Research & Commentary: Higher Education Regulations, State Authorization

Published March 10, 2011

The U.S. Department of Education will begin implementing two new regulations on for-profit colleges in July 2011. The new rules mandate that all for-profit postsecondary education institutions must receive authorization from the government of the state in which they are located in order for students attending them to qualify for federal financial aid programs.

As Molly Broad of the American Council on Education wrote in a letter to Congress, “The ambiguity of the regulations … raises the concern that state officials may overreach by imposing requirements on private, nonprofit institutions that go well beyond the grant of authority to operate as postsecondary institutions and that have nothing to do with the program integrity objectives of the new regulations.”

The fears of overreach are echoed by other scholars. Writing for The Heritage Foundation, Matthew Denhart notes, “Because student participation in federal financial aid programs is crucial to the financial viability of most institutions, this move gives state governments substantial power to decide which institutions can offer higher education programs.” The new rule weakens the role of private, third-party accrediting agencies and give states power that can be abused easily.

Richard Bishirjian of the Pope Center for Higher Education Policy says the new policy is unconstitutional: “Singling out for-profit education for using Title IV funds without including non-profit colleges violates the due process clause.”

This increase in regulation injects politics further into higher education while denying students freedom of choice and raising costs further. As a statement from Colorado Christian University notes, “The pending federal rule would plunge private higher education into the maelstrom of ideological agendas and interest-group politics in 50 state capitals.”

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

“Edupreneurs:” A Survey of For-Profit Education
The Cato Institute’s Carrie Lips examines the innovations coming from for-profit educators and offers some policymaking tips. Lips writes, “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 School Students Need Loans
Former Libertarian presidential candidate Bob Barr and ex-Mississippi state legislator Ronnie Shows argue that the new rules will make college impossible for many students who “face life obstacles that students at traditional four-year colleges do not.” They point out that many good schools will not survive under the new rules and that the for-profit sector should be a valued resource in reaching the Obama administration’s “lofty education goals: that the United States should have the highest percentage of college graduates in the world by 2020 and that an additional 5 million Americans have degrees and certificates in the next decade.”

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 so 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.

Preparing the Scapegoats for Slaughter
Richard Bishirjian of the Pope Center for Higher Education Policy contends the new regulations on for-profit higher education are unconstitutional.

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.”

Rep. Mike Coffman’s Letter to Arne Duncan
Rep. Coffman’s letter to Education Secretary Arne Duncan questions the use of states as accreditation agencies and suggests limiting this power.

War on For-Profit Colleges Reeks Even Worse
Neal McCluskey of the Cato Institute says it’s hypocritical for the government to attack only for-profit higher education instead of focusing on necessary 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].