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February 18, 2011 4:31 PM For-Profit Games

By Daniel Luzer

Yesterday, in anticipation of the House of Representatives efforts to pretend to block the gainful employment rules—under which schools wouldn’t be eligible for federal financial aid if average graduates carry more than a certain amount in student loans—that the Department of Education will issue to for-profit colleges, the Center for American progress hosted an event “to bring attention to the real-world stories of some students’ experiences with for-profit schools that engaged in questionable practices.” It was a little confusing and sort of silly.

The awaited gainful employment rules will cut proprietary schools off from federal financial aid if they present students with debt above 12 percent of their income and if their students have loan repayment rates below 35 percent.

Certain members of congress are opposing this rule, which they say will cut needy Americans access to higher education. They’ve therefore proposed a budget amendment to prevent the Department of Education from using any public money to institute those gainful employment provisions. This budget amendment is, however, meaningless. It won’t get through the Senate and the president would veto it if it did. It’s a largely pointless exercise. But there it is.

The Center for American Progress supports these gainful employment provisions very much. Through its Campus Progress arm CAP is working on a campaign to highlight abuses and institute reform at for-profit colleges.

At yesterday’s CAP event two people highlighted their disturbing experiences with one for-profit college, ITT Technical Institute. According to a piece by Kay Steiger at Campus Progress:

Adam Gonyea, a former student of ITT Technical Institute…explained that, despite the fact that he was a veteran and qualified for federal Pell grant funding, he was still charged a high price for a low-quality education.
Rashidah Smallwood, a former financial aid administrator with both the University of Phoenix and ITT Technical Institute… noted that she was encouraged to falsify letters from students saying their parents were missing or dead so students could be awarded larger aid packages. She refused to complete an application for two students who told her their parents were undocumented. She said her supervisor then completed a false financial aid application under her employee ID so the students could be classified as independent. When Smallwood filed a complaint with ITT’s corporate office, she was suspended, supposedly until they completed the investigation into her complaint.

These allegations are certainly disturbing. As Angela Peoples, who also spoke at the event, explained: “The proposed gainful employment rule implements requirements set by Congress and advances a common-sense principle: Federal financial aid shouldn’t go to career education programs that consistently leave students buried in debt they cannot repay.”

Well fine. The event demonstrated that some things are wrong. It’s not really clear that the gainful employment rules will improve things however.

Part of the problem here is that what Smallwood is alleging is just straight-up fraud. That’s illegal now. It’ll be equally illegal once gainful employment regulations go into effect. It’s unclear what one has to do with another. Even Gonyea’s “high price for a low-quality education” wouldn’t necessarily be fixed by the regulations. Student debt above 12 percent of student income. Would ITT fall under that?

This is one of those strange things about of the way Washington works. There is a problem. The problem has a solution. Some are opposed to that solution and propose a measure to defund that solution. The measure will never be enacted. But those who oppose it go through the motions anyway.

Meanwhile, those who support the proposed solution have a meeting to explain why the current situation is bad. They bring some people together to talk about their experiences with the current problem. This is despite the fact that their experiences appear to make no difference to the policy proposed.

UPDATE: Campus Progress has a response here.

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer