Research & Commentary: Higher Education Regulations and the Disadvantaged

Published April 7, 2011

Congress and the president stress the importance of providing higher education opportunities to traditionally disadvantaged groups. At odds with this agenda, however, are federal regulations that are being put in place affecting for-profit colleges. They will limit the options for higher education, cut competition, reduce innovation, and keep tuition costs high and rising.

Attempting to demonize for-profit schools, Sens. Tom Harkin (D-IA) and Dick Durbin (D-IL) have publicly attacked the institutions for, as Durbin said at the National Press Club last year, “raking in huge amounts of federal dollars.” Research from the Center for College Affordability and Productivity finds for-profits received, on average, just “$11,130 in revenues per student in 2008–2009, while public universities collected $18,922 per student and private nonprofit colleges received a staggering $37,869 per student.”

The new regulations will especially burden lower-income and minority students. According to the Government Accountability Office, the average for-profit higher education student has a household income at just 60.1 percent of his or her peer in a public college. In 2007, according to the Center for College Affordability and Productivity, almost 40 percent of for-profit students were racial minorities, a figure well above those for public and nonprofit private schools.

If adopted, these regulations would nearly eliminate the educational option most available to many disadvantaged individuals. Any regulations on higher education should apply equally to all types of institutions, and market-distorting subsidies should be removed, to help foster healthy competition, innovation, and new entrants into the sector.

The following documents offer additional information on for-profit higher education.

“Edupreneurs:” A Survey of For-Profit Education
Researcher Carrie Lips of the Cato Institute examines the innovations coming from for-profit educators and offers some policy advice: “Policymakers interested in improving America’s education system should eliminate financial biases against edupreneurs by adopting policies, such as tax cuts and universal tuition tax credits, that would return education purchasing power to individuals.”

Federal Overreach into American Higher Education
Heritage Foundation education expert Matthew Denhart analyzes the new regulations in detail, concluding, “If enacted, these new regulations will impose additional costs on already tuition-strapped students and the higher education institutions that they attend.”

For-Profit Higher Education: Growth, Innovation and Regulation
This report by education analysts Daniel Bennett, Richard Vedder, and Adam Lucchesi for the Center for College Affordability and Productivity is intended to “provide an objective overview of the industry and its students, to discuss operational differences between the traditional educational sector and for-profits, to assess the regulatory environment facing the industry, and to examine the economics of education as a profit-making enterprise.”

Put Department of Education in Timeout
Richard W. Rahn of the Cato Institute finds “the nation is best served by having a highly competitive mix of public, private, nonprofit and for-profit educational institutions.” He gives the Department of Education an “F” for regulating for-profit education too tightly.

U.S. Education Dept. Proposes New Regulations on For-Profit Colleges
Heritage Foundation education policy expert Lindsey Burke describes the new regulations in an article for The Heartland Institute’s School Reform News.

Breaking: Potential Government Takeover of Private Colleges
This Colorado Christian University press release notes, “The pending federal rule would plunge private higher education into the maelstrom of ideological agendas and interest-group politics in 50 state capitals.”

New Federal Rule Threatens Practices and Revenue at For-Profit Colleges
Goldie Blumenstyk, an editorial writer for The Chronicle of Higher Education, covers both sides of the debate over the new regulations’ definition of a credit-hour.

What Is Gainful Employment? What Is Affordable Debt?
Mark Kantrowitz, creator of and, studied the new regulations and points out five major flaws and potential corrections.

War on For-Profit Colleges Reeks Even Worse
Neal McCluskey of the Cato Institute argues it’s hypocritical for the government to attack only for-profit higher education instead of focusing on reforms that would improve the system as a whole.

For further information on the subject, visit the School Reform News Web site at or The Heartland Institute’s Web site at

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or the Heartland Web site, contact Marc Oestreich, legislative specialist in education, at 312/377-4000 or [email protected].