, this came on the heels of a letter from Senators Tom Coburn (R – Oklahoma) and Richard Burr (R – North Carolina) seeking investigation into allegations of insider trading within the Education Department relating to its campaign to cripple career colleges.

Now comes a report providing greater detail on just how malignant that the defective GAO “undercover” report was.  According to Frederick Hess and Andrew Kelly, fully 16 of the report’s 28 findings required revision.  Tellingly, every single one of those “findings” skewed the same direction – casting for-profit career colleges negatively.  The statistical likelihood of all 16 randomly tilting the same way, according to Mr. Hess and Mr. Kelly, is 1 in 65,536.

That doesn’t suggest extreme coincidence.  It suggests intentional malfeasance.

Amid persistent unemployment and intense global competition, for-profit colleges provide important alternatives for education and job skills.  That is why CFIF has formally petitioned Chairman-Elect Darrell Issa (R – California) of the House Committee on Oversight and Government Reform  to investigate this matter.  It is also important that supporters and activists across the nation contact their Senators and Representatives to help stop the Obama Administration’s unjustifiable scheme.