by Capitol Confidential
Over the last several months, as attention has been focused elsewhere, the Obama Administration and Education Secretary Arne Duncan have been waging a quiet war against for-profit schools and universities – educational institutions that offer job training and degrees in in-demand fields to students looking for an alternative to four-year non-profit schools, or a more accessible price tag.
The Administration has fired a number of rounds at the industry, but recently unveiled it’s secret weapon: a “gainful employment” restriction on federal loan money available to students at for-profit schools. While for-profit schools have had their difficulties, their deficiencies aren’t that dissimilar to those of their not-for-profit counterparts, but this weapon could kill off for-profits as a viable option to not-for-profit education.
Essentially, students at for-profit schools that have either a low graduation rate or an unacceptably high number of unemployed, graduated students would be denied federal student loan and grants. As Forbes points out, these schools serve primarily lower-income and minority communities who depend so heavily on student loans, such a restriction could put the whole industry in jeopardy.
Which, of course, is exactly what the Obama Administration would like to see happen. And, from recent news, it seems that they and their network of associates will do just about anything to make sure it happens.
In just the last month, public scrutiny exposed major flaws in a GAO report that accused for-profit schools of major malfeasance, forcing the GAO to revise and update their findings. Just last week, a writer for the New York Daily News was canned after an article he wrote on for-profit schools for the Village Voice turned out to feature a number of fake sources and outright lies. And then there’s this: an online report from a Soros-funded think tank purporting to be neutral.
Eisman’s struggling hedge fund, FrontPoint Partners was hit with insider trading allegations late last year after a massive FBI investigation into hedge fund operations that named one of it’s key players. The fund faced a major cash shortfall, but has since recovered, pledging a future marked by a new-found commitment to complete transparency. It’s not a stretch to wonder whether that transparency includes Eisman’s possible plans to make money on the decline of for-profit education, or whether they’d be willing to address their relationship with the Obama agenda.
Meanwhile, Americans should be questioning this fantastic web of influence that the Administration has called in to assist in their policy-making. The web of the left is vast and should be heavily scrutinized. If the war on for-profit schools is allowed to succeed, such a well-oiled machine will only get more efficient at it’s job.
Big Government
Over the last several months, as attention has been focused elsewhere, the Obama Administration and Education Secretary Arne Duncan have been waging a quiet war against for-profit schools and universities – educational institutions that offer job training and degrees in in-demand fields to students looking for an alternative to four-year non-profit schools, or a more accessible price tag.
The Administration has fired a number of rounds at the industry, but recently unveiled it’s secret weapon: a “gainful employment” restriction on federal loan money available to students at for-profit schools. While for-profit schools have had their difficulties, their deficiencies aren’t that dissimilar to those of their not-for-profit counterparts, but this weapon could kill off for-profits as a viable option to not-for-profit education.
Essentially, students at for-profit schools that have either a low graduation rate or an unacceptably high number of unemployed, graduated students would be denied federal student loan and grants. As Forbes points out, these schools serve primarily lower-income and minority communities who depend so heavily on student loans, such a restriction could put the whole industry in jeopardy.
Which, of course, is exactly what the Obama Administration would like to see happen. And, from recent news, it seems that they and their network of associates will do just about anything to make sure it happens.
In just the last month, public scrutiny exposed major flaws in a GAO report that accused for-profit schools of major malfeasance, forcing the GAO to revise and update their findings. Just last week, a writer for the New York Daily News was canned after an article he wrote on for-profit schools for the Village Voice turned out to feature a number of fake sources and outright lies. And then there’s this: an online report from a Soros-funded think tank purporting to be neutral.
Campus Progress, an online magazine produced by liberal think tank the Center For American Progress, has been out front in its reporting on the for-profit schools issue, publishing a series of stories alleging conflicts of interest and disclosure problems among Democratic consultants working, or allegedly working, on the issue…
Meanwhile, Campus Progress is also part of a coalition of liberal groups that include a wide array of unions and a dozen members of Congress lobbying the Obama administration for strict regulations of for-profit colleges.Interesting how it all ties in right there. And lest you think the Administration has left it’s friends on Wall Street out of the dealings, it turns out that the government’s laser-like attention is being directed at for-profit institutions – at least in part – by one of the men who made billions betting against the market during the housing crisis, Steve Eisman.
The coalition includes the major teachers’ unions, the Rainbow PUSH Coalition, several Hispanic groups including the National Council of La Raza and liberal lawmakers like independent Sen. Bernie Sanders of Vermont.
Steve Eisman, the outspoken investor whose huge wager against the subprime mortgage market was chronicled by author Michael Lewis in his bestselling book The Big Short, has set sights on a new target: for-profit colleges…Short-selling isn’t necessarily a bad thing, and Eisman’s analysis may prove to be correct, but as Matt Lewis at Hot Air pointed out, most short-sellers wouldn’t dream of pushing their target market over the edge by testifying to it’s deficiencies in front of Congress and then reaping the financial benefits of the subsequent market downfall. However, that seems to be exactly what Eisman is doing.
In a speech titled “Subprime Goes to College,” delivered Wednesday at the Ira Sohn Investment Research Conference, Eisman blasted the for-profit education industry, likening these companies to the seamy mortgage brokers who peddled explosive subprime loans over the past two decades.
Eisman himself is a central figure, testifying in front of the Senate in June about the apocalyptic prospects of the proprietary college industry, warning of $275 billion in student loan defaults sometime in the next decade if Congress did not step in and regulate the industry. His testimony caused those same for-profit education stocks to fall, this time an average of 6 – 8 percent — a fall that made him a profit.Coincidence? Maybe.
Eisman’s struggling hedge fund, FrontPoint Partners was hit with insider trading allegations late last year after a massive FBI investigation into hedge fund operations that named one of it’s key players. The fund faced a major cash shortfall, but has since recovered, pledging a future marked by a new-found commitment to complete transparency. It’s not a stretch to wonder whether that transparency includes Eisman’s possible plans to make money on the decline of for-profit education, or whether they’d be willing to address their relationship with the Obama agenda.
Meanwhile, Americans should be questioning this fantastic web of influence that the Administration has called in to assist in their policy-making. The web of the left is vast and should be heavily scrutinized. If the war on for-profit schools is allowed to succeed, such a well-oiled machine will only get more efficient at it’s job.
Big Government
