Thursday Fox Business' Andrew Napolitano grievously mischaracterized Education Department rule changes that will end federal aid for for-profit schools that fail to help students obtain gainful employment. He said:
The job market has been sluggish, but that's not stopping the Obama administration from requiring for-profit colleges to produce gainful employment or face being shut down by federal education officials. That means if a culinary or nursing school fails to prove that graduates make enough income to pay off their student loans, then the government will hang the closed sign on their windows. Why is it the government's business to regulate what kind of income students make from their first jobs out of college?
But according to the Los Angeles Times, the federal government will simply refuse to give tax dollars to schools that fail to deliver gainful employment:
Under the rules, programs would remain eligible for federal aid if they meet at least one of three tests in a given year: at least 35% of former students are repaying their loan balance; yearly educational-debt payments of typical graduates account for a maximum of 12% of their total income; and those payments account for no more than 30% of their discretionary income.
Programs would have to fail all three tests in the same year for three out of four years before losing aid eligibility.
For-profit colleges enroll about 12% of U.S. higher-education students, but they use about one-quarter of federal student grants and loans and account for 46% of student loan dollars in default, the Education Department said. [Los Angeles Times, 6/2/11]
Some schools may close if they stop receiving government aid -- Reuters reports that federal student aid "accounts for around 90 percent" of for-profit colleges' revenue -- but Napolitano should applaud the end of for-profit education's "dependency" on a federal money. Apparently only senior citizens and poor people who are "dependent upon big government" receive Napolitano's scorn. Big business does not.
Video of Freedom Watch is below the jump: