50 Per Cent, But All Dollars

If you're looking for something to do this fine new month of March, it's a good time to start up a distance-education university, preferably of the for-profit variety. As described in this long but unevenly reported article in the Times, Congress has just decided, after years of lobbying by for-profit distance-ed institutions like my former employer, that

colleges will no longer be required to deliver at least half their courses on a campus instead of online to qualify for federal student aid. That change is expected to be of enormous value to the commercial education industry. Although both for-profit colleges and traditional ones have expanded their Internet and online offerings in recent years, only a few dozen universities are fully Internet-based, and most of them are for-profit ones.

The provision is just one sign of how an industry that once had a dubious reputation has gained new influence, with well-connected friends in the government and many Congressional Republicans sympathetic to their entrepreneurial ethic.

Now, that's rich. The "entrepreneurial ethic" at play here isn't so much scouring The Market for loose change as it is figuring out exactly how to tap the maximum number of students for the maximum amount of federal financial aid.

Ignoring the overhyped and misleading issue of possibly fraudulent distance-ed schools, it's clear that lifting the "50% Rule" will make it even easier for accredited or otherwise legit schools to obtain what amounts to federal - nay, taxpayer or private creditor - subsidies. And the for-profit distance-ed institutions rely very heavily on federal financial aid to support their operations. The nature of distance-ed institutions all but ensures that the clear majority of students will finance their (usually very costly) degrees through federal financial aid. And just to be absolutely clear, that money passes briefly through their hands while making the trip from the government to the companies' shareholders.

Missing this point is, I think, a critical flaw in the article. That aside, though, it's good to learn that distance ed is reaping what it has sown:

Sally L. Stroup, the assistant secretary of education who is the top regulator overseeing higher education, is a former lobbyist for the University of Phoenix, the nation's largest for-profit college, with some 300,000 students. Two of the industry's closest allies in Congress are Representative John A. Boehner of Ohio, who just became House majority leader, and Representative Howard P. McKeon, Republican of California, who is replacing Mr. Boehner as chairman of the House education committee. And the industry has hired well-connected lobbyists like A. Bradford Card, the brother of the White House chief of staff, Andrew H. Card Jr.

Looking up my former employer's CEO on Opensecrets.org, I see two donations to Republican causes and two to a New Jersey Democrat who happens to sit on the House education committee. He's clearly made some good investments, and I'm sure he and his peers at other for-profit distance-ed institutions will be happy to collect their dividends. Thus the wheels of commerce grind on.