Ronnie Shows: Is Plan for Private Sector Colleges Bad News for Blue Dogs?

No doubt about it, this is going to be a tough re-election year for many Democrats. It will be particularly so for the conservative Blue Dogs who hail from the small towns of the Deep South, as I do.

For Blue Dogs, the best politics over the next several months will be to steer Congress and the Obama administration toward policies that are centrist, focused on reducing our national debt and improving the lives of the American people. After all, I have always believed that good policy is good politics. And good policies are what the American people are demanding, Republican and Democrat alike.

One storm on the horizon that most Blue Dogs are probably unaware of right now is a proposed rule change by the Department of Education that will recommend a “gainful employment” provision as part of federal student loan programs. This rule is currently working its way through the Obama administration, and if enacted would dramatically reduce or eliminate the number of private sector colleges in the United States. By private sector, I mean colleges such as trade schools that advertise and not private colleges such as New York University or the University of Southern California.

The proponents of the gainful employment provision are doing this because they assert that graduates from private sector colleges don’t find jobs that pay enough to justify their receiving federal aid, which threatens to raise the number of federal loan defaults.

This assertion is woefully off the mark. A lot of private sector colleges do help students find good jobs, and the gainful employment provision does not distinguish between good programs and bad ones — it shuts them both down. It also fails to take into account many other factors impacting a student’s ability to find a job, such as their family responsibilities or temporary trends in the job market.

This provision is also bad news for taxpayers, because two-year programs at private sector schools are expanding at roughly four times the rate of their public two-year counterparts. For the taxpayer, private sector colleges are a blessing because the total tax burden to educate a student at a private sector college is significantly less than the tax cost for a student at a public college, which is heavily subsidized by federal, state and local funding.

Career College Centeral
4/27/10