For-Profit Education Stocks Rise as GOP Opposes Tighter Rules

[Beet]

Representative John Kline, the Republican who will head the House Education Committee, said he opposes tighter rules for the for-profit education industry, sending company shares higher.

“I would push back really hard against a bill that might come out of Chairman Harkin’s committee,” Kline, of Minnesota, told Reuters, referring to Senator Tom Harkin, the Iowa Democrat who heads the Senate education committee. Harkin has commissioned a government probe of for-profit colleges and held hearings on their sales tactics, use of government funds and program quality.

http://www.bloomberg.com/news/2010-12-10/for-profit-education-shares-rise-as-kline-reiterates-opposition-to-rules.html

Why is the GOP defending the subprime of the education market?

[cinyc]

Democrats think the government needs to regulate while Republicans have faith in the free market to regulate itself.   You're surprised about this why?

[Verily]

No, Republicans see "for-profit" and assume it is good rather than make rational decisionmaking. After all, this is Republicans voting for what are effectively subsidies while Democrats vote against.

[Dgov]

Why is the GOP defending the subprime of the education market?

To put it simply, because Education is so bad in the US that we might as well try something new.

[King]

Potential Response A: To be fair, accredited public universities in Oklahoma apparently give out eCommerce degrees.  I don't see how DeVry or Phoenix could do much worse in program quality.

Potential Response B:

Why is the GOP defending the subprime of the education market?

To put it simply, because Education is so bad in the US that we might as well try something new.

K-12 education is bad in this country.  However, the United States has the best overall higher education system in the world.  Not that you would ever get to experience this, of course, but take my word for it.

Point being, it's far from the broken part of the system.  It's only problem is that the primary schooling is so bad that too much emphasis is being placed on it and collegiate systems are now getting overcrowded with morons.  Not to mention the construction of community colleges to teach what should be high school curriculum.
I think I'll go with B on this one.

[Verily]

Why is the GOP defending the subprime of the education market?

To put it simply, because Education is so bad in the US that we might as well try something new.

Huh? American college education is the best in the world, bar none. American colleges dominate international rankings, even if you look only at public colleges (which are more comparable to foreign schools due to lower tuition internationally).

Sure, secondary and primary education sucks, but for-profit colleges have nothing to do with that and probably make it worse by allowing secondary schools to punt education further down the line.

[TheDeadFlagBlues]

The debt load for students going to for-profit universities is two times that of those going to private universities and they're getting a much worse education and a degree that is looked upon very skeptically by employers. Millions, upon millions of dollars is spent on advertising to rope in new students which accounts for part of the higher tuition as opposed to a community college.

Yeah this is definitely the equivalent of subprime lending in education. The default rate is absurd.

[Beet]

cinyc and Dgov have completely missed the point.

cinyc: The status quo is not 'free market' because this is being funded by public money. It is the same as Fannie Mae purchasing a mortgage from New Century Financial. When these students default, taxpayers will be on the hook.

See it goes like this,
Democrat: We should have a government program to promote education, but manage it wisely by strict regulation.

Republican: The government spending is fine, but there should be no regulations. Free markets!

[Money is not spent wisely, leading to failure and taxpayer losses]

Libertarian: See! Government doesn't work.

Dgov: The point is it's been tried and the employment rate of some of these graduates is 30-40%, which is why they can't pay back the massive loans they've taken on.