I noted earlier the myriad economic consequences of a Tea Party-inspired government shutdown, to which Congress is creeping ever closer. The effect of a shutdown on education policy, however, has been harder to ascertain. Many education programs are funded in advance (due to the schedule of the school year) and thus won’t be affected.
However, one beneficiary of a shutdown could be the for-profit college industry. The Education Department has been working on a new set of regulations to govern these subprime schools, and if department employees aren’t able to go to work, progress on the regulations will stall:
If the federal government shuts down on Saturday, some students will have to wait longer for their aid, federal oversight of colleges and lenders will lapse, and the Education Department’s controversial “gainful employment” rule could be further delayed.
The for-profit school industry has been fighting tooth and nail to prevent these new regulations from coming online, hiring a phalanx of lobbyists and throwing fundraisers for key lawmakers like House Education Committee Chairman John Kline (R-MN). The regulations would block federal aid from higher education programs with students that fail to meet a certain debt-to-income ratio or have high rates of student loan default.
Currently, just 11 percent of higher education students in the country attend for-profit schools, yet they account for 26 percent of federal student loans and 44 percent of student loan defaults. For-profit schools make up to 90 percent of their revenue from the federal government, while producing profit margins of 30 percent. While this qualifies as a serious problem, the few employees at the Education Department’s Office of Postsecondary Education who would be allowed to work through a shutdown likely wouldn’t have anywhere near the bandwidth to deal with it:
[During the 1995 shutdown], only two employees in the Office of Postsecondary Education were deemed “essential” by the department: David A. Longanecker, the assistant secretary for policy and planning, and his deputy, Maureen McLaughlin. Mr. Longanecker said he spent most of his time answering phones and telling students and financial-aid administrators that the department would have to get back to them. He also became chauffeur to the secretary of education at the time, Richard W. Riley, because the department’s drivers were furloughed.
These regulations have already been delayed once by the Education Department.