Following repeated claims by whistle-blowers, the government finally launched a lawsuit against a for-profit college company owned by Goldman Sachs that was allegedly defrauding the government and students for billions of dollars. The NYT reported on Monday:
The Education Management Corporation, the nation’s second-largest for-profit college company, [is being charged by the government] that it was not eligible for the $11 billion in state and federal financial aid it had received from July 2003 through June 2011.
Good news here and bad. The good news is that fraud should be punished; if students have been cheated the company should pay. The bad news: there’s an ideological hostility toward the idea of private education in much of the bureaucracy. That’s a problem.We need a regulatory framework that protects students from abuses but that also facilitates more private investment in education and more competition in the system. The danger is that blue model zealots in the bureaucracies will initiate regulations designed to kill for-profit education rather than to channel it in a direction that benefits everyone, from students to investors.