Key US Education Department Official to Leave

James Kvaal, a key U.S. Department of Education official responsible for propagating rules against the for-profit education industry, is leaving to join president Barack Obama’s 2012 re-election campaign.

Kvaal is currently the deputy undersecretary of post-secondary education at the department, and will quit this month to become a policy director for the re-election campaign, department spokeswoman Sara Gast told Reuters.

Kvaal took over that position from Robert Shireman in June 2010 and has since been the main official behind the department’s efforts to rein in the for-profit education industry.

Over the past one year, the department issued several new rules for a sector that has come under criticism for low graduation rates and leaving students with unwieldy debt.

Companies such as Apollo Group and Corinthian Colleges , which run a chain of for-profit colleges, have made changes to comply with the rules and are seeing a sharp decline in enrollments.

The department has threatened to cut off federal aid to the colleges if they do not comply with the rules.

Wunderlich Securities analyst Trace Urdan said Kvaal’s resignation was a marginal positive given that he was a driver of initiatives to rein in the sector.

Although the rules were framed by Shireman, who was known for his vocal stance against the sector, Kvaal was a significant player in implementing them.

Shireman’s departure last year prompted a rally among the education stocks.

The S&P 1500 education services sub-industry index was up 2.67 percent on Wednesday. It has fallen 38 percent in the last two years.


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