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Thursday, July 14, 2011

SBE Council Applauds Congressional Efforts to Probe 'Gainful Employment' Rulemaking Proces

Certainly there is a lot of "drama" taking place in Washington regarding whether or not there will be a deal to lift the debt ceiling. Of course this is a critical issue, but Congress remains hard at work conducting oversight hearings regarding government regulations and actions that could be harmful to private sector efforts to get the economy back on a strong, growth track. Last week, for example, there was a hearing on the "Gainful Employment" regulation -- a misguided and controversial effort by the U.S. Department of Education (DOE) to regulate for-profit career colleges.

SBE Council applauds the efforts of U.S. House Reps. Darrell Issa (R-CA) and John Kline (R-MI) who probed the inept and shady rulemaking process that produced the DOE's "gainful employment" rule. The rule has drawn harsh criticism from the business community, small business groups and minority leaders for unfairly targeting for-profit institutions whose students are predominantly minorities.

SBE Council has also been critical of the rulemaking, and has expressed its concern to Congress regarding the harmful effect that the rule could have on America’s small business workforce, entrepreneurship, and economic opportunities for the minority community and individuals in transition – that is, workers who need additional training and skills to compete in the competitive 21st century economy.

On July 8, the Committee on Education and the Workforce's Subcommittee on Higher Education and Workforce Training conducted a joint hearing with the House Committee on Oversight and Government Reform's Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending. The hearing -- "The Gainful Employment Regulation: Limiting Job Growth and Student Choice," featured testimony from an array of stakeholders, including: Harry Alford, President of the National Black Chamber of Commerce; Dr. Dario Cortes, President of Berkeley College, NY; Karla Carpenter, a graduate of Herzing University in Madison, WI; and Dr. Anthony P. Carnevale, Director of Georgetown University Center on Education and the Workforce.

The take-away from expert stakeholder testimony remains clear: "Gainful Employment" will hurt the economy and kill jobs through excessive government intrusion into the for-profit college sector, which fills a market niche by providing college opportunities to non-traditional students. This niche has not been filled by private and overcrowded public institutions, especially community colleges. The rule is anti-entrepreneurial and anti-business to the core.

The "Gainful Employment" rule demands that students who graduate from for-profit colleges earn high enough salaries in their careers to justify ongoing federal student aid to attend that college. With unemployment figures topping 9.2 percent, this "Gainful Employment" regulation could affect thousands of programs at proprietary institutions and block postsecondary education opportunities for millions of Americans.

Congress cannot stand by and watch yet another regulation destroy jobs -- it must immediately move to reverse this misguided regulation. Congress can do that by using its "congressional review" authority. SBE Council hopes they use this tool to not only reverse a bad rule but also to save educational opportunities for America's workforce. In addition, pressure is growing for the SEC to probe possible "insider trading" activity that may have occurred during the rulemaking process. Such allegations erupted as the regulation was moving through the DOE, yet -- and incredibly -- they were ignored. Congress has the last say on "gainful employment" and they must take the opportunity to bring some accountability to the federal regulatory system.

Karen Kerrigan, President and CEO, Small Business & Entrepreneurship Council

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