It was an obvious headline when, not days into his Presidency, Biden started the process of revoking ACICS, the notoriously lax accreditor of last resort favored by many for-profit colleges. ACICS is so bad, they handed accreditation to a college that did not exist - one with no teachers and no students. Obama killed ACICS; Trump brought them back. Now, Biden has them marked for disbandment again.
But before that, days before Biden took the oath, and largely overlooked in the news, a legal challenge was filed by Xavier Becerra, the Attorney General of California. His suit should have received at least as much notice as Biden’s ACICS action.
In the fight to regulate for-profit bad actors, Becerra has been an overlooked champion. He has kept the pressure on education’s outlaws while the Trump administration not only looked the other way but at times seemed to drive the getaway car.
Specifically, in this new challenge, General Becerra has asked a federal court to toss out two rules that Trump’s Secretary of Education approved in early September 2020 - barely 60 days before the General Election. And while a judge will determine whether he’s right, the suit itself underscores the degree to which Trump, by way of his Education Secretary Betsy DeVos, sold out to for-profit colleges, putting their profits above students.
One of the new rules under Becerra challenge is about accreditation and, by proxy, access to billions of federal dollars in student loans and grants. By law, schools have to be certified to access those funds at least every six years and, as part of that process, the Secretary of Education has to affirm that the schools were credible and capable of using taxpayer money appropriately.
But in September, Trump and DeVos made a new rule saying that if a college has requested a renewal of that certification for 12 months without a decision, it is approved automatically. That may sound reasonable. But in practice it removes nearly any safeguard protecting federal education funds. If allowed to stand, that rule opens the bank vaults to any and all kinds of irresponsible action. Or, as the Becerra suit calls it, “an abdication of federal oversight.”
Imagine, for example that a really bad, irresponsible, even fraudulent school was seeking continued access to federal funds and, because of their conduct, regulators had questions. Maybe there are lawsuits by states or defrauded students. In that case, all any school would have to do is delay those questions and proceedings for a year while their application was pending and - poof! - they’re certified to keep spending tax dollars for six more years.
Greasing those renewals is important to for-profit colleges because, without easy access to federal money, most of them would go bankrupt. There’s simply no profit in for-profit colleges unless taxpayers are signing the checks. The Becerra suit correctly cites that, “in 2009, the 15 publicly traded, for-profit education companies received 86% of their revenues from federal sources.”
Therefore, giving bad colleges a way to duck federal review by simply running out the clock on problems is a pretty big, multi-billion dollar gift to the investors who run for-profit colleges. Becerra called it, “a potential regulatory windfall to predatory institutions, allowing them to evade important ED oversight,” and that is exactly what it is.
The second rule contested by Becerra is, if you can believe it, even worse.
Before Trump, colleges could not outsource more than half of the education they provided. That is to say that a school could not just buy courses from another school, or more likely an ed-tech company, and resell them. At least not more than half the time. The rule was intended to be sure that if you enrolled at Arizona State, for example, at least half your classes would actually be provided by Arizona State.
That the cap was ever allowed to be 50% is pretty shocking.
But Trump’s September rule allowed for-profit colleges, and only for-profit colleges, to outsource their programs entirely — 100%. The rule does have the fig leaf that that complete outsourcing has to be from entities the college owns, but that’s legal window dressing. In his suit, Becerra says, “The new regulations irrationally rescind this commonsense protection, allowing for-profit schools to now outsource 100% of a student’s education.”
You can see the profit potential in building one course, hiring one teacher and selling it over and over again to “different” schools under different names. You can also see why, from the consumer side, that’s a problem.
As an example, the rule used to guarantee that if someone was buying a Mercedes, they weren’t buying a car with a Mercedes nameplate but built entirely out of spare Ford parts. If you were going to sell a Mercedes, at least half of it had to actually be a Mercedes. Now, under Trump’s plans, not a single part has to be.
As of 2009, for-profit colleges already collected more in profit than they spent on education. This 100% outsourcing opportunity only makes it easier to drive profits up by driving education investment down. It would allow students to be sold an education from one school but taught entirely by another.
Fortunately, Becerra is arguing, that by passing these late rules, Trump’s team did not follow the rules and they may be - should be - thrown out. “In its haste to provide an eleventh-hour regulatory bonanza to for-profit schools in the waning days of the Trump administration, ED has once again violated the [law],” the suit says.
Let’s hope a judge agrees.
It’s good that, in Biden, the regulators are back. It’s just as good that a few of them never left.
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California AG Goes After Two Late Trump Give-Aways To For-Profits - Forbes
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