Trump VA Tries to End Ethics Law Prohibiting Staff Conflicts of Interest with For-Profit Colleges

While this blog focuses on K-12 public education, the Trump administration has proposed ending a regulation of for-profit, higher education, a proposal that is so outrageous it cannot be ignored.  The Trump administration wants to nullify a law signed by President Franklin D. Roosevelt to protect veterans by ensuring that staff in the Department of Veterans Administration are not being paid or otherwise rewarded by the for-profit colleges that, to stay open, actively recruit students who will pay tuition with GI benefits, federal loans and Pell Grants.

NY Times reporter Patricia Cohen explains: “The proposal to suspend the ethics law was published in the Federal Register in mid-September and is scheduled to take effect on Oct. 16, but no public hearings have been scheduled and no public comments have yet been submitted.”

Here is what the change will mean, explains Aaron Glantz of Reveal, The Center for Investigative Reporting: “The proposed regulation… would allow employees of the Department of Veterans affairs to receive ‘wages, salary, dividends, profits, gratuities’ and services from for-profit schools that receive GI Bill funds. VA employees would also be allowed to own stock in those colleges, the waiver says, as ‘the Secretary (of Veterans Affairs) has determined that no detriment will result to the United States, veterans or eligible persons from such activities.'”

The NY Times‘ Patricia Cohen quotes Carrie Wofford, director of Veterans Education Success, a nonprofit advocacy group: “There’s no good that can come from allowing colleges to have unseemly financial entanglements with V.A. employees. Congress enacted a zero tolerance for financial conflicts of interest for V.A. employees precisely because Congress uncovered massive fraud by for-profit colleges targeting veterans.”

In the Washington Post, Valerie Strauss just published a letter sent by Senators Patty Murray (D-WA), Elizabeth Warren (D-MA), Sherrod Brown (D-OH) and Richard Durbin (D-IL) to Secretary of Veterans Affairs David Shulkin to protest the Department’s waiving the conflict-of-interest regulation:  “If this proposed change were to go forward, Department employees and state accreditors would be able to be employed by or own stock in the very institutions the Department and State Approving Agencies are charged with regulating… Many for-profit colleges have been found by numerous law enforcement entities and investigative reporting to have preyed on veterans and service members for access to their educational benefits, and have invested heavily in obtaining special access to military bases and populations. Loopholes in federal law have created incentives for many entities in this sector to recruit and enroll veterans as a means of gaining access to other sources of state and federal aid.  Many for-profit colleges have also put substantial resources into lobbying Congress and numerous federal agencies to weaken regulations that would protect student veterans from fraud.  Weakening conflict of interest regulations related to for-profit institutions is not only inadvisable, but will put our men and women in uniform and those who have served our country at further risk of predatory and abusive business practices.”

The effort to waive the conflict of interest regulations in the Department of Veterans Affairs is part of a wider effort by the Trump Administration to roll back rules imposed during the Obama Administration to curtail abuses by the for-profit college sector. The U.S. Department of Education under Secretary Betsy DeVos has also taken steps to weaken rules that protect students from predatory activities by for-profit colleges. Michael Stratford covers these issues for POLITICO.  Here is his summary at the end of August of steps taken by the DeVos Department of Education to undermine Obama-era regulations to protect students from taking loans to study in for-profit colleges whose programs are so weak academically that their graduates are unemployable and unable to pay off the loans they have accrued:

  • “Moved to gut two major Obama-era regulations reviled by the industry that would have cut off funding to low-performing programs and made it easier for defrauded students to wipe out their loans;
  • “Appointed a former for-profit college official, Julian Schmoke Jr., to lead the team charged with policing fraud in higher education—one of a slew of industry insiders installed in key positions. Schmoke is a former dean at DeVry University, whose parent company agreed last year to pay $100 million to resolve allegations the company misled students about their job and salary prospects;
  • “Stopped approving new student-fraud claims brought against for-profit schools. The Education Department has a backlog of more than 65,000 applications from students seeking to have their loans forgiven on the grounds they were defrauded….”

Stratford adds some background to clarify what kind of for-profit programs the Obama Department of Education had been regulating and the current administration is trying to let off the hook: “For-profit colleges, which enrolled nearly 2.5 million students in the past academic year, encompass multistate behemoths such as the University of Phoenix and DeVry, as well as hundreds of small trade schools that struggle to make ends meet. Since a Great Recession boom, the industry has been dogged by allegations of predatory sales techniques and poor outcomes that left tens of thousands of students drowning in debt while the schools raked in billions from federal student loans and grants. President Barack Obama sought to curb those abuses with a regulatory crackdown that the industry blamed for pushing two of its giants, Corinthian Colleges and ITT Tech, into bankruptcy, while others saw their stock prices nosedive and enrollment plummet.”

In her fine book, Degrees of Inequality, Suzanne Mettler summarizes the problems for-profit colleges pose for our society: “Ironically, despite being regarded as part of the private sector, the for-profits are financed almost entirely by American taxpayers. They enroll about one in ten college students today, but utilize one in four dollars allocated through Title IV of the Higher Education Act of 1965, the predominant source of federal student aid.  A 1998 law permitted the for-profits to gain up to 90 percent of their total revenue from this single source.  Other government funds do not count against this threshold, so the for-profits also receive 37 percent of all Post-9/11 GI Bill benefits and 50 percent of Department of Defense tuition assistance benefits. In recent years, this combination of public funds has provided the for-profit schools with 86 percent of their total revenue, to the tune of roughly $32 billion annually.” (pp. 2-3)

The Obama Department of Education, to its credit, tried to crack down on abuses by for-profit colleges. The Trump administration is systematically undermining the public interest by rolling back regulations.

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3 thoughts on “Trump VA Tries to End Ethics Law Prohibiting Staff Conflicts of Interest with For-Profit Colleges

  1. Actions by the current administration are unconscionable and without reason. It is also wrong to systematically reverse any action taken just because it was adopted/enacted during the Obama term of office … a political tactic that is repugnant to the general law of our country.

    • Debbie, Trump has shown that he is thin-skinned, he holds a grudge, he needs constant praise, he’s narcissistic, he’s selfish, he cannot control his temper, his mouth, or his Twitter fingers.
      In short, he had all the maturity of a third-grader and, in fact, I’ve known third graders who were far more mature, thoughtful, and compassionate than he is.

  2. Trump and friends never met a regulation they didn’t want to gut.
    As long as somebody can make money, they don’t care who is hurt in the process.

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