Educating Congress: Our Government Can Mismanage Even a For-Profit

If ever there was an opportunity where the Government couldn’t possibly mess up, wouldn’t you expect it to be in the for-profit education industry? After all, we have an American capitalist group of entrepreneurs and corporations in the business of providing educational programs to interested consumers; and these businesses are strictly driven by the good old for-profit motive. Since the Government get to tax the profits of these for-profits, I mean, how could you go wrong? Surely this is a win-win-win. Education consumers get to pursue their dreams of a first or new career, the Education businesses get to sell their product to these clients, and the Government receives the taxes on profits and the taxes on the incomes produced by the graduates of these for-profit schools. The funds should just keep rolling in.
And to help prime the pump, grease the skids and stoke the fire; Congress provides funding for student loans that can be used to pay for these educational opportunities for securing a financially productive career. The Department of Education (and for all I know, other Government agencies/departments) delivers any number of programs that assist students/consumers/clients with obtaining Government backed loans. And to help the Government out, these programs are often set-up so that the for-profit institutions can help in processing the loan applications so that their clients don’t have to do more than agree to the loan, and the Government doesn’t have to do much other than okie-dokie the funds. What could be easier or more efficient?

So how is it that things are not working out so wonderfully? Lots of loans are being granted, that’s good: right? Lots of students are graduating, so again that’s great: right? The for-profit education industry is making lots of profits, so the best of the best: right? And of course, the students are getting their desired and well-paying jobs: right? Uhh! No. Opps!

What the industry is producing are a lot of people who cannot make a living that enables them to pay back their loan and have a chance at actually, you know, living. Congress as usual set up a funding trough intended to create a program that would be beneficial to the country, the economy and the society. But they don’t do anything to create a management process that insures a sound and prudent investment mechanism that prevents the public funds from being squandered. The Government’s administrative agency approaches the program with the same principles that have worked so well in other Government endeavors. Set up the paper work process to distribute the money, don’t monitor much of anything, and repeat.

If Congress wants to do something to save the public’s money and promote job-creation then they should look to re-engineering the system to be focused on actually achieving a beneficial result or that will self-report its failure to deliver. If Congress wants to over-see how funds are spent then they should become more attentive to bringing people into the creation of the legislation and the execution of the program that can show them how to make it self-sustaining and less vulnerable to predatory businesses that can game the system. Congress should consider including the most effective force that America has leveraged in our democratic system: self-interest.