In Congress, on the presidential campaign trail, and in the editorial pages of The Wall Street Journal, Republicans have been unified in the belief that the Obama administration badly overreached in its attempts to regulate for-profit career colleges that leave graduates unable to pay off student debt with income from the jobs for which they were trained. Rolling back the Obama administration’s so-called “gainful employment” requirements for postsecondary career programs is thought to top the GOP’s current higher-education agenda.
What’s surprising about this GOP consensus is that it is deeply at odds with conservative practice: Republican administrations, dating back to President Eisenhower, have traditionally pressed for tighter regulation of for-profit colleges, often over the objections of Democratic lawmakers.
In earlier eras, Democrats such as Senator Ted Kennedy and Senator Paul Simon defended for-profit colleges from government regulation, citing the role that the schools played in preparing low-income students, single mothers, minorities, and dislocated workers for jobs in specific fields—the very same defenses that Republicans employ today. Charles Kolb, who served in the Education Department during the Reagan administration and in George H.W. Bush’s White House observed dryly last year that “There are future doctoral dissertations waiting to be written about how and why Democrats and Republicans reversed positions on the merits of the for-profit trade-school sector.”
Doctoral dissertations aside, some conservatives are puzzled to learn of the prior Republican crackdowns on poorly performing and predatory for-profit colleges. Why would conservatives support laws and regulations that impose government-mandated accountability on for-profit colleges, instead of letting the invisible hand of the free market ferret out the institutions that thrive or fail?
The answer is simple. Far from being free-market paragons, accredited for-profit schools typically depend on federal student-aid programs for 75 percent or more of their revenues. (Trump University was an unaccredited for-profit school and thus ineligible for federal aid). Conservatives have long asserted the need to regulate for-profit colleges because they have long maintained that schools which depend heavily on federal aid ought to be held accountable for their use of taxpayer dollars.
President Eisenhower was the first GOP president to place restrictions on federal aid to for-profit schools. The landmark GI Bill of Rights of 1944 benefitted millions of veterans. But in the years before Eisenhower took office, the law also propelled a proliferation of shoddy for-profit schools intent on securing their shares of the new federal largesse for educating and training World War II veterans.
In the five years after FDR signed the GI Bill, the number of for-profit schools in the U.S. tripled to nearly 5,650 schools. More veterans actually used their educational benefits to attend for-profit schools rather than enroll in four-year colleges and universities. As for-profit schools mushroomed, recruiting abuses, misleading school ads, false job-placement claims, and training of veterans in fields with no job openings proliferated too.
A slew of investigative reports appeared with headlines like “Are We Making a Bum out of GI Joe?” and “How Many Wrongs Make a GI Bill of Rights?” In May 1948, Collier’s reported that the federal government was paying to have GI's take courses at for-profit schools to become ballroom dancers, amateur piccolo players, and chicken sexers—the latter being a course that taught trainees how to distinguish male chicks from females. The federal government, Collier’s concluded, had “squandered at least a half billion dollars supporting what in many instances is the greatest boondoggle of all time.”
After the Korean War ended in July 1953, the issue of how to provide educational benefits and pensions to those serving in peacetime took on new urgency. President Eisenhower flatly opposed extending educational benefits to peacetime soldiers and appointed the famed general Omar Bradley to head a presidential commission to study the issue.
The 1956 Bradley Commission report seconded Eisenhower’s opposition to giving peacetime soldiers educational benefits and concluded that “much of the training in profit schools was of poor quality.” The report noted that there was “no information on the number of veterans graduated from profit schools who were actually placed in jobs for which they were trained, but it was estimated in January 1951 that of the 1,677,000 veterans who attended profit schools, only 20 percent completed their courses.”
The October 1957 Soviet launch of the Sputnik satellite prompted Eisenhower to propose a federal scholarship program to encourage low-income students with aptitudes in science, math, or foreign languages to attend college. But Congress, with Eisenhower’s backing, barred for-profit schools from receiving federal funding from the National Defense Student Loan program.
By the mid-1970s, a new source of federal funding—the guaranteed student-loan program, enacted in 1965—was leading to a new round of scandals at for-profit institutions. To combat the abuses, Caspar Weinberger, the secretary of Health, Education, and Welfare in the administrations of Presidents Nixon and Ford, issued new regulations in 1975 that called for reviewing an institution’s eligibility for federal student aid if the school’s default rate exceeded 10 percent, if the school had a dropout rate exceeding 20 percent, or if more than 60 percent of students used federal student loans.
Weinberger’s regulations were far more draconian than any issued by the Obama administration, and effectively would have disqualified most for-profit schools from eligibility for federal student aid if strictly enforced. But those regulations were largely dismantled in the Carter administration after Congress established the Department of Education, and by the time Ronald Reagan took office, student default rates were soaring.
In response, William Bennett, Reagan’s second secretary of education, launched a regulatory crusade to crack down on for-profit schools. In 1987, Bennett proposed that colleges with high-default rates be reviewed for elimination from federal student-aid programs. Eighty percent or more of the schools targeted for review were for-profit schools. “It’s accountability time,” Bennett declared.
In a foreword to a government-commissioned report on for-profit schools, Bennett warned in 1988 that “the pattern of abuses revealed in these documents is an outrage perpetrated not only on the American taxpayer but, most tragically, upon some of the most disadvantaged and most vulnerable members of society.” “The kids are left without an education and with no job,” Bennett told Time, “and the taxpayer ends up holding the bag for the kid who gets cheated.”
Bennett failed to finalize his default regulations before stepping down in September 1988. But his default cap regulations, plus a slew of new restrictions targeting for-profit schools were included in the 1992 Higher Education Amendments. When President George H.W. Bush signed the 1992 law, with his Secretary of Education Lamar Alexander by his side, Bush declared that the new law would “crack down on sham schools that have defrauded students and the American taxpayer.” Bush proved prophetic. By the end of the decade, more than 1,000 for-profit schools had lost their eligibility for federal student aid.
Today, Senator Lamar Alexander oversees the Senate committee that will review the gainful-employment regulation and appears to have abandoned his previous support for accountability standards that primarily sanction poorly-performing for-profit schools.
The new secretary of education, Betsy DeVos, has not said if she will seek to do away with the regulation. But she did pledge at her confirmation hearing before Senator Alexander’s committee to review the Obama-era rule and “see that it is actually achieving what the intentions are. The last thing any of us want is to unnecessarily close down important programs.”
Secretary DeVos doesn’t sound much like Secretary Alexander. But she does sound like Senator Ted Kennedy, when he chaired the same Senate committee as Alexander in the George H.W. Bush administration. As Senator Kennedy stated at an April 1991 hearing, his concern was that legislation affecting for-profit schools should “make sure the good schools, the schools that provide opportunities for students . . . can move ahead.”
Secretary DeVos may be planning to follow in Kennedy’s footsteps. But on this issue, she might be better off taking her cue from Bennett, who defended the interests of students and taxpayers in the Reagan administration and warned that poorly performing institutions deserved to be cut off from federal student-aid programs. The purpose of federal aid, Bennett said, was “to promote educational opportunity, not educational default.”
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