Ed Dept’s State Authorization Rule Will Not Cause the Sky to Fall

Last October, the U.S. Department of Education issued a new rule to implement the long-standing law requiring schools to have "state authorization" to offer postsecondary education if they want to participate in federal student financial aid programs. The rule has triggered hysterical calls from non-profit colleges for Congress to rescind the regulation. At the same time, the leading for-profit college lobbying group has sued the Education Department to overturn the rule. The new regulation provides some protection to taxpayers and students, but is so weak that the schools’ vociferous reaction to it seems akin to Chicken Little’s remarks. How could such a namby-pamby rule cause such a stir?

Although the state authorization requirement has long been in the law, the Education Department never explained what constituted state authorization to offer postsecondary education. Over time, the extremely profitable for-profit schools’ massive lobbying funds persuaded states to weaken or even abandon oversight entirely or to turn over oversight to private accrediting agencies. These private accrediting agencies, directly or through their affiliates, earn their revenues from the schools they accredit, much as rating agencies that rated toxic mortgage bonds triple A earned their revenues from the banks offering the bonds. The Department’s rule would, for the first time, establish a minimal standard for what constitutes state authorization: the school must either be established by name, state charter, constitution or other state action, or if not, it must be approved or licensed by the state, and the state must have a process to handle student complaints.

The arguments against this rule simply don’t add up.

The non-profits argue that “state officials may overreach.” Of course, state officials may authorize schools to operate in their states, with or without the federal rule, and may overreach with or without it as well. But for Republicans in the House Committee on Education and the Workforce who recently voted to eliminate the new rule, the contradiction with their core belief of putting more control in the hands of the states rather than the federal government is glaring. For states in which for-profit schools’ lobbying clout is paramount, elimination of the standard would mean that all the power to choose which schools are eligible to participate in the federal student aid programs would likely be concentrated in the federal government. As a result, the states would once again be marginalized.

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