History and the Myth of the Level Playing Field

Equal regulatory treatment, or having all higher ed institutions compete on “a level playing field,” may sound fair at first. But it makes little sense in practice to regulate all colleges and sectors of higher education identically, any more than it makes sense to regulate trucks and cars identically because both are motor vehicles. Trucks and passenger cars are regulated differently because they pose different safety risks, and because trucks are more likely to be gas guzzlers and bigger sources of pollution than lighter, more efficient cars.

The same types of distinctions apply in higher education, where for-profit schools pose heightened consumer safety risks. For-profit schools are far more likely than nonprofit colleges and universities to engage in boiler-room recruiting tactics, fraud, deceptive advertising, and job placement misrepresentations, and are much more likely to implement disastrous mid-semester closures.

It is essential that the government treat all groups of students, whatever their race, sex, religion, disability, and income, equitably. But institutions are not students, any more than corporations are people (no matter what the Supreme Court says). Just last month, CECU President Altmire told U.S. News that the Department of Education has “a moral obligation to develop policies that hold public, private nonprofit, and for-profit institutions equally accountable for their outcomes.” But it is not a lofty principle of equity that all higher ed institutions be treated identically. In fact, equal treatment of very different types of postsecondary institutions would result in significant inequities.

To take one example, Trump Education Secretary Betsy DeVos was a staunch proponent of “institutional equity” in assessing the job placement performance of all postsecondary programs. Yet it makes no sense to assess and only assess the ministry leadership program at Calvin University, her Christian alma mater in Grand Rapids, Michigan, with the same government job placement standards used to evaluate the performance of the nail technician program at the Michigan College of Beauty, a for-profit career school in Troy, Michigan.

In the past, GOP lawmakers, secretaries of education, and U.S. presidents were among the first to recognize that postsecondary institutions with very different missions should not always be regulated identically, and that consumers in particular needed added protection from the predatory marketing and recruiting tactics of for-profit colleges.

The first major federal scholarship program, and the direct predecessor of Pell Grants, provided grants to veterans through the original World War II GI Bill. Like Pell Grants, the GI Bill’s education benefits operated like a no-strings voucher that allowed veterans admitted to schools to enroll in the schools of their choice, including for-profit schools. Before long, however, Congress amended the GI Bill, repeatedly, to attach a host of strings to its benefits, all due to abuses by for-profit schools.

The popular lore isn’t entirely wrong—the GI Bill did send a generation of veterans to college who transformed and democratized higher education for the better. My father went to NYU School of Law on the GI Bill. But lost in the Greatest Generation’s educational ascent is the fact that more World War II vets actually used their educational benefits to go to for-profit trade and technical and business schools (2.4 million) and for-profit correspondence courses by mail (637,000) than used their benefits to go to four-year colleges and universities (2.2 million).¹

GI Bill benefits were paid directly to the institution, and, not surprisingly, entrepreneurs of all stripes jumped at the opportunity to tap into the new and unprecedented pile of government cash. The total number of for-profit or proprietary schools in the U.S. tripled in the five years that followed FDR’s signing of the GI Bill, from 1,878 to 5,635.

Thousands of new for-profit schools, many of them fly-by-night operations, opened and closed after turning a profit thanks to the new government largesse, and for-profit schools lured veterans into signing over their educational dollars with wildly misleading claims about quality training and well-paid jobs that awaited them upon their graduation. Tens of thousands of veterans were trained for jobs in overcrowded fields in which there were no job openings.