Sen. DeMint Goes After Gainful Employment Regulations

On June 7, 2011, Sen. Tom Harkin (D-Iowa) held a hearing on the newly announced “gainful employment” regulations at the Department of Education (DoEd).   Mired in controversy, and the topic of numerous blog posts by the Taxpayers Protection Alliance (TPA), the hearing was supposed to be an objective look at the new regulation which could severely hurt career colleges and universities.  But, according to the Chronicle for Higher Education, “…Sen. Tom Harkin, the Iowa Democrat who held the hearing, said the rule would not do enough to protect students and taxpayers from underperforming programs, and he promised stronger legislation focused on the sector.”  Just moments after the hearing, Sen. Jim DeMint (R-S.C.) offered his own amendment on the subject. According to CQ.com, “Later in the day, Jim DeMint , R-S.C., added an amendment to a bill to reauthorize the Economic Development Administration (S 782) that would nullify the newly published Obama administration regulations, which focus on ‘gainful employment’ prospects for graduates of programs that receive federal financial aid.”

The process of getting this regulation instituted has been filled with intrigue and deception:

August 4, 2010: The Government Accountability Office prepared a report for the Senate Health, Education, Labor and Pensions Committee at the request of Sen. Tom Harkin (D-Iowa). The report criticized for profit colleges and universities recruiting practices based on the evidence of 28 key investigative “scenarios.”

September, 2010: DOEd delays implementation of new rule

November 17, 2010: Senators Richard Burr (R-N.C.) and Tom Coburn (R-Okla.) sent a letter to DOEd inspector general Kathleen Tighe that said that publicly available documents show that the department may have leaked the proposed “gainful employment” rules to short sellers and others who support the department’s position. (See the National Law and Policy Center’s blog post about the short seller issue.)

November 18, 2010: Former special counsel to President Clinton Lanny Davis points out in a Huffington Post article that DOEd is targeting only for-profit career colleges.

November 30, 2010: GAO released revisions to its August report. (see revisions here)

December 23, 2010: The Examiner ran a story that stated, “Recent revisions to a Government Accountability Office report on for-profit colleges have raised questions about the GAO’s objectivity and credibility. Now, a bipartisan group of six members of Congress has asked that those questions be answered.” And, “The GAO report of Aug. 4 was prepared for the Senate Health, Education, Labor and Pensions Committee at the request of Sen. Tom Harkin (D-Iowa). It criticized the recruiting practices of for-profit colleges and universities based on the evidence of 28 key investigative ‘scenarios.’ The revisions, released Nov. 30, made factual changes to 16 of the 28.”

February, 2011: A bipartisan grouping of house members offered an amendment to stop Gainful Employment in its tracks.

March 1, 2011: Citizens for Responsibility and Ethics in Washington (CREW) also weighed in on the issue with a press release: “Citizens for Responsibility and Ethics in Washington (CREW) sent letters to the Director of Enforcement for the Securities and Exchange Commission (SEC) and U.S. Department of Education Secretary Arne Duncan to share records CREW obtained through its Freedom of Information Act (FOIA) lawsuit against Education. These documents show high-level Education officials colluded with Wall Street short-sellers, improperly leaking the contents of highly controversial gainful employment regulations in advance of their publication.”

May 3, 2011: The Toronto Star reports that DOEd sent its proposed gainful employment regulations to the Office of Management and Budget.

June 2, 2011 – The Department of Education released its proposed regulation.

June 6, 2011 –  Grover Norquist, president of Americans for Tax Reform called for an SEC investigation to determine whether or not Department of Education officials worked with short-sellers to craft “gainful employment” legislation. To read Grover Norquist’s letter to the SEC, click here.

June 7, 2011 – Sen. Harkin holds a hearing on the proposed regulations and Sen. DeMint immediately offers an amendment that would nullify the new regulations

June 7, 2011 – TPA issues a TPAPB to Congress urging them to pressure the SEC to investigate the Department of Education’s involvement with Wall Street short-sellers.

The new regulation isn’t expected to go into effect until June 2012.  TPA will be following this issue very closely and will be supporting DeMint’s amendment and any congressional attempts to kill this regulation because the new regulation is bad for taxpayers and the economy.